Government may lease out some mills to private players
The Andhra Pradesh government has decided put the sick cooperative sugar mills in the state back on track. There are 11 such factories, of which only two have positive networth.
To understand the problems facing these units, the government has asked Apitco Limited, formerly Andhra Pradesh Industrial and Technical Consultancy Organisation Limited, to study their problems and submit a report along with recommendations to revive them.
The report is expected to be ready by this month end.
According to officials, the cooperative sugar mills are facing many problems. Capacity expansion is one such as some of the mills have become quite old. The latest cooperative sugar factory was set up as early as 1984. A few of them have outdated machinery while some others need capital infusion to keep the operations going.
Among the various options, the government is keen on leasing out a few cooperative sugar factories to private parties to improve their operations. It would also provide capital for modernising machinery in some factories.
The 11 cooperative sugar factories have a combined crushing capacity of 19,200 tonne. Only Chodavaram and Etikoppaka cooperative sugar mills showed positive networth of Rs 14.1 crore and Rs 6.92 crore respectively as on March 31, 2009. Others have negative networth ranging from Rs 5.55 crore to Rs 55.87 crore.
The combined liabilities of the cooperative sugar factories in the state, as on March 31, 2009, was estimated at Rs 313.84 crore, a portion of which has been cleared. Even as the crushing season this year ended recently, cooperative and private factories both have pending dues of Rs 125 crore to farmers.
According to an official, some factories do not have money to pay farmers for the cane they supplied during the crushing season.
Farmers, so far, have been paid Rs 1,100 crore by both cooperative and private sugar factories this season. Some of the mills paid from Rs 1,750-2,250 per tonne for sugarcane.
However, with the prices of sugar and molasses falling significantly in the recent few days, the factories were in a quandary over the payments to be paid to farmers, who have got the 'fair and remunerative’ price of Rs 1,350 per tonne for the produce.
The Apitco report would study the causes for the negative networth and suggest remedies including roping in private partners through lease agreements. There were indications that at least four of the 11 cooperative sugar factories would be leased out to private parties. The ownership would continue to remain with the government.
Only six factories last year reported profits. However, this was an improvement when compared with the corresponding period the previous year when only one cooperative factory posted profits.
The state, in all, has 38 cooperative, joint venture and private sugar factories of which 35 had gone for crushing this year. Three other remained closed during the year.
Sugar output in the state declined to 5.06 million quintal for the year 2009-10 (55.5 million tonne sugarcane crushed) as compared with 5.92 million quintal sugar produced last year (59.9 million tonne cane crushed).
