Co-op sugar mills seek restructure of soft loans to factories in Maharashtra

The National Federation of Cooperative Sugar Factories (NFCSF) is seeking restructuring of the soft loans given to factories in past five years. The sugar industry is in deep financial distress and needs support, Prakash Naiknavare, managing director, NFCSF said to Financial Express. He also hinted at the possibility of the Centre raising the MSP of sugar to Rs.3,300 per quintal soon.

Last season, the Maharashtra State Cooperative Bank (MSC) had given a bridge loan at the rate of 14 per cent to factories. A similar loan would be useful for this season as well, he maintained.

Maharashtra has not been able to take advantage of the Rs 15,000-crore loan scheme of the government given for sugar mills since the balance sheets of mills are not healthy.

The government is yet to pay the pending dues of the export subsidy given on sugar for the last season of 2018-19 while the FRP (Fair and Remunerative Price) for the last season is pending to the tune of Rs 9,000 crore. The season of 2019-20 is a corrective season while the previous two seasons were seasons of excess production.

A meeting has been called by top officials of Nabard soon to discuss issues related to the industry which includes restructuring of loans of the factories and ethanol production.

Globally, there has been excess sugar production in the last couple of years and the production is 61 lakh tonne lower this season. This has had an impact on the sugar prices which are rising and that is good for farmers. 

Sugar recovery last year was 10.47 per cent and this year it has come down to 9.81 per cent which has had an impact on production. Maharashtra, Karnataka and Gujarat have reported lower production this season. Maharashtra is expected to produce 55 lakh tonnes, Gujarat around 10-12 lakh tonnes and Karnataka even lesser production. Of the 24 lakh tonne of contracts for export, around 15-16 lakh tonne is from Uttar Pradesh and Maharashtra is lagging in its target.

Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at

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