The Hindu Business Line : Sugar mills get Nabard package on debt

AS part of its ongoing efforts to revitalise the sugar industry - many units of which are ailing, Nabard has come up with a package to assist commercially viable mills that have operational surplus to pay their dues, including bank dues, within the stipulated time, and to mills that may need an extended period of time for repayment.

Based on the need, loans of the former category mills will be rescheduled for a period of up to five years and in the latter category, up to a period of 15 years with a two-year moratorium on payment of interest and repayment of principal.

The package will cover all mills in the co-operative sector and private sector in Andhra Pradesh, Bihar, Karnataka, Maharashtra and Tamil Nadu, a Nabard release said. It added that the package would be subject to conditionalities such as State Government guarantee in case of sugar mills financed by co-operative banks, observance of norms of good governance as also reduction in management and operational costs.

All financial institutions and banks will charge a maximum interest of 10 per cent a year - revised rate to be applicable from July 1 - on their outstanding and future loans and financial accommodations to sugar mills in private sector and co-operative sector.

For co-operative banks that are likely to face a shortage of liquidity during the two-year moratorium period, Nabard will provide need-based liquidity support estimated at Rs 315 crore annually.

Mills that do have an operational surplus or cannot repay debts within 15 years are considered commercially unviable and therefore, ineligible to benefit from the loan restructuring scheme.

The scheme follows the assurance of a sugar industry revitalisation package given by the Finance Minister in his Budget speech of 2005-06.

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