Maharashtra State Cooperative Bank (MSCB) has sanctioned working capital of R3,135 crore to 30-odd sugar factories in the state with positive net worth for the season of 2014-15. The bank has stopped providing working capital to factories with negative net worth, Pramod Karnad, MD, said. Last year, the bank had sanctioned R3,200 crore to sugar factories in the state.

“Working capital loans are usually given for the period from November 1, 2014, to October 31, 2015. The pledge limit is around R3,135 crore and as production begins, the mills will begin withdrawals as against production,” Karnad said. Earlier, there were around 11 factories with negative net worth but that was in the 2011-12 period. Thereafter, the bank has not been providing working capital to such mills, he said.

The crushing season for mills in Maharashtra has begun with 28-odd mills commencing operations, while the rest are yet to start the same, following demands made by farmer bodies for higher first cane payment installments.

Around 14 sugar cooperatives and 14 private mills in the state have crushed around 11.02 lakh tonne, resulting in production of 8 lakh quintals of sugar, senior officials of the Maharashtra State Cooperative Sugar Factories Federation said. This time around, 96-100 sugar cooperatives and 65 private mills are expected to crush cane in the state.

ISMA has estimated sugar production from Maharashtra at around 93 lakh tonne in the 2014-15 season, about 20% higher than last year’s 77.11 lakh tonne. The state’s sugar production could rise by 20% to 9.3 million tonne in 2014-15.

RBI and National Bank for Agriculture and Rural Development have said that no working capital should be advanced to factories with negative net worth, Karnad pointed out. Some factories with negative net worth have approached private banks and district central cooperative banks for the working loan, he added. District cooperative banks will also fund mills in their respective districts, he explained.

Earlier this year, the bank had begun the process of selling about 12 mills. The bank, main lender to co-operative institutes in the state, sold a sick sugar co-operative, Ahmednagar Taluka Sahakari Sakhar Karkhana, last month, to recover its dues. It had floated tenders to give 13 sick co-operative mills on lease. Some cotton mills are being put up for sale as well and work is in progress, according to Karnad.

The state of sugar

* Last year, the bank had sanctioned R3,200 crore to sugar factories in the state

* The crushing season for mills in Maharashtra has begun with 28-odd mills commencing operations. Around 14 sugar cooperatives and 14 private mills have crushed around 11.02 lakh tonne, resulting in production of 8 lakh quintals of sugar

* ISMA has estimated sugar production from Maharashtra at around 93 lakh tonne in the 2014-15 season, about 20% higher than last year’s 77.11 lakh tonne