The Hindu Business Line : Sugar mills seek protection of reserved cane area

FOR the Indian Sugar Mills Association (ISMA), the priorities at this juncture are getting the Government see the need for protection of reserved cane area of existing units and spatial distance of 25 km between two units; giving an impetus to the ethanol programme; and restructuring of loans and reduction in the rate of interest on past loans for the private sugar mills.

Sources told Business Line that an ISMA team met the Union Minister for Agriculture, Food, Consumer Affairs and Public Distribution, Mr Sharad Pawar, early this month and explained the industry's predicament. Mr Pawar is understood to have been favourably inclined towards the spatial distance issue, assuring a follow-up.

The association is said to have urged the Minister to give "due and careful" consideration to the Tuteja Committee recommendation and re-formulate the guidelines for establishment of a new sugar factory by duly providing for a minimum spatial distance of 25 km and after ensuring that the cane areas already reserved for existing units are not transferred to the proposed new unit.

"This would not only guard against poaching of cane from the reserved areas of the existing factories but ensure proper and viable operations of the Indian sugar industry," the ISMA President, Ms Rajshree Pathy, reasoned.

The association has also emphasised that in the policy formulation, higher priority would have to be accorded to expansion of existing sugar plants enabling them to reach a capacity level of 10,000 TCD to achieve global competitiveness.

"With the likely elimination of heavily subsidised largescale European Union white sugar exports (following a WTO ruling), sugar export prospects for India are expected to look up. We need to harness this opportunity. So priority would have to be given to expansion of existing projects rather than encourage new units," the sugar industry sources said.

Higher plant capacity, industry sources say, would help in creation of sugar complexes, in production of renewable energy and ethanol.

While the industry is not averse to new units, the association has urged the Government to promote such units in new green field areas.

On the ethanol programme, the Minister, while agreeing that the progress was dissatisfying, assured of moving it at the highest level for early implementation.

The ethanol programme received a green signal in March but in the last six months nothing has moved despite continuous follow up. According to information, the total lifting of ethanol from the sugar mills in northern India (where alone the tender process is complete and supply orders issued - except in Uttaranchal) is said to be less than 10 million litres out of a total quantity of 157 million litres. In the southern and western regions, even the basic tender process is not complete as yet. The technical bids were opened in August, but the price bids are yet to be opened, lament industry sources.

Ms Pathy had told Business Line some time ago about the constitution of a Task Force for making recommendations and sustaining the blending programme in the long run. It is reliably learnt that the Task Force has not been constituted yet.

The industry is said to have offered ethanol at Rs18.75 a litre.

On the issue of restructuring of loans and reduction in the rate of interest on past loans to 10 per cent (a facility which has already been extended to the cooperative sugar factories), Mr Pawar is understood to have discussed the matter with the Finance Minister, Mr P. Chidambaram, who promised to look into it and take an early decision on extending this facility to the private sugar mills.

The association, while reiterating that sugar mills in the private sector were also included in the revitalisation package, pointed out that the corporate debt restructuring mechanism currently available to the private sector units was limited to the heavily stressed assets and included only such of those units whose accounts were highly irregular.

Alleging the scheme as "highly impractical" in its approach, the source said only 12 units had so far been able to avail of this facility. Even here, the refixed rates are far above the suggested interest rate of 10 per cent, the source said.

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