Ailing sugar sector gasping for asistance

PUNE: The state''s ailing cooperative sugar sector, looking for lifelines, will have to wait a little longer. The two lifelines it is looking for, the Rs 1340 crore open market borrowing (OMB) by the state government and the package to help factories with term loans and other outstandings, approximately Rs. 4,300 crore, are not likely to be thrown out to it soon.
Sources indicated that the bail out using these two routes is expected to be re-worked by the Sugar Commissionerate here and both processes could take over a month.This follows a meeting of the Maharashtra Rajya Shakari Sakhar Sangh (MRSSS) with the Reserve Bank of India (RBI), for a two-year moratorium on term loans, totalling Rs. 4,300 crore.
Sources said the MRSSS is holding out for the state government to bear the Rs. 400- 1,000 crore interest burden on these loans. The MRSSS'' stand is that the state government bear the burden since the liquidity of banks would be affected, with a two-year moratorium. While there was no confirmation, it is believed that the banks would lend only if the interest were paid during the period of the moratorium.
"Should the state government pay this interest, it would amount to a grant to the sector," sources said.
With sugar and state politics being closely linked, much more than just the fate of the sugar cooperatives is at stake. And the Vilasrao Deshmukh government, torn as it is between fiscal discipline and taking the brunt of rolling back populist decisions, is expected to take a political view.
The proposed Rs. 1340 crore OMB was to be used to bail out the 56 sick sugar cooperatives who owe their workers wages and fixed costs, since the view was that it would cost less to pay factories to remain shut. These 56 were identified as being sick during 01-02. At a recent meeting in Mumbai, the chief minister is believed to have taken the stand that if nearly 38 of the 56 sick sugar cooperatives (SSKs) are terminally ill and face liquidation, there was no point in bailing them out.
The MRSS had announced in October that the central government would clear the OMB proposal. However, to date, these clearances have not come through. The Sugar Commissioner is expected to offer a report on this issue by next month since the state government would like another look at lending to factories which face liquidation. The 38 who face liquidation are in addition to the 11 already ear-marked for liquidation.
Meanwhile, the sugarcane crushing season has got off to a slow start this year. While the season began on November 20 for the rest of Maharashtra, mills in the south Maharashtra region of Kolhapur, Sangli, Satara began earlier, to combat the aggressive approach of sugar mills in Karnataka. Here, of the 26 licences issued, 23 have begun crushing with three not having started.
"It is still too early to say exactly how many of the 85 cooperative and 17 private mills which have received licences to crush cane this season will actually crush this season. We should be able to get a clearer picture by the end of this month," Apurva Chandra, commissioner, sugar, government of Maharashtra, said.
The crushing season this year will last between 75-90 days, down from the normal 160 days. This is due to the cane shortage, this sesaon at its all time low of 170 lakh ton cane, which will produce 17 lakh ton sugar. In the crushing season 03-04 (October- April), 116crushed 290 lakh ton cane, working for 84 days and producing 131.77 lakh ton sugar.