Kolhapur: For the first time, the Maharashtra government has framed rules that allow it to dissolve the board of directors of a cooperative sugar mill if it delays loan repayment to the National Cooperative Development Corporation (NCDC) by more than a month. An administrator will then be appointed to run the mill, reported The Times of India.
The NCDC, funded by the Union Ministry of Cooperation, provides loans through state governments, which act as guarantors. In the last financial year, 46 cooperative sugar mills in Maharashtra received 70 “margin money” loans worth ₹7,600 crore to meet working capital needs.
On March 3, the state government set up a committee under the sugar commissioner in Pune to study loan conditions. Based on its recommendations submitted on May 20, the new rules were notified in June.
Millers have expressed unease over the tough measures. They agree directors elected by farmer shareholders for a five-year term should be held responsible for repayment, but argue that cutting short their tenure will hurt the cooperative spirit.
Sharad Lad, chairman of Kranti Sugars in Sangli district, said the government should review the clause. “The industry is under central regulation. Mills can recover costs only if sugar prices keep pace with rising cane prices. Ethanol pricing also needs to match production costs,” he said.
Ganpatrao Patil, chairman of Shirol’s Dutta Factory, pointed to delays in cash flow. “We pay farmers upfront, but mills earn revenue only when sugar is gradually sold. Recovery takes months, so repayment timelines should be flexible,” he explained.
Experts say the strict measures are rooted in past experiences, particularly the Maharashtra State Cooperative Bank loan scandal, in which mills linked to politicians were given loans without proper collateral. Many defaulted and were later auctioned.
The new policy requires mill boards to provide undertakings for repayment, while each director must submit a separate commitment. Managing directors (MDs) are also directly accountable. Under clause 33, the MD must file a notarised affidavit on a ₹500 stamp paper, reporting any wrongdoing by the board to the sugar commissioner and the state government.
Sugar industry analyst Vijay Autade said the rules are aimed at instilling discipline. “This is to ensure mills handle funds responsibly. Some mills will inevitably default, but the fear of losing their position could stop mismanagement, which otherwise harms not just the factories but also farmers,” he said.
