The government has issued guidelines to restructure loans taken by sugar factories and provide eligible troubled factories with a two-year deferral period and a five-year repayment period. The rules relate to loans that mill owners receive from the Sugar Development Fund (SDF).
The total default due from SDF is approximately Rs 3,100 crore, including principal and interest, according to an official statement issued on Wednesday by the Food and Public Department.
The department has come out with union lines for “restructuring SDF loans under Section 26 of the SDF Rules 1983.”
She said the guidelines provided for “a two-year deferral and then five years of repayment.”
These guidelines will be uniformly applicable to SDF loans of all types of interests, including cooperatives, private limited companies and public limited companies.
The interest rate will be changed to the interest rate according to the prevailing bank rate on the date of approval of the rehabilitation package.
“These points will facilitate debt relief for troubled sugar mills,” the statement said.
A sugar factory that has been continuously incurring cash losses for the past three fiscal years or the factory’s net worth is negative, but the factory has not closed down or has not stopped crushing sugar cane for more than two sugar seasons, except for the current sugar season, is eligible to apply for restructuring, the statement said.