The National Cooperative Sugar Mill (NCSM), spread over 137.68 acres of land at P. Mettupatti near Alanganallur here, began commercial operations on September 4, 1966, with high hopes. But its financial performance has declined with losses increasing steadily from Rs.134.80 crore in 2006-07 to Rs.230.62 crore in 2012-13.
N. Palanisami, one of the 17 Directors of the mill and president of the Tamil Nadu Sugarcane Farmers’ Association, alleges that political interference, corruption, administrative irregularities and official connivance with registered farmers in diverting produce to private sugar mills are the reasons for the poor financial status of the mill.
He suggests that the State Government should convert the loss amount into share capital and also subsidise the interest for bank loans taken by the mill to improve the situation.
“Though the volume of sugarcane crushed keeps varying every year, depending on the monsoon, it can still make profits if an effective administration is in place,” he adds.
But M. Sembukutty, Managing Director of the NCSM, cites steep increase in production cost, conversion of wetlands into residential plots and consequent reduction in area used for sugarcane cultivation, decrease in sugarcane cultivation due to lack of rains, drop in prices of molasses and increased interest on bank loans as reasons for the losses.
He points out that the price paid to farmers for every tonne of cane has been increased from Rs.1,014 in 2005-06 to Rs.2,339.50 in 2012-13.
Though the minimum support price was only Rs.1,789.50 last year, the State Government has recommended an additional Rs.550. Further, from 2006-07, the mill has been paying the transport cost for cane supplied by the farmers.
He hopes that the loss will decline if a 15 MW in-house power plant to generate electricity from bagasse (sugarcane waste) commences operations by June 2014. The mill will sell excess power to the Tamil Nadu Generation and Distribution Corporation.
“In 2010, the State had allocated Rs.84.44 crore for establishing the power plant and Rs.39.94 crore for modernising the mill. Around 80 per cent of the work on the power plant is over. From next year, it can generate 15 MW of electricity every hour, of which only 5 MW would be used by us. The rest will be sold to TANGEDCO,” he says.
Steps have been taken to curb the loss by establishing an in-house diesel filling station and a vermicompost production facility.
The mill has been earning around Rs.4 lakh every year through sale of diesel to vehicles transporting cane and vermicompost to farmers, he adds.