Over 60 per cent of sugar mills in the state will find it difficult to raise working capital to commence operations in the next season. In a special meeting on the crisis, held in Mumbai on Friday and presided over by NCP chief and former Union Agriculture Minister Sharad Pawar, millers from across the country spoke about the problems facing the industry. Mills have failed to pay the growers due to low prices of sugar, and the cane arrears in the country stand at Rs 19,000 crore. Mills in Maharashtra are facing arrears worth Rs 2,277 crore, with sugar commissioner Sambhaji Kadu Patil issuing orders of confiscation of sugar against 10 mills.
Rohit Pawar, vice-president of the India Sugar Mills Association (ISMA), said millers in Maharashtra are facing an unprecedented crisis over short margin — the difference between the advance released by the banks to the mills and the realisation of the latter. According to analysts, falling sugar prices and reduction in the valuation of sugar by the Maharashtra State Cooperative Bank (MSC) Bank has led to the financial crisis. The MSC Bank provides working capital to 40 sugar mills in the state and currently, almost all of them have gone into short margin. Mills are given a stipulated time period to clear the amount, failing which their accounts are declared as Non Performing Assets. Sugar production in the country has already crossed 300 lakh tonnes (lt) and estimates have put the production figures at 340 lt next year.
During the course of the meeting, Pawar stressed on the need to export sugar to fulfil the 20 lt quota declared by the central government earlier. But exports at the current international prices of Rs 19-20 per kg would entail a loss of around Rs 8-10 per kg, as the cost of production is estimated to be Rs 30 per kg, said industry insiders.
Another problem with exports is the shortage of international markets, with many traditional destinations such as the Philippines putting import restrictions in place. Meanwhile, a special study group has been formed to study the problems facing the industry. The group, which will have high-ranking officials from ISMA and the National Federation of Cooperative Sugar Factories, will come up with a policy paper. “Once we have finalised the document, Pawar saheb will be leading the delegation to meet the Prime Minister to apprise him about the situation,” said Rohit Pawar.