Maharashtra sugar mills fear cash crunch as top lender cuts loan target


Maharashtra sugar mills will have to make do with about 40 per cent lesser loan to start the next crushing season, which is just a month away. They also fear action for failing to sell sugar as per the quota set by the Centre.

Maharashtra State Cooperative Bank (MSC Bank), the top lender to sugar cooperatives in the state, slashed its pre-seasonal loan amount by over 40 per cent, to Rs 225 crore for 2016-17 season from Rs 400 crore last year, due to the decrease in area under sugarcane. The bank, which finances 34 sugar cooperatives of the state, is worried about mills' ability to pay back loans.

"Many mills will run under capacity this year, which will make it tough for them to repay loans," said Pramod Karnad, managing director, MSC Bank. Increasingly, financially better-managed sugar cooperatives do not avail pre-seasonal loans. However, those mills that are dependent on it, may find it tough to make advance payments to harvesting farmers and meet other expenses including servicing their loans. In addition to financial worries, the mills may face action for failing to meet the monthly sugar sale quota target set by the centre. The sugar mills were supposed to keep only 37 per cent of their stocks by September end, but many mills are believed to have excess stock.

The district administration has started checking sugar stocks of mills to verify if they have met the quota requirements.

"Government officials have started visiting mills to take stock of the situation. We fear that the government may take action," said the managing director of a sugar cooperative from south Maharashtra.


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