Chennai: Sugar industry apex body ISMA today said that about 25 percent of over 500 mills in the country may not be in a position to start crushing operations next marketing year starting October 2015 due to huge debt and banks' reluctance to provide fresh loan.
Seeking relief from the government to address the crisis, the Indian Sugar Mills Association (ISMA) sought that the cane producing states should adopt the Rangarajan panel's recommendation on the sugaracane pricing, which already been adopted in Maharashtra and Karnataka.
It also sought removal of 5 percent value-added tax imposed in Tamil Nadu, Telangana and Andhra Pradesh, and promotion of ethanol production for blending with petrol.
Addressing the media here, ISMA Director General Abinash Verma said: "The debt burden of the industry has tripled to Rs 36,601 crore in 2012-13 fiscal from Rs 11,443 crore in 2007-08. With the increase in debt burden, 20-25 per cent of the sugar mills may not be able to start crushing operations in the 2015-16 marketing year."
The sugar marketing year runs from October to September.
There are around 530 mills operating in 13 sugarcane growing states. Maharashtra and Uttar Pradesh are the two leading sugar producing states in the country.
Stating that many sugar companies were on the verge of collapsing due to piling up of inventories, he said that even some good companies have gone to BIFR (Board for Industrial and Financial Reconstruction) due to crisis.
"We want the government to rationalise the sugarcane pricing policy. Bringing the revenue sharing formula that Maharashtra and Karnataka governments have adopted. The five per cent VAT imposed by the state governments has made sugar industry uncompetitive", Verma said.
He also requested the sugarcane growing states to take positive steps in allowing sugar mills to produce more fuel ethanol for blending with petrol.
The ISMA chief said that the country has surplus sugar. "We are expecting to close this marketing year at 9 million tonnes of stock, blocking Rs 27,000 crore of working capital".
The Rangarajan panel in its report on decontrol of the sugar industry had suggested linking of cane price with the sugar prices. It recommended that cane price to farmers should be 70 percent of the realisation from sugar and by-products.
