The Hindu Business Line : Sugar mills betting on Tuteja panel for growth

WHILE the Budget has not held out promises for the sugar industry, the sugar mills are banking on the committee for the revitalisation of sugar mills, headed by the Union Food Secretary, Mr S.K. Tuteja, to bail them out.

The committee, which is expected to submit its recommendations soon, met with representatives of South-based mills last week. The millers represented their case to enable the committee to suggest measures that will ensure the long-term sustainability of the industry. The sugar industry is expecting a support package along the lines announced for the steel and textile industries, according to industry sources.

The industry is hoping to swap some of its high-cost debts incurred a few years ago to reduce interest rates to manageable levels. If the mills are able to swap their debts, the interest rates could come down to 7 - 8 per cent from double digits. Financial institutions such as the IDBI and the UTI are not for such a swap, and the industry is hoping that the Government would intervene on its behalf, sources said.

At the meeting with the committee, the industry sought for a scientific basis to calculate sugarcane price, the primary raw material. The mismatch caused by soaring sugarcane prices while sugar prices stagnate or drop is the basic reason for the industry's problem, they said.

The industry also sought a differential pricing mechanism for sugarcane Statutory Minimum Price fixed by the Centre. The price cannot be uniform for the mills based in the tropical belt in Gujarat, Maharashtra and the four southern States, and the mills in the sub-tropical North. The industry also sought for a revamp of the sugarcane command areas allotted to the sugar mills. In some cases, the inadequate area allotted to a mill resulted in shortage of raw material and affected the mills' viability. They also pressed for restoration of the 40 km distance criteria between mills. This has over the last few years been brought down to 15 km.

The industry tried to convince the Government that it need not be sensitive to movements in sugar prices. Of the estimated annual consumption of about 18 lakh tonnes, only about 25 per cent is by the retail consumers and the balance is by the commercial segment such as the confectionery and food industry.

The industry is hoping for a positive reaction from the Government, more than it got from the earlier high-powered committee — the Mahajan Committee — set up to suggest measures to revitalise the sugar industry. The committee submitted its recommendations more than five years ago, which was welcomed by the industry.