R. Balaji

Rehab package to increase cane-crushing capacity, modernise facilities

Chennai , Nov. 24

Cooperative sugar mills in Tamil Nadu hope to increase capacity utilisation, set up ethanol manufacturing facilities and upgrade systems to improve performance, according to officials.

The buoyancy in the last two years in sugar industry has rubbed off on the cooperative sector. In 2005-06, seven mills reported profits against four in the previous year. The officials hope to sustain the trend for the current season and step up production and productivity.

Also, in the pipeline is a rehabilitation package for the 19 mills in the cooperative and public sectors which together have an accumulated loss of over Rs 1,000 crore, they said. Two of the cooperative mills are shutdown due to financial constraints.

For the 2006-07 season, the cooperative mills have set a capacity utilisation target of more than 100 per cent to improve profitability. They plan to crush 77.5 lakh tonnes of sugarcane to produce 7.68 lakh tonnes of sugar. In 2005-06, they crushed 62.68 lakh tonnes and produced 5.87 lakh tonnes of sugar.

Also, the two distilleries in Salem Cooperative Sugar Mills and Amaravathy Cooperative Sugar Mills will soon start producing ethanol for supply to the ethanol-blended petrol programme. By July 2007, they will be in production with a capacity of about 30 kilolitres a day.

During the year, the mills hope to bring under drip irrigation over 30,000 acres in their command areas. The total area under the cooperative sugar mills is about 2.5 lakh acres. The area under drip irrigation will be expanded in the coming years under a subsidy programme backed by the Central and State Governments.

The authorities are also computerising facilities to enable online monitoring of operations to improve efficiencies. Over Rs 50-lakh investments will be made, with Rs 35 lakh for hardware, for which orders have been given to Elcot, the officials said.

A rehabilitation package is on the anvil to increase sugarcane-crushing capacity, modernise the facilities, set up cogeneration, distilleries and ethanol production facilities.

According to the officials, a sugar mill needs to have a minimum capacity to crush about 3,500 tonnes sugarcane a day to be viable. The average capacity of the mills in the cooperative sector is less than 2,000 tonnes.

The officials declined to give the details of the package under preparation. But they said it would address the need to increase capacity and financial rehabilitation by converting loans to equity, bringing down interest and cleaning up the balance sheet.

The mills will seek a National Cooperative Development Corporation loan for the modernisation and expansion programme and a soft loan from the Sugar Development Fund for the financial rehabilitation package. Once approved the package will be implemented in phases with priority on the most viable mills.

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