Maharashtra sugar mills set for revival

As many as 19 closed sugar mills are likely to see a new lease of life in Maharashtra in the forthcoming sugar year (October 2007-September 2008).

The purpose behind reviving the mills is to utilise the standing crop. Although the state government has compensated 52,400 hectares of the standing crop at Rs 25,000 a hectare, accumulating to Rs 131 crore, the disposal of the crop is a big worry for farmers and the government.

Sugar mills in Maharashtra have been instructed to start crushing on the first day of the season, October 1. The state government has permitted the mills to utilise the standing crop for non-sugar production such as jaggery and khandsari.

The mills have already been tendered to existing state-run corporations and private players in equal proportions. Private players have been asked to revive the mills in areas where corporations have not shown interest.

The mills have been leased out for 5 to 12 years on a case-to-case basis at an average rate of Rs 2.5 crore a year.

Accumulatively, the largest sugar-producing state is likely to see a fresh investment of Rs 100 crore next year.

There are 182 sugar mills registered with the Maharashtra government, of which 142 came up during the last crushing season (2006-07), with a record total sugar production of 91 lakh tonnes. These mills crushed a record 798 lakh tonnes of cane last year, breaking the previous record of 576 lakh tonnes in 2000-01, when they accumulatively produced 67 lakh tonnes of sugar.

Meanwhile, adding to farmers' worries, Maharashtra expects to break all previous records next season with an estimated crushing of 844 lakh tonnes of cane and sugar production of 97 lakh tonnes.

"Mills in Maharashtra have recorded a short margin of Rs 600 crore because of record-low sugar prices and high production cost. These mills, however, hope for a revival in fortunes," said Prakash Naiknavare, managing director, Maharashtra State Cooperative Sugar Factories Federation.

A short margin is the difference between the amount banks release to sugar mills before the season starts and the total value of the production.

There was no differential treatment between private players and corporations in Maharashtra and both faced the same problems. After all, sugar price and release order formula were equal for both, he added.