The Center issued a flexible plan to restructure loans to debt-laden sugar mills to clear the amounts owed by them from the Sugar Development Fund (SDF). The plan offers 24 months of deferment, which the government hopes will help it collect a large part of the dues. Up to 171 sugar mills are owed ₹3,052.78 crore to financial institutions as of October 31.
The remaining loan amount including principal and interest will be divided into equal monthly installments for a period of five years after the deferment period, according to the guidelines issued by the Ministry of Food. The guidelines said that while the penalty interest would be waived, mills would have to liquidate the principal and interest. The IFCI will be the nodal agency for private mills while the National Corporation for Cooperative Development (NCDC) has been designated to audit requests for cooperative mills.
A committee under the supervision of a joint minister of the Ministry of Food will select the beneficiaries of the program. “This is a new offering just for distressed mills to clear capital and interest. “I hope they will seize the opportunity and finish their outstanding performance,” said a Food Ministry official. An industry source said that not all of these 171 mills, which have defaulted on Sustainable Development Fund loans, do not necessarily need to be able to repay. The official added that they did not settle their loans for several reasons.
eligibility – eligibility
According to the restructuring formula, a sugar factory that has incurred “continuous cash losses for the past three financial years or if the factory’s net worth is negative” is eligible to apply for loan restructuring. The eligibility requirement also states that factories that have not closed down or have not stopped crushing sugarcane for more than two sugar seasons can apply for restructuring.
See also: Making India a food export powerhouse
Also, the factories that benefited from the restructuring of the loan facility in the past three years are not eligible to apply this time.
Of the $3,052.78 crore in SDF loans, Rs 1,627.79 crore was taken by the mills for modernization, Rs 1,039.99 crore for the cogeneration unit, Rs 260.69 crore for setting up ethanol plants and ₹1,24.31 crore for sugar cane development, the official said. No company in Uttar Pradesh has defaulted on the SDF loan that was disbursed to set up ethanol production plants.
Also, the total amount in default includes Rs.1,249.72 crore in principal and Rs.1,060.57 crore as interest while remaining Rs.742.48 crore as penalty.
“It is a positive development and means a lot to those mills which are not doing well due to various reasons and are unable to repay the bank loans along with the SDF loans,” said Abhinash Verma, Director General of the Indian Sugar Mills Association (ISMA). ), the main commercial body.
See also: Sugar production increased by 4% until the end of December at 115.55 thousand tons: ISMA
Verma said the industry has been petitioning the government for a long time asking to restructure SDF loans and waive or reduce interest for mills that are not working well for various reasons.
The interest fee on sustainable development fund loans is very nominal and is 2 percent lower compared to bank rates.
With input from BL Bengaluru office