Maharashtra: 37 cooperative sugar mills in state face problems in raising finance

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Written by Partha Sarathi Biswas | Pune | Published: June 10, 2020 11:55:04 pm

covid-19 in maharashtra, maharashtra sugarcane farmers, maharashtra sugarcane crushing season, maharashtra sugar mills, maharashtra sugar mills finance, maharashtra banks, indian express news In case of cooperative mills, of the 74 mills which bank with the Maharashtra State Cooperative Bank (MSC), 37 mills have reported negative NDR. (Representational Photo)

Ahead of the 2020-21 sugarcane crushing season, as many as 37 cooperative sugar mills in Maharashtra not be able to raise capital from banks to start their operations. Jaiprakash Dandegaonkar, chairman of the Maharashtra State Cooperative Sugar Factories Federation, has urged NABARD to allow such mills to raise finance from the banks by restructuring their existing loans.

Sugar mills raise working capital from banks on the basis of their credit history and by pledging their available resources, called Net Disposable Resource (NDR). Banks lend as per the available NDRs, and mills with negative NDR will not be able to raise any capital from banks as their resources have been pledged already.

In case of cooperative mills, of the 74 mills which bank with the Maharashtra State Cooperative Bank (MSC), 37 mills have reported negative NDR. Similarly, 13 mills which bank with the District Central Cooperative Banks (DCCBs) have negative NDR and thus will not be able to raise fresh capital for the next crushing season.

During their meeting with the newly-elected president of NABARD, G R Chintala, Dandegaonkar and other officials of the Federation pointed out that without restructuring their old loans, such mills will not be able to raise any loans to start their operations. This credit problem, they pointed out, has cropped up even as the next season is expected to see a bumper cane production, with 900-950 lakh tonnes of cane estimated to be available for crushing.

Because of the Covid-19 crisis, mills have been unable to sell their sugar stock and this has hit their capacity to raise capital by selling their stock. The central government had allowed anks to extend 10 per cent more working capital for units to help them get over the financial crisis.

However, none of the cooperative banks have extended this to their lending sugar mills, claimed the Federation. Many private and public sector banks have already done so for the private sugar mills in the state.

During discussions with officials of the sugar Federation, Chintala agreed to look into the problems of the mills. He said he would also look into the matter of restructuring of loans.

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