Tarun Sawhney, VC and MD, Triveni Engineering says since the sugar industry is going through crisis, even banks have refused to expand their relationships with the sector.
"Given the financial difficulties that the industry is facing, given the very stringent problems with the cash flow across the industry, banks are unwilling to look at further lending to the sugar industry," he told CNBC-TV18 in an interview.
According to Sawhney, the UP sugar industry is in a devastating situation at this point in time with the losses for the last fiscal year crossing Rs 3,000 crore, the highest in history.
The industry is lobbying government to review the cane pricing. It wants the UP government to introduce the revenue sharing model as per the Rangarajan committee recommendations.
Below is the verbatim transcript of Tarun Sawhney’s interview on CNBC-TV18
Q: There are reports and discussions about how the UP sugar mills are in dire state at this point in time. What is your view on the same and what measure could possibly help?
A: The UP sugar industry is in a devastating situation at this point in time. The losses for the last fiscal year crossed Rs 3,000 crore which is a staggering amount, the highest in our history. Over the last three years, we had losses that have catapulted close to Rs 4,500-5,000 crore for the UP industry as a whole. So it is a dire situation that calls for immediate redressal and it is important that all stake holders take account of this in the very short-term.
Q: In the next three months are you expecting any steps, any conversation that you have had with government officials, which may alleviate the condition?
A: We are having conversations on multiple levels. We have to talk to both the state and the central government. The conversation with the state government is about the upcoming years, cane price, the fact that our paying capacity is below Rs 240 with a falling sugar price. We have written to them, had several conversations with them and I am cautiously optimistic that they are taking this into account, in setting cane prices for the following year.
Our request has always been the adoption of the Rangarajan Committee formula and I hope they will follow it. With the central government, the hope is that we need to export 2.5 million tonnes of sugar and that export will only happen from the coastal states. There is scope for some subsidies to be offered to producers to export their raw sugar in the coming season.
Q: How is the situation with banks in such a scenario then, is it difficult to acquire working capital from banks?
A: It is very difficult. All the leading banks have written to the industry, the UP industry, the millers and have said that they are not looking at expanding relationships with the sugar sector. Given the financial difficulties that we are in, given the very stringent problems that we are having with cash flow across the industry, they are unwilling to look at further lending to our industry.