Rahul Wadke

Mumbai, June 27

THE Maharashtra Government is considering the leasing out of four sick co-operative sugar mills to the private sector. This is perhaps the only way these mills can be rescued from bankruptcy, said Mr Prakash Naiknavare, Managing Director, Maharashtra State Cooperative Sugar Factories Federation Ltd.

"The takeover will not be free for all. The private party will have to pay an escalating rent on every tonne of sugarcane crushed. At the end of the specified period the mill will have to be handed over to the original owner. When the tender process is called for, first preference for running the sick mill would be given to the adjoining co-operative mill. Their bid will be given first preference," Mr Naiknavare told Business Line.

There would be an open tender process for such a takeover. The takeover would be on pre-specified terms. The interest of the farmers associated with the mill would not be compromised. Neither there would be any retrenchment of staff. The mill would be run like a business enterprise, he said.

The co-operative sugar industry in Maharashtra is today in doldrums, having as many as 71 declared sick sugar mills. Despite repeated bailouts by the Maharashtra Government, the situation has not improved over the last decade or so. According to Mr Naiknavare, nepotism in recruitment, financial mismanagement and inadequate sugarcane availability are the major ills plaguing the sector.

The latest initiative - of private sector intervention may well set a new precedent. Mr Naiknavare said the Aajra Cooperative Sugar Mill in Kolhapur has already been taken over by Shree Renuka Sugars Ltd, Karnataka, in 2004. Since then, the mill has managed to engineer a remarkable turnaround, he said.

The gravity of the situation can be gauged from the fact that already two committees have been appointed by the State Government to resolve the situation. Delineating the process of takeover by the private mills, Mr Naiknavare said that the cooperative mills would be leased to private mills for a period of 5-7 years.

During the sugar season (2004-05) in the State, Maharashtra crushed 194 lakh tonnes of sugarcane, with an average sugar recovery of 11.49 per cent, with production at 22.33 lakh tonnes.

(This article was published in the Business Line print edition dated June 28, 2005)
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