Unauthorised sale, non-payment of dues: Report takes lid off sugar sector

In simple terms, NDR refers to the resources available with sugar mills against which they can raise finance. In case of negative NDR, the sugar mills do not have any resources left to pledge and as per the guidelines of National Bank for Agriculture and Rural Development (Nabard), they would not be able to raise finance from any bank.

In view of this, the state government had issued guarantees to these mills to raise funds. A total of Rs 178.28 crores was lent to these mills on the basis of the unconditional government guarantees.

The report said the elaborate system of checks and balances failed to ensure recovery of the loans. In its report for the fiscal 2022-23, the bank stated that Rs 130.46 crores is pending from these mills as of March 31, 2022. The bank has written to the state government to revoke the guarantee on October 1, 2021, but nothing came out of it.

Of the six mills, two sugar mills—Rajgad cooperative sugar mill in Pune district and Sahakar Shiromani Vasantrao Kale Cooperative Sugar Mill in Solapur—were lent Rs 10 crores and Rs 18 crores in October 2021. The bank, on its part, had worked out a system of tagging sugar bags being sold so that Rs 250/bag would be deposited into the MSC bank’s account post its sale.

However, the mills failed to adhere to the repayment schedule, compelling the bank to write to the state government to revoke the guarantee. The state government, instead of revoking the guarantee, has extended the guarantee to both mills till September 2023.

While the mill in Bhor is managed by Congress MLA Sangram Thopte, the mills in Solapur is managed by NCP leader Kalyan Kale. With a new sugar season starting next month, both these mills might find it difficult to raise finance for the next season.

The bank’s annual report also mentions about another cooperative mill in Solapur—the Bhima Takali Cooperative Sugar mills managed by BJP heavyweight leader and Rajya Sabha MP Dhananjay Mahadik. “Bhima Takali SSK Ltd, Solapur, had sold sugar stock during the period from 1st January, 2022 to 31st March, 2022 without bank’s permission. Bank had filed complaint to Mohol, police station on 4th March 2022,” the annual report said.

Sugar mills who hypothecate their sugar stock has to let the bank know about sugar sales as the bank recovers their loan from the sales. The sale without the bank’s knowledge is deemed illegal. Mahadik said no FIR was filed. “The sugar in question was sold under the Revenue Recovery Code to pay the pending Fair and Remunerative Price (FRP) to the farmers. The matter is cleared now,” he said