July 29, 2015
Sugaronline | http://goo.gl/mDO9bK
Officials fear that almost a fifth of the total sugar mills in India would find it difficult to start crushing operations.
Indian Sugar Mills Association (ISMA) director, General Abinash Verma told Business Standard that he was apprehensive 20-25% of the total mills in India could bear the brunt of the prolonged crisis, which has engulfed all the major sugar producing states, including Uttar Pradesh, Maharashtra and Karnataka.
“Earlier, the sugar crisis was identified with UP only due to its high sugarcane prices, but this time, the problem exists everywhere and refuses to die down,” he added.
With banks not willing to advance working capital to private sector sugar mills fearing defaults and rise in non-performing assets, sugar mills are now closing down units.
During 2013-14, 509 sugar mills functioned in India, of which UP accounted for 119 units.
Now, already, four private sector mills belonging to top sugar companies Bajaj Hindusthan and Balrampur Chini, have shut operations in UP.
According to sources, more mills, both owned by big groups and standalone entities, could close units in the coming weeks if a turnaround does not happen before the next crushing season around November 2015.
The steep fall in sugar prices and accumulated arrears of around Rs 20,000 crore may affect the 2015-16 crushing season, according to the Business Standard.
Bajaj Hindusthan has already notified the UP government about the closure of its two units at Pratappur (Deoria) and Gangnauli (Saharanpur). Another unit, which the company operated under license from original owners, in Walterganj (Basti) has also been closed.
Now, Bajaj has 12 operational mills, down from 15 (including Walterganj unit). Its tonnes crushed per day (TCD) capacity of 1,36,000 is also down by around 21,000 TCD to about 1,15,000 TCD.
Earlier, Balrampur had closed down its Khalilabad unit citing difficult business conditions and losses. This brought down the number of its UP units to 10 from 11. With 11 operational units, Balrampur Chini mills had combined capacity of about 78,000 TCD.
Meanwhile, UP Sugar Mills Association (UPSMA) has also notified the state government it can't commit to purchase cane during the forthcoming 2015-16 crushing season.
In its letter dated July 21, UPSMA mentioned the mills were facing unprecedented financial crisis due to the steep fall in sugar prices and “totally unfavourable atmosphere for the business of sugar manufacturing…”
UPSMA claimed that the central loan package of Rs 6,000 crore was insufficient compared to the total arrears of Rs 20,000 crore. UPSMA has demanded cash subsidy of Rs 50/quintal from the state in addition to the sop of nearly Rs 20/quintal already announced by the state.