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Saturday, September 5, 2009
Mehul: What are the problems and difficulties faced by sugar industry, particularly in Maharashtra?
Posted by Tip at 6:27 AMPrakash: 92(Yc, of the sugar industry in Maharashtra belongs to the category of cooperatives, and the cooperative sector due to its peculiar nature, is always saddled with financial problems. To start with, they require pre-seasonal loan, which is a clean cash credit for
meeting the expenses to prepare for the season. Here the financial institutes insist on government guarantee which invariably gets delayed. As a result, the pre seasonal loan, when not made available in time, delays the maintenance and other works, thereby resulting in delayed commencement of crushing season. Secondly, the financing bank releases advance against pledge of stocks for which the benchmark price is Rs 1,750 per quintal of which 85(K, is released upfront on pledge of stock. Thus, a mere amount of Rs 1487.50 per quintal is made available when the sugar bag is fetching Rs 2,250. This tantamount to almost Rs 762.50 not coming to the mill's hand, but getting adjusted against the bank loan recoveries. I do not see any major hurdles in starting the crushing season of Maharashtra around mid October 2009.
meeting the expenses to prepare for the season. Here the financial institutes insist on government guarantee which invariably gets delayed. As a result, the pre seasonal loan, when not made available in time, delays the maintenance and other works, thereby resulting in delayed commencement of crushing season. Secondly, the financing bank releases advance against pledge of stocks for which the benchmark price is Rs 1,750 per quintal of which 85(K, is released upfront on pledge of stock. Thus, a mere amount of Rs 1487.50 per quintal is made available when the sugar bag is fetching Rs 2,250. This tantamount to almost Rs 762.50 not coming to the mill's hand, but getting adjusted against the bank loan recoveries. I do not see any major hurdles in starting the crushing season of Maharashtra around mid October 2009.
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