In the last 24 hours, there has been a record sale of some 20 lakh quintals of sugar in Maharashtra, leading to speculations over distress sale happening in the market. According to traders, sugar mills in the state have sold some 40 lakh quintals of sugar in the last 10 days. Mills are reported to have received rates between R2,125 and R2,175 per tonne from traders for their sugar.

Market sources say the long dry spell in between the monsoons has led to trader sentiment wanting to make purchases and stock these while prices are at an all-time low. Till date some 40 lakh odd quintals are reported to have been sold in the market.

Senior officials from the Maharashtra State Cooperative Sugar Factories Federation said that the millers are disposing stocks in view of the need to make payments both to prevent Revenue Recovery Certificate (RRC) orders against mills and also make bank payments. The Maharashtra Sugar Commissionerate has already issued RRC orders against 9 mills and hearings are in progress against some 40 mills. Federation officials maintained that a sale of some 1 lakh tonne in the month is normal and is expected given the fact that the mills have to pay FRP (fair and remunerative price) dues to avoid legal action.

According to market sources, the delayed monsoon has led to an inventory build-up. Sugar prices this year have crashed by Rs 800 quintal in the current year. Millers have cleared R850 crore worth dues in the last 10 days. Some of them also have to make good the short margin requirements of their accounts with the Maharashtra State Cooperative Bank.

Meanwhile, none of the mills in the state have submitted documents to banks to avail of the soft loan package declared by the Centre, sources from the federation said. The stringent conditions put forth by the cooperative banks have made it difficult for mills to meet every condition, they added. Of the Rs 6,000-crore loan package, mills in the state are eligible for a loan of Rs 1,850 crore, mills could avail of Rs 1100 crore for a period of 5 years.

While officials from the Commissionerate say that most mills meet the 50% FRP payment criteria, millers maintain that they have not been able to pay up the required 50% FRP dues. Senior officials said the Department of Financial Services is yet to issue operational guidelines and, therefore, there is no clarity among banks on how to approach the loan issue.

Meanwhile, the MSCB has come out with its own draft guidelines that also require certificates from the Sugar Commissionerate stating that the payments have been made. Pramod Karnad, MD of the bank, however refuted this stating that a self declaration from the banks will suffice.