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Journalism of Courage
We are a private company in body, but cooperative in soul,” declares Bhairavnath Bhagwanrao Thombare, wearing a yellow hardhat and standing outside the ethanol distillery attached to his sugar mill in Maharashtra’s Dharashiv district.
Thombare, 71, is the Chairman & Managing Director of Natural Sugar & Allied Industries Ltd, an Rs-800-crore-turnover company that runs Maharashtra’s first ever sugarcane mill to be set up in the private sector after more than four decades.
It all started on September 7, 1998 — just a week after the sugar industry was de-licenced — when Thombare obtained an IEM (industrial entrepreneur memorandum) to establish a mill at Ranjani village in Kalamb taluka of then Osmanabad district. That mill, which could crush 1,250 tonnes of cane per day (tcd), was commissioned on February 29, 2000.
Today, besides this factory that can crush 5,000 tcd, Thombare’s company owns another 2,500-tcd mill at Gunj-Sawana in Mahagaon taluka of Maharashtra’s Yavatmal district. In the last 2023-24 season, the two mills together crushed 14.94 lakh tonnes (lt) of cane procured from some 22,000 farmers.
Thombare is part of a key shift in Maharashtra’s sugar landscape — from a state where practically only cooperative mills were allowed to operate to one that’s significantly controlled by private barons, many of them bigger than Thombare. In 2023-24, 104 out of Maharashtra’s 207 operational mills were private. They crushed 46.5 per cent of the state’s cane and produced over 44 per cent of its sugar. That’s a far cry from 25 years ago — in 1998-99, there were merely three private factories which together produced just 2.3% of Maharashtra’s total sugar.
With Maharashtra heading to the polls, which way the key players of the politically influential sugar industry — both cooperative and private — align is being keenly watched.
Traditionally, sugar in Maharashtra has been synonymous with cooperative mills.
Not surprising, given the preferential treatment the mills got from successive Congress governments, starting with Yashwantrao Balwantrao Chavan’s, which made sure no new private sugar factory was started after 1958. Chavan, and also Vasantdada Patil after him, saw sugar as a tool for empowerment of the larger rural population and their own upwardly mobile Maratha farming community. Not granting any new private mill licences was an effective way to consolidate the community’s leadership of the Congress party in Maharashtra.
Between 1951-52 and 1998-99, the number of private mills in the state shrank from 14 to three — Ravalgaon Sugar Farm (Nashik), New Phaltan Sugar Works (Satara) and Saswad Mali Sugar Factory (Solapur) — while that of cooperatives soared from 1 to 116.
As they grew in numbers, so did their political and social influence. With each mill procuring sugarcane from 10,000 or more farmers, it gave the chairman and directors of the cooperatives enormous powers to wield patronage that could extend to the political field. Often, the founder-chairman of a cooperative sugar mill would go on to assume bigger mantles like that of the local Member of Legislative Assembly or Parliament. They would, then, pass on the legacy to their sons and even grandsons. Maharashtra has had a long line of chief ministers — from Vasantdada Patil (who controlled the Farmers Cooperative Sugar Factory in Sangli) to Vilasrao Deshmukh (Manjara in Latur) — who rose through the sahakari (cooperative) route.
But all that is history as cooperative mills have made way for private sugar magnates. The credit for this goes to two men.
The first was Atal Bihari Vajpayee, whose government at the Centre, on August 31, 1998, de-licenced the sugar industry. Henceforth, anybody could freely set up a sugar mill, provided it was at a minimum 15-km radial distance from an existing or proposed new factory.
The second person was Thombare, who showed the way to other private entrepreneurs. Thombare is ironically someone who cut his teeth in cooperatives. Between 1978 and 1983, he worked as chief accounts officer at the Ambajogai (Beed), Godavari Manar (Nanded) and Jai Jawan Jai Kisan (Latur) cooperative sugar factories. From there, he became the managing director of two cooperative mills — Manjara (Latur), promoted by former Congress chief minister, the late Vilasrao Deshmukh; and Vaidyanath (Beed), promoted by senior Bharatiya Janata Party (BJP) leader Gopinath Munde.
As Manjara’s top executive during 1984-1997, Thombare oversaw the setting up of the factory and its operations from the 1986-87 sugar season (October-September). Munde’s Vaidyanath mill came up in a record 11 months and, in 1998-99, was India’s first to crush 5 lt of cane during a trial season.
“I was with Vaidyanath till 1999-2000. That was the trial season for my own factory, which took even less time (nine months) to be ready. I was then shuttling between the two locations. He (Munde) let me go in early 2000 after I found him an able replacement as managing director,” recalls Thombare.
Thombare’s Rs 18-crore project was financed by a consortium of urban cooperative banks that lent Rs 9 crore on the “personal guarantee” of Munde. The remaining 50 per cent equity funding came from the promoters and some 5,000 farmer-shareholders.
“Even today, 40 per cent shares in my company are held by 12,500 farmers… I am myself from a farmer family, born and raised till primary school in this village (Ranjani),” he says.
Over the last two decades, Thombare has invested heavily in a string of initiatives at his mills. The Ranjani mill has a 23-megawatt co-generation plant (which burns bagasse, the fibrous residue after juice is extracted from sugarcane) and a 150 kilo-litres per day distillery, which supplied 3.25 crore litres of ethanol to oil marketing companies in 2023-24, using B-heavy molasses and direct cane juice/syrup.
Thombare has further invested in bio-digesters for treating the liquid effluent (spent wash) from the distillery to produce about 60,000 cubic meters per day of raw biogas. This biogas, containing 60 per cent methane, is purified to over 95 per cent (by removing carbon dioxide and hydrogen sulphide) for use as boiler fuel, generating another 1.5 megawatt of green power.
Another facility uses press-mud (another byproduct of sugar manufacture), along with napier grass and farm wastes, to produce 12,500 cubic meters/day of raw biogas that is then purified, compressed and stored in cascades. This compressed biogas is sold as ‘BioCNG’ at Rs 80/kg.
“Ours is the first sugar mill in Maharashtra to produce BioCNG. We sell 3,500-4,000 kg daily through four outlets at Ranjani, Dharashiv, Latur and Parli (Beed),” says Thombare.
The Ranjani unit also has a submerged arc furnace plant to manufacture 10,000 tonnes per year of ferromanganese and silicomanganese alloys that are used in steelmaking. “We installed it in 2005 to consume our surplus co-gen power that the Maharashtra state utility wasn’t buying. Power constitutes 60-65 per cent of the production cost of ferroalloys,” he explained.
As Thombare paved the way for private mills, others caught up.
Vilasrao Deshmukh’s Manjara Group – managed by his sons, Amit and Dhiraj, and brother Diliprao — has grown from one to 10 mills that together crushed 53.02 lt of cane procured from roughly 1 lakh farmers in 2023-24. Five of these are cooperatives, all in Latur district, with a total capacity of 23,450 tcd. The rest — two in Latur and one each in Dharashiv, Parbhani and Nanded — are under private companies: TwentyOne Sugars, Jagruti Sugar & Allied Industries and Manjra Sugar Industries Ltd. Their combined capacity is higher at 27,600 tcd.
Equally big are the private sugar empires of the extended family of Sharad Pawar.
Baramati Agro, belonging to the Maratha leader’s nephew Rajendra and grandnephew Rohit, has four mills – at Shetphalgade (Pune), Kannad (Aurangabad), Chopda (Jalgaon) and Jamkhed (Ahmednagar) — with an aggregate capacity of 29,500 tcd and crushing 34.70 lt of cane in 2023-24.
Even bigger are the six mills — Daund (Pune), Jarandeshwar (Satara), Karjat (Ahmednagar), Omerga and Bhum (Dharashiv), and Samsherpur (Nandurbar) — linked to senior Pawar’s estranged nephew, Ajit Pawar, who controls the Nationalist Congress Party (NCP) founded by his uncle. These mills have a total capacity of 58,000 tcd and crushed 66.96 lt in the last season, making him arguably the biggest of the sugar barons.
Both Ajit and Rohit Pawar are contesting this Assembly election — the former from the family bastion of Baramati and the latter from the Karjat Jamkhed constituency on the rival NCP (Sharad Pawar) faction’s ticket. So are Vilasrao Deshmukh’s sons, Amit and Dhiraj, as Congress candidates from Latur City and Latur Rural respectively.
The proliferation of private mills, including the new ones promoted by politicians (the Pawar family was traditionally associated with Baramati’s Malegaon and Shri Someshwar cooperative factories), has partly to do with government policy.
In the past, not only were licences reserved for cooperatives, they were also allowed to meet 70 per cent of project costs through long-term loans from public financial institutions, with the Maharashtra government providing guarantees for their repayment. Even for the 30 per cent equity portion, the state government subscribed up to two-thirds of the share capital, which the cooperatives could gradually redeem at face value by deducting a part of the cane price payable to farmer-members.
That party ended with both de-licencing and the government ceasing to invest in the equity or stand guarantee for the loans of cooperative mills. Those who controlled the mills found it more expedient to start private factories on their own or even acquire sick cooperatives. The Jarandeshwar mill, for instance, was started as a cooperative by the Maratha strongman Vasantdada Patil’s wife Shalini, before it was sold to a company allegedly connected to Ajit Pawar in 2010.
“When the option to file IEMs for private mills was made available, we went for it. It made no difference. Ultimately, we are serving farmers,” claimed Dhiraj Deshmukh of the Manjara Group.
Privatisation, however, did little to change the political clout these sugar mills exercised in Maharashtra.
A former Managing Director of the Maharashtra State Cooperative Sugar Factories Federation, who spoke on condition of anonymity, said, “Look at it this way — a big mill would purchase cane from 20,000-30,000 farmers. Other than the mill, the promoter would also run a string of other establishments dairies, engineering and medical colleges, etc. That is a source of both patronage and prestige in the area.”
Thus, while the mills may have changed in their structure, the promoters continue to be politically important. Take the case of the state’s Minister of Public Health and Welfare and Shiv Sena candidate from Paranda (Dharashiv), Tanaji Sawant. His company, Bhairavnath Sugar Works, runs three mills in Dharashiv and two in Solapur.
Not all private mills have been success stories, though. Gopinath Munde’s family floated the privately owned Pannageshwar Sugar Mills at Renapur (Latur) in 1999. That factory and the original Vaidyanath cooperative have virtually turned sick.
The same fate has befallen Armstrong Infrastructure Pvt. Ltd, a factory promoted by NCP leader Chhagan Bhujbal’s family at Malegaon in Nashik, and Shrigonda BJP MLA Babanrao Pachpute’s Shri Saikrupa Sugar & Allied Industries in Ahmednagar.
Despite these setbacks, as Thombre realised early on, the needle has decisively moved in Maharashtra’s sugar industry — from cooperatives to private.
