Maharashtra likely to consider Rs 4,000 crore soft loan package for cooperative sugar mills
Maharashtra may provide around Rs 4,000 crore in soft loans to financially stressed cooperative sugar mills ahead of the next crushing season. The proposed package aims to offset losses from lower sugarcane output, adverse weather, shorter crushing operations and rising production costs.
MUMBAI: Maharashtra is likely to consider a soft loan package of about Rs 4,000 crore for cooperative sugar mills facing financial stress, with the proposed support aimed at helping them prepare for the next crushing season amid lower cane output, adverse weather and rising production costs, Sakal reported.
The state Cooperation Department has prepared a proposal and sent it to the Finance Department for final approval, according to people familiar with the matter.
Sugarcane production in Maharashtra is estimated to have fallen by 12-15% this year because of changes in weather and higher temperatures. The crushing season also ended earlier than usual, lasting only 80-90 days.
The shorter season and lower cane availability are estimated to have caused losses of about Rs 3,300 crore to the sugar industry, according to the report.
The industry has also faced pressure from the Centre’s ethanol policy. The allocation of 70% of the ethanol quota to grain-based production has affected the revenue of sugar mills, according to industry sources.
Sugar mills had earlier asked the Centre to raise the minimum selling price of sugar and restructure their loans to ease financial pressure. However, no decision has been taken on the demands even after three months.
The state government has therefore proposed providing soft loans to eligible cooperative mills. Under the proposal, the financial position, balance sheets and performance of individual mills will be assessed before loans are sanctioned.
The proposed package could involve an interest burden of around Rs 600 crore, which the state government is expected to bear, according to sources.
If approved, the measure would provide financial support to cooperative sugar mills before the next crushing season and help them manage the impact of lower cane availability and higher operating costs.
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Source : ChiniMandi
