Ailing sugar co-op banks on its margdarshak: Shivraj Patil’s son

For practically all purposes, Shailesh Patil is the chief patron, guide and lobbyist since early 2004 for the factory which is steeped in losses and debt, fighting hundreds of legal battles and is struggling to survive even as it makes grand expansion plans.

The annual report of the factory describes him as a “young leader” who is the “margdarshak” or guide and whose picture is printed ahead of that of the chairman.

Factory officials and union leaders said that at present, his “connections” are badly needed in key areas which could help bail out the factory: secure a Rs 7-crore loan for modernisation, get permissions to set up a distillery to use the molasses and to generate about 3 MW of power on the premises.

The brainchild of the Home Minister, the factory was set up in 1984 when 5,000 farmers formed a co-operative and raised over Rs 1 crore while Rs 10 crore was borrowed from banks.

Once considered the biggest among Maharashtra’s old sugar co-operatives, it mostly had Shivraj Patil’s relatives or supporters running it. The factory, which can produce 2 lakh metric tonnes of sugar annually, had few worries in its initial years.

But neglect, mismanagement and lack of modernisation began hurting it in the late 1990s, the present management admits. As a result, workers started deserting it and today, the massive structure spread over 300 acres in Nalegaon village is a collection of leaking pipes, outdated boilers and shoddy godowns.

Production is limited and the last time full salaries were paid was in 2003. The account books reflect the sorry state. During 2002-03, it had an accumulated loss of Rs 15.4 crore. During 2006-07 it grew to 46.85 crore. Debt stands at Rs 30 crore.

“We finally had to threaten the management and call a strike to wake them up,” said Ashok Tambolkar, a Jai Jawan employee and secretary of the district sugar workers’ union, referring to the acute crisis in 2005 when production stopped completely. “It was only then that matters reached the higher ups. Shailesh Patil started attending meetings and finally the board was dissolved, a new board was appointed and Dr Manikrao made chairman.”

Manikrao Patil, a medical doctor who is related to the Home Minister’s family and says he has been running the factory for the last two years “with the help of Shailesh”, is candid about the crisis. “We have incurred losses of about Rs 40 crore in the last 10 years due to mismanagement, corruption and all these reasons,” he told The Indian Express. The “earlier management”, for instance, would pay advances to “unreliable contractors” for harvesting and they would not complete their job, he said.

“Money played through a lot of hands. Today, we have around 300 court cases only in this matter,” Manikrao said. “We could not blame the banks as we did not have a good history. At one point, we had a debt of Rs. 42 crore which has now come down to Rs 30 crore.” But he is confident that he can turn things around. “Shailesh’s presence helps as he involves himself in getting the required permissions and also in interacting with the commissioner of co-operatives in Pune and at the CM’s office.”

But Basavjirao Patil, Manikrao’s predecessor, denies that he was responsible for the factory’s fortunes plummeting and says Shailesh Patil was equally involved during his term as well.

“During my tenure too he took equal interest and would accompany me when I had to meet government officials. During one crisis, he was the one who accompanied me to meet the commissioner of sugar in New Delhi. At the government level, he is the one who made phone calls when we needed any help. He also has helped us when we have had to answer banks,” he told The Indian Express.

Now, many workers say they continue to stick to the factory because of Shailesh’s involvement although some are beginning to get angry that they may only be paid one month’s salary this month even though Shailesh Patil had promised to pay them for the full crushing season of six months. Besides, he has also not turned up to meet them so far despite assuring that he would visit in the first week of June.

Shailesh Patil’s plans to turn the co-operative around include getting outsiders to process the molasses and make spirits and generate electricity as a by-product. “We need to invest around Rs 7 crore for modernisation and turning this around,” said Manikrao. “Shailesh walked in after the factory had become very messy. He helps in getting the bureaucratic hurdles cleared by meeting the relevant officials in all the government departments like the commissioners and also takes the matter to the CM’s office when the situation demands.”

Shailesh visits Latur at least once a month while his wife also visits frequently. A family member, who did not want to speak on record, said the factory’s crisis “is the baggage of the last 10 years and it will take some time to overcome its problems. Shailesh is now guiding the management in its efforts. A sugar factory was a dream of Shivraj Patil even before his legislative days.”

“The board had even offered Shailesh the chairmanship but he declined it and chose to look into the matters without holding any post. He is the backbone of the factory and is very much involved in it. We are associated with the factory since the beginning and even though we are not in it officially, is it not our baby?” the relative asked.

Certainly, but the baby could have been raised and cared better, industry experts said. Raj Gopal Deora, Maharashtra’s Commissioner for Sugar, said that although the entire sugar sector had suffered in recent years, co-operatives that managed their finances well weathered the storm.

In 2006, the government had allowed 25 sugar factories that were sinking to rope in private players to run and rescue them, he told The Indian Express. “Jai Jawan Jai Kisan is not on that list,” he said. “They need to have managed their finances well and also cleared bank loans, which they have not. Banks and the government will only help co-operatives where the management is strong and can handle their finances well.”

On May 27, The Indian Express sent detailed questionnaires to Shivraj Patil and his son Shailesh Patil on the functioning of the sugar cooperative and their role in it. A reminder for a reply was sent three days later but no reply has been received so far.