Scheme from Finance Department

The scheme is planned to be implemented to increase the crushing capacity of cooperative sugar factories in Maharashtra with a crushing capacity of 1250 MT per day to 2500 MT per day. Other by-product production projects are not implemented in cooperative sugar factories with a crushing capacity of 1250 MT per day. The amount of sugar, molasses and other by-products produced by such sugar factories is less than that of other factories. Also, their production cost (Conversion Cost) is high. While running such factories, due to old machinery of the factories, excess number of employees, insufficient working capital expenditure, and high interest to be paid on loans taken and other such reasons, the factories with a crushing capacity of 1250 MT per day have not been financially viable for the last many years. Therefore, the scheme has been proposed by the government.

General information:

• As per the cost of the crushing capacity project, equity capital has been fixed at 40% and loan from financial institution at 60%.
• Under this scheme, government equity capital will be provided to the eligible cooperative sugar factories to increase their crushing capacity from 1250 MT to 2500 MT per day.

Eligibility Conditions:

• Cooperative sugar factories with a current crushing capacity of 1250 MT per day will remain eligible for this scheme.
• The factory should not have any outstanding government share capital, government loan, government guaranteed loan from other financial institutions and government guarantee fee to the concerned cooperative sugar factory. The factory will be eligible for the said scheme after the outstanding share capital and other loans are fully repaid.
• Cooperative factories given to a private company/other organization to run on lease/collaboration/partnership basis will not be eligible for the scheme.
• The cooperative sugar factory will be eligible for the scheme only after it receives an IEM from the Central Government for capacity expansion.
• It will be mandatory for the respective cooperative sugar factory to pay the entire amount of FRP (Fair and Remunerative Price) of sugarcane to the respective farmer.

Repayment of financial assistance:

• Moratorium period is applicable for first two years from obtaining Govt Share Capital.
• The amount of government share capital provided to the factory will be recoverable in equal annual instalments (10% of the total share capital each year) over ten years starting from the third year.
• The amount of government share capital will remain interest free. However, if the repayment instalment is not paid by the concerned cooperative sugar factory on the due date, interest at the rate of 12% per annum will be charged on the outstanding amount.

Complete information about the scheme and terms and conditions is available on the Maharashtra Government website.

The Sugar Research (Contribution to Maharashtra Development Fund) Fund has been established under Government Resolution No. Sasaka - 3190/38927/CR-373/3-S dated December 13, 1990 for the fundamental facilities of the sugar industry in the state from the increased revenue from sugarcane purchase tax.

From this fund, grants are provided to the Vasantdada Sugar Research Institute for modernization of machinery of sugar factories, utilization of by-products, increase in per acre production capacity of sugarcane, conduct research to improve sugar yield, provide training to the employees of sugar factories, etc.

As per Government Resolution No. Sasaka 1008/Pr.No.58/25-S dated 12/03/2008, the Sugar Research (Contribution to Maharashtra Development Fund) fund has been cancelled and it has been decided to make the necessary funds for this purpose available from the budgetary provisions henceforth.

As per Government Resolution dated 17/06/2009, the Government has decided to provide a minimum research assistance of Rs. 500 lakhs per year to the Institute from the financial year 2009-10 and if the crushing exceeds 500 lakh MT, then the Government has decided to increase Rs. 1/- per ton above this crushing provision. Also, as per Government Resolution dated 18/08/2009, the rules have been fixed for the utilization of the grant to be made available to the Institute.

In the last five years, the following grants have been distributed to Vasantdada Sugar Research Institute, Pune.

Scheme to convert the initial 5 years of sugarcane purchase tax into interest-free loans for cooperative sugar factories that have expanded their crushing capacity under Government Resolution No. Sasaka-1089/1011/CR-138/89/3S dated 23 January 1990 and Government Resolution No. Sam dated 10 June 1992.

Government letter no. Ukhak 1108/750/P.Kr. 19/13-C dated 26 June 2008 also applicable to new cooperative sugar factories.

After the implementation of GST in the country in June 2017, there will be no proposals for conversion of sugarcane purchase tax into interest-free loans in the subsequent period. However, action is expected on the sugarcane purchase tax proposal of cooperative sugar factories submitted to the government earlier.

Under this scheme, the following subsidies have been distributed to sugar factories in the last five years.

Demand No. V.-5, 6425 - Loans for Cooperatives, (108) Loans to other Cooperative Societies, (03) Cooperative Sugar Factories, (03) (11) Loans as Margin for Working Capital to Cooperative Sugar Factories (RSVNI) 55, Loans and Advances - (64250654).

To provide financial assistance to the cooperative sugar factories which are in financial difficulty and are not eligible for direct funding from National Cooperative Development Corporation (NCDC), the government has issued a Government Resolution on 04/05/2023 and through it, a decision has been taken to provide margin money loan for working capital through the National Cooperative Development Corporation (NCDC) through the Maharashtra Government (Routed through State Government). Under this scheme, margin money loan of Rs. 549.54 crore has been approved and disbursed to the following 06 cooperative sugar factories as per the government decision dated 03/08/2023.