The sugarcane farmers of Uttar Pradesh supplying cane to 14 sugar mills of Bajaj Hindusthan Sugar Limited, (BHSL) are faced with an uncertain situation as the lenders have declared India’s largest sugar company a non-performing asset (NPA) even as its gross value stood at Rs 4,814 crore at the end of March earlier this year.
The company owes as much as Rs 2,860 crore to sugarcane farmers of the state.
Sources in the industry and farming circles say that the lenders must opt for change in management and asset sales via the insolvency and bankruptcy process to protect the interests of all stakeholders.
According to Bajaj Hindusthan sources, restructuring of the outstanding loans was in progress as per the RBI circular of June 2019. The previous two restructuring schemes aimed at salvaging the company came a cropper.
BHSL was declared an NPA as it defaulted on payments related to debt of Rs 4,814 crore. As on July 5, the company paid only 35% of its total cane dues of Rs 4,398 crore to farmers who supplied cane to its 14 mills spread across the state in Lakhimpur, Gonda, Muzaffarnagar and east UP districts.
In the just-concluded sugar season 2021-22, as many as 120 sugar mills in the state purchased cane worth Rs 35,198 crore from farmers. As on July 11, the outstanding dues to farmers by all mills in the state stood at Rs 7,000 crore.
If BHSL fails to conduct normal cane crushing operations in the next season, it will lead to a crisis situation for the sugarcane farmers.
“The farmers will find it difficult to find an alternative market for their agricultural produce if BHSL fails to resume normal operations from November,” a farmer leader said.
Sugarcane Development Minister Chaudhary Lakshmi Naryan said that the government was aware of the issue and that the interests of the farmers would be protected. He said BHSL would operate in the next cane crushing season commencing from November.
Farmer leader VM Singh said the state government could not ensure that the company adhered to the 14-day payment cycle mandated under the Sugarcane Control Act. BHSL and a few other mills kept farmers waiting for even 12-14 months for the payments to be cleared, even after the payment schedule was tightened, he added.
According to the company’s quarterly disclosure on loans to the SEBI as on June 30, the total financial indebtedness of the company, including short-term and long-term debt, stands at Rs 4,810 crore. Out of the 12 banks that have an exposure to the company, the State Bank of India has the highest exposure of Rs 1,204 crore, followed by Punjab National Bank at Rs 1,089, Indian Bank at Rs 511 crore, Central Bank at Rs 388 crore, Bank of Maharashtra at Rs 365 crore, IDBI Bank at Rs 347 crore.
Uttar Pradesh Cane Commissioner Sanjay Bhoosreddy said the government was monitoring the situation closely. “We are aware of the matter and will take appropriate decision as the situation unfolds,” he said.
As per the BHSL website, the sugar company describes itself as number one sugar and ethanol manufacturing company with a daily sugarcane crushing capacity of 1, 36 lakh MT per day and distillery capacity of 8 lakh litres per day.