Indian sugar mill defaults on bank loans, others may follow

jueves 9 de octubre de 2014 05:00 GYT
 

* State-run banks refuse to give fresh loans to mills

* Higher cane price makes producing sugar unviable

* Mills to suspend crushing unless govt trims cane price

By Rajendra Jadhav

MUMBAI, Oct 9 (Reuters) - Plunging sugar prices have forced at least one Indian sugar mill to default on bank loans and could drive others to do the same, the latest sign of the heavy toll a four-year-old supply glut in the country is taking on producers of the sweetener.

One of the country's largest sugar mills, Mawana Sugars Ltd , has defaulted on 2.5 billion rupees ($40 million) of outstanding loans from a consortium of lenders, according to an official from the company.

"We are losing 5-6 rupees per kg of sugar we produce. It is not viable to operate mills with the current pricing of sugar and cane," said Rajendra Khanna, a director at the company which posted a 245.2-million rupee loss in the three months ending in June.

"We have defaulted on term loan due to the disparity in cane and sugar prices," Khanna told Reuters by telephone.

Squeezed margins in sugar mills internationally, caused by depressed prices after years of global over-supply, are hastening closures and consolidation in the sector around the world.   Continuación...