Liquidity crunch impacts sugar mills operation

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Pune: Sugar mills are going under financial stress as they are facing a liquidity crunch. The opening balance of 107 lakh tonne (lt) sugar stocks piled in warehouses at the beginning of the crushing season have blocked most of the working capital of the sugar mills which amounts to Rs 35,000 crore. The mills are likely to increase their cash flow in May-June from sugar exports.

The officials of Indian Sugar Mill Association (ISMA) have stated that around 85-90% of the revenue generated by the sugar mills is used to clear cane bills to farmers which amounts to Rs 93,000-94,000 crore.

As per news report published in Thehindubusinessline.com, Abinash Verma, DG, ISMA said, “The period up to April, 2021 is more of buying sugarcane and less of sugar sales, which is reducing available cash flows to mills to enable them to pay cane prices to farmers as also repayment of bank loans. Cash flow from sugar exports will only come mostly from May-June 2021, which means sugar mills will continue to face liquidity crunch.”

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