The Maharashtra government expects sugar mills to cough up fair and remunerative price (FRP) payment dues to the tune of R300 crore by the end of this week. Vipin Sharma, Maharashtra sugar commissioner, told FE that factories have sought time from a week to 10 days to meet at least some of the payment requirement.

Around 26 mills in Maharashtra with a shortfall in payments of more than R400 per tonne for cane crushed until February 15 have been called for hearings at the Sugar Commissionerate. The next round of hearings is likely to be held for mills with a shortfall in payments of more than R300 per tonne for cane crushed till March 31, in the first week of April, top officials said.

According to Sharma, hearings of the mills should be completed in a couple of days following which a fresh round of hearings will be held. This time, hearings will be held for those mills with a shortfall of cane payment of more than R300 per tonne for cane crushed till March 31. Till date, the arrears have mounted up to R2,600 crore and an additional R300 crore is expected to be coming in by the end of this week, he said.

The overall payment comes up to R10,400 crore. Sharma said mills in the state have paid up around 80% of the arrears and the effort is to ensure that the gap in payments is reduced further from more than R400 per tonne to below R300 per tonne.

The state this year is expected to crush 875 lakh tonne of cane to produce around 100 lakh tonne of sugar. According to Isma, Maharashtra sugar mills have produced 84.07 lakh tonne sugar as against 64.10 lakh tonne last year up to  March 15, 2014.  As compared to 111 sugar mills which were still crushing sugarcane last season, 170 sugar mills continue to crush sugarcane in this season now.

Although the government had issued revenue recovery orders against three mills in the state, none of the mills in the state are in the same situation as Uttar Pradesh where Mawana Sugar is reported to have closed down all its mills. Mills in the state have been making more FRP payments on the higher side for years and this is the first time that mills in the state have been struglling to make payments, senior officials said.