Sugar millers seek debt restructuring, price stabilisation fund

Sugar millers have sought the Centre’s assistance to help deal with increased financial stress due to “high sugarcane prices.”

In a meeting with Finance Minister Arun Jaitley earlier this week, representatives of the Indian Sugar Mills Association (ISMA) called for restructuring of the industry’s debts, creation of a price stabilisation fund, extension of interest subvention on loans and increase in price of molasses.

Seeking assistance from Jaitley, the industry argued that the high prices of sugarcane had rendered it uncompetitive in the global market and had resulted in huge financial losses for several sugar mills.

To help sugar mills out of their financial distress, the government extended subvention loans (credit at lower interest rates subsidised by the government) in 2014 to the extent of ₹6,000 crore (under SEFASU scheme) and disbursed soft loans of ₹4,600 crore the following year.

Sugar millers, however, now want assistance to deal with their growing indebtedness.

ISMA proposed that the sugar industry’s debt should be restructured as per the recent Reserve Bank of India’s ‘S4A’ scheme for sustainable structuring of stressed assets.

To enable the sugar industry to be included in the scheme, the industry representatives suggested that the eligibility condition of exposure of ₹500 crore should be brought down to ₹100 crore.

The industry further suggested that the excess cess being collected at the rate of ₹100 per quintal of sugar from February 2016, should be made into a price stabilisation fund and utilised to pay the difference between FRP (Fair and Remunerative Price) for sugarcane and sugar realisation price.

This can go directly as direct benefit transfer to the sugarcane farmers into their accounts, as suggested by the CACP.

The industry also asked the government to raise the price of ethanol fixed at ₹39 per litre of ethanol as it was unviable.

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