Govt offers one-time settlement option to sugar mills for SDF loans

To provide relief to sugar mills, the government has come out with revised guidelines for loans taken under the Sugar Development Fund (SDF), giving factories option of debt restructuring and also a one-time settlement.

As on January 31, sugar mills have an outstanding loans of Rs 3,730.15 crore under different schemes, of which, penal interest is about Rs 939.87 crore, according to official data.

Issuing the revised operational guidelines for restructuring of SDF loans on February 28, the food ministry said,

"Restructuring of the SDF loans would be in the form of capitalisation of balance interest, along with principle and re-schedulement," it said.

In case of restructuring, the penal interest will be waived off, it said.

Under the restructuring option, the government has offered a moratorium period of 24 months for payment of balance principal amount and interest amount. However, normal interest will continue to accrue during the moratorium period.

"Balance loan amount, including principal and interest, will be divided into equal monthly installments for five years after the moratorium period," the guidelines said.

In case of one-time settlements, the government said if sugar mills clear their dues within six months, the penal interest will be waived off.

However, the ministry said, only sugar factories that have been incurring cash losses continuously for the last three financial years, or their net worth is negative, will be considered for the option.

Moreover, sugar factories should not stop crushing or remain closed for more than two sugar seasons, excluding the current one.

Hailing the decision, the National Federation of Cooperative Sugar Factories (NFCSF) President Harshvardhan Patil said, "Both the above schemes will bring great relief to the co-operative factories across the country. Along with this, they will be eligible to get the benefit of government schemes..."

The revised guidelines will provide big relief to 33 cooperative sugar mills across the country by restructuring outstanding loan amounts of Rs 1,378 crore.

Of the total outstanding loan of these cooperative mills, the principal amount is Rs 566.83 crore and the interest on the outstanding loan is Rs 191.79 crore while the additional interest on it is Rs 619.43 crore, he said in a statement.

Among the states involved in the total outstanding loans, Maharashtra has Rs 861.23 crore, Uttar Pradesh Rs 202.48 crore, Tamil Nadu Rs 113.15 crore, Karnataka Rs 103.20 crore, Gujarat Rs 39.37 crore and balance in the rest of the states, including Andhra Pradesh, and Odisha, he added.