Ahead of the upcoming sugarcane crushing season, the Maharashtra government has indicated its conditional readiness to stand guarantee for financially weak sugar mills.
In a meeting chaired by Minister of Cooperation Balasaheb Patil in Pune on Thursday, mills have been urged to ensure that pre-seasonal loans, for which the government would stand guarantee, have to be repaid before the end of the 2020-21 sugar season
Since March, the uncertainty over extending bank guarantee to financially weak sugar mills has loomed large over the sector as a bumper crop of cane awaits the mills. The state government had earlier issued a GR enlisting five financial parameters based on which mills would be evaluated for extension of bank guarantee, as these mills would not have been able to raise money otherwise due to weak balance sheets.
Initial scrutiny by officials of the sugar commissioner had shown that none of the 33 mills that had applied for the scheme was fulfilling the five conditions set by the government. Only four mills were recommended for the scheme as officials felt those mills, in Sangli, Satara and Ahmednagar, would face problem in timely crushing of the standing cane in their catchment areas.
On Thursday, Patil, along with Minister of State Vishwajit Kadam, chaired a series of meetings with the chairman and managing director of the concerned sugar mills.
Speaking to the media after the meeting, Patil said the state government will take utmost care to ensure crushing of cane happens on time.
“The sugar commissioner has been asked to redraw case-wise proposals, which will come up for discussion before the state Cabinet soon,” he said.
Officials said the state government has asked them to ensure the pre-seasonal loans have to be repaid before the end of the season. “So, the banks will not revoke the guarantee and save the government from coughing up the amount if mills fail to repay it,” he said.
Pre-seasonal loans are used by mills to overhaul machinery and book harvesting and transportation labour for the upcoming season. Mostly, mills take loans to the tune of Rs 15-20 crore based on their crushing capacity. Banks and financial institutions provide these loans based on the balance sheet of mills. Weak balance sheets had made cooperative mills ineligible for raising further finances from banks.
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