Maharashtra faces new challenge as only 4 of 39 sugar mills fulfill criteria to avail bank guarantees

On March 2, the state government had issued a government resolution (GR), laying down five conditions for mills to be eligible for government guarantees: non-NPA accounts, positive net worth, regular repayment of government dues, a balance sheet in green (ie having reported profit) and government guarantee not being challenged in courts. Mills were asked to submit their financial details for scrutiny. Of the 58 mills, 39 had submitted their proposals, which were scrutinised. The mills collectively require guarantees for loan worth Rs 784 crore.

But, according to officials of the Sugar Commissionerate, only four of the 39 mills fulfilled all the five conditions laid down by the state government, five mills fulfilled four conditions while 13 mills fulfilled three of the five conditions. Rest of the mills fulfilled fewer or none of the conditions.

A senior officer of the state Cooperative department, on condition of anonymity, told The Indian Express that the conditions in the present GR would not allow many of the mills to raise capital needed to start their operations. A sub-committee headed by Deputy Chief Minister Ajit Pawar is expected to take the final decision on the matter. “Either the GR has to be recalled or the sub-committee has to provide guarantees by bringing in exceptions. Either way, the state government has to walk a tightrope in this matter,” said the officer.

Earlier, the Maharashtra State Cooperative Bank was reprimanded for providing loans and guarantees to sugar mills which were nonviable.With only two months left for the crushing season to start, the state government doesn’t have much time to solve this problem.