33 sugar mills apply for bank guarantee, committee finds only 4 mills fit for it
The technical committee set up by the Maharashtra government to study the feasibility of advancing bank guarantees to financial weak cooperative sugar mills has decided that only four of the 33 mills should get the guarantee. Senior officials of the committee confirmed that the amount for which the government needs to stand guarantee for these four mills is around Rs 90 crore, as against the Rs 1,030.34 crore demanded by the mills.
At the start of the 2020-21 sugarcane crushing season, Maharashtra is staring at a bumper crop of over 815.50 lakh tonnes (lt) of cane. The bumper crop has raised the issue of whether the cane can be harvested in time. Otherwise, the state government will have to pay compensation to farmers for their non-harvested cane. The sugar industry had pointed out that that this can be avoided if more mills undertake crushing, which would ensure timely harvesting of cane.
However, 58 cooperative sugar mills, which had ample cane availability in their area of operation, had expressed their inability to take season as banks and financial institutions refused to extend working capital to them. Weak balance sheets and negative net worth has been the main reason for the mills failing to raise capital. To resolve this problem, the Maharashtra State Cooperative Sugar Factories Federation had asked for government guarantees for such mills to help them raise working capital.