The Hindu Business Line : Centre announces Rs 525-cr package for coop sugar units

THE Union Government today announced a Rs 525-crore financial package for the cooperative sugar factories that were operational during 2002-03 sugar season. The sugar mills would be extended a two-year moratorium on interest and principal repayments.

Further, the interest rates of their restructured loans would be reduced to 10 per cent a year from April 1, 2005, irrespective of the original contractual rate. The cooperative units would then be categorised into two slots, depending on their financial health, and accordingly be asked to repay loans within five or 15 years.

"All cooperative sugar mills that have outstanding term loans as on March 31, 2005 and are commercially viable and have adequate surplus to repay the term loans, will be categorised as falling under either Category A or Category B. Accordingly, term loans would be restructured to enable payment within five years for Category A or within 15 years for Category B," said the Union Agriculture Minister, Mr Sharad Pawar, adding that the Centre would provide "interest subvention on the restructured loan which is estimated at Rs 525 crore".

"The total value of loans to be restructured is Rs 2,500 crore," he said. Originally, sugar mills had taken loans at 11-15 per cent interest rates.

Asked if private mills would benefit, officials clarified that private mills were working out their restructuring packages with commercial banks. Nabard would provide a "liquidity support" to cooperative banks during the two-year moratorium period to the extent of Rs 500 crore. The package was prepared by a committee set up by Nabard, which submitted its report in August 2005.

Beneficiaries of the package

This move will benefit about 270 cooperative sugar units, according to Mr Pawar. Around 170 mills are understood to have sought benefits from Maharashtra region.

On the restructuring mechanism, the Nabard Chairperson, Ms Ranjana Kumar, said the bank had formed a committee that would study each case and decide the repayment terms.

So far, the cases of 139 sugar units had been processed out of which 47 are in Category A (with repayment duration of up to five years) and 92 in Category B (repayment duration of up to ten years). Among these, 112 units are from Maharashtra - 30 in Category A and 82 in Category B.

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