Chennai: Sugar mills in Tamil Nadu are facing financial crisis owing to the bank debt over Rs 4,500-5,000 crore. They may face insolvency as most cash is concentrated in listed companies. The farmers are likely to agitate against the mills which are yet to pay Rs 500 crore cane arrears.
The sugarcane output has been affected due to drought and mills are functioning to 30 per cent of their capacity. According to a representative of a leading sugar mill, 14 out of 25 sugar mills from the private sector are in trouble. The cane shortage has affected listed companies. Most companies having multiple mills were not able to operate all their mills to full to their capacity.
The industry representatives have stated that they have approached banks and requested to restructure the loan and help them to stay out of insolvency. Taking action against them is not in the interest of the banks, sugar mills or cane producing farmers, an industry representative said.
Sugar production of Tamil Nadu is reducing since 2011-12 from 24 lakh tonnes to 6.5 lakh tonnes during this crushing season.