Chennai: The Tamil Nadu sugar mills are in dire straits. Nearly 14 of the 25 private sector mills in the State will not be in a position to start operations in the 2019-20 sugar season (October-September) owing to shortage of sugarcane and a severe liquidity crunch.
What the sector requires is a ‘deep restructure’ involving not just bank loans, but Sugar Development Fund and SEFASU (a central government scheme for supporting the sugar sector), as well, say sources.
As the current 2018-19 season is nearing its end, Tamil Nadu has produced 8.83 lakh tonnes sugar, which is just one-third of its established capacity. This includes cooperative mills’ output of 2.77 lt (1.93 lt). Sugarcane acreages are also discouraging with the total registration in the private sector at 1.32 lakh acres (1.52 lakh acres) as of August end for the coming season.
According to South Indian Sugar Mills Association (SISMA), apart from the Centre, the State government should also have to extend sops to the sector, which is cash-strapped due to four years of drought. The industry urgently needs a helping hand, it was pointed out. Further, measures to resolve the NPA issue will also have to be explored.
A special package will have to be formulated as due to years of adverse conditions, sugar companies have not met the basic RP4 credit rating, which is just above sub-investment grade.
“Sugar mills in Tamil Nadu need a larger support package. The mills in Tamil Nadu were already operating below capacity. The units here might still not be able to export. Tamil Nadu mills need incentives without linking them to exports,” source in the industry said.
