Sugar Development Fund Loan Restructuring Center


The Center issued a flexible loan restructuring plan for the debt-ridden sugar factories to wipe out their outstanding Sugar Development Fund (SDF). The plan provides for a 24-month moratorium which the government hopes will help it collect a significant portion of contributions. As of October 31, 171 sugar factories owed 3052.78 crore yen to financial institutions.

The loan balance amount, including principal and interest, will be divided into equal monthly installments for five years after the moratorium period, according to guidelines issued by the Food Ministry. While criminal interest will be removed, factories will have to clear principal and interest, according to the guidelines. IFCI will be the nodal agency for private factories while the National Cooperative Development Corporation (NCDC) is appointed to review applications from cooperative factories.

A committee under a joint secretary of the Ministry of Food will select the beneficiaries of the program. “This is a new offer only for struggling factories to clear both principal and interest. I hope they will seize the opportunity and erase their expectations, ”said an official from the Food Ministry. Not all of those 171 factories, which have defaulted on SDF loans, lack payment capacity, an industry source said. For several reasons, they don’t pay off their loans, the official added.


Under the restructuring formula, a sugar mill that experiences “continuous cash losses over the past three years or if the mill’s equity is negative” is eligible to apply for a loan restructuring. The eligibility condition also stipulates that factories that have not closed or have not stopped crushing cane for more than two sugar seasons can apply for restructuring.

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Likewise, factories that have benefited from the restructuring of the loan facility over the past three years are not eligible for this time.

Of the 3,052.78 crore of SDF loan defaults, 1,627.79 crore was taken by the factories for modernization, 1,039.99 crore for the cogeneration unit, 260.69 for the installation of ‘ethanol plants and 1,24.31 crore for cane development, the official said. Not a single company in Uttar Pradesh has defaulted on the SDF loan disbursed to set up ethanol plants.

In addition, the total overdue amount includes 1,249.72 yen crore in principal and 1,060.57 yen crore in interest, while remaining 742.48 yen in penalty.

“Positive development”

“This is a positive development and means a lot to the factories which are not doing well for various reasons and which are unable to repay bank loans and with SDF loans,” said Abinash Verma, general manager of Indian Sugar Mills Association (ISMA), the umbrella trade body.

See also: Sugar production up 4% until the end of December to 115.55 lakh tonnes: ISMA

For a long time, the industry has asked the government to restructure SDF loans and waive or reduce interest on factories that are not doing well for various reasons, Verma said.

Interest charges for SDF loans are very low and 2 percent lower than bank rates.

With contributions from BL Bengaluru Bureau

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