After Govt stands guarantor for Rs 20-crore credit
The Aska Cooperative Sugar Industries ltd (ACSI), which is already reeling under financial strains, got a new lease of life after the State Government decided to stand guarantee for a loan to meet its working capital requirements.
With an aim to restructure the ailing unit, the State Cabinet at its last meeting extended its support as a guarantor to ACSI’s Rs 20-crore credit requirement, thanks to the initiative taken by the Department of Cooperation. looking at the bleak future of the leading cooperative institution, Cooperation Secretary Bishnupada Sethi initiated a move to help out the industry.
Notably, in the current season, the industry has crushed sugarcane of 52,685 MT valued at Rs 12.33 crore by February last. It has so far produced about 34,265 quintal of sugar and has an inventory of 44,422 quintal, including previous year’s 10,157 quintal valued at about Rs 13.33 crore.
ACSI estimates that the total sugar stock will reach up to 96,422 MT by end of the crushing season valued at Rs 28.93 crore against which the total cane payment to farmers will be Rs 28 crore, resulting in an estimated working capital requirement of Rs 20 crore.
Due to non-availability of the required working capital, the ACSI has failed to pay the cane dues of the farmers leading to resentment among the farmers for delay in cane price payment.
Things went sour for the ACSI, which functions through a line of credit from the State Bank of India and subsequently, from the Aska Cooperative Central Bank ltd, when its crushing operations came to a halt for 45 days after the accidental collapse of its molasses tanks in 2011-12.
Subsequently, the ACSI went on to suffer a loss of around Rs10 crore during the year leaving it with a negative net worth of Rs 7.7 crore. Financing dried up as the ACSI stood to lose its credit worthiness on account of its negative net worth. Even though the Aska Cooperative Central Bank has agreed to provide cash credit accommodation of Rs 20 crore for the current crushing season, as per the existing policy of the NABARD, the regulator of the bank, financing is not permissible unless a guarantee is provided by the State Government in favour of the sugar mill. Set up with a paid-up capital of Rs 4.06 crores, the ACSI is one of the oldest sugar industries in the country in the cooperative sector and has been facilitating sugarcane cultivation leading to diversification from the traditional paddy crop to improve the economic condition of farmers of Ganjam and Gajapati districts.
Amidst a dire need of financial assistance, the recent Cabinet decision would help the ACSI to tide over the current woes and stay on course to fulfill its cause.