The model used by Maharashtra to keep sick sugar mills afloat has caught the attention of other states. A high-level team from Andhra Pradesh was recently in Pune to study the manner in which these mills were turned around by the government.

The visiting team was headed by L Murali, director-sugar and cane commissioner, Andhra Pradesh.

According to Vipin Sharma, sugar commissioner, Maharashtra, the team has met mill owners as well as government officials to look at different models under which these sick mills were either leased out or sold. So far, 39 mills in Maharashtra have been sold by banks under the Sarfaesi Act, while seven have been leased out and another nine taken up in collaboration.

At least 10 cooperative sugar units in Andhra Pradesh are struggling to stay afloat with problems ranging from capacity expansion to outdated machinery. The latest cooperative sugar factory was set up as early as 1984. A few of them have outdated machinery while others need capital infusion to keep the operations going. Among various options, the Andhra Pradesh government has been keen on leasing out a few cooperative sugar factories to private parties. Saddled with mounting production cost and lower recovery of sugar from a few available varieties of cane, sugar manufacturing industries in Andhra Pradesh and Telangana have been looking to the Central and state governments for immediate help.

In Maharashtra, earlier this year, MSC Bank began the process of selling 12 sugar mills. The bank, the main lender to cooperative institutes in the state, sold a sick sugar cooperative, Ahmednagar Taluka Sahakari Sakhar Karkhana, to recover its dues. It floated tenders to give 13 sick cooperative sugar mills on lease. Since 2006, as many as 26 cooperative sugar factories under liquidation had been taken over by private parties. The Delhi-based Dalmia Bharat Sugar Industries had recently acquired Ninaidevi SSK, a sick sugar cooperative in Maharashtra’s Sangli district, for Rs 24.32 crore through auction.