Sugar

राष्ट्रीय सहकारी विकास निगम

NATIONAL COOPERATIVE DEVELOPMENT CORPORATION

SUGAR

I) Description of Scheme

NCDC has been promoting establishment and development of sugar factories in the co-operative sector so as to help them in achieving the primary objective of ensuring remunerative prices to the farmers for sugarcane by providing the following assistance:

i) Investment loan assistance to the State Governments to supplement their resources for equity participation in new co-operative sugar mills.

ii) Term loan assistance to the existing co-operative sugar mills for modernisation/ expansion including setting up of effluent treatment plants for pollution control.

iii) Term loan assistance for establishment of sugar by-product units.

iv) Margin Money assistance to the existing co-operative sugar mills.

v) Short/medium term loan towards working capital requirements of coop. Sugar mills.

2. Details about dovetailing Govt. of India scheme (s)

i) The scheme for providing term loan assistance to existing coop. sugar mills for modernisation/expansion and also setting up of by-product units are dovetailed with the soft loan assistance from the SDF of the Union Ministry of Consumer Affairs, Food & Public distribution towards meeting the shortfall in promoters’ contribution. SDF assistance would be routed through NCDC even if the term loan is provided by other financial institution or bank.

ii) NCDC is also recognised as one of the financial institution for providing assistance under a scheme implemented by the Sugar Technology Mission (STM) in the Department of Science and Technology, Govt. of India along with soft loan from SDF for technological upgradation in the sugar industry with a focus on improvement in level of technology in the various areas like reducing sugar losses, saving energy, improvement in sugar quality and capacity optimisation.

iii) NCDC has also been recognised as a financial institution by the Ministry of Non-conventional Energy Sources (MNES) for routing its grant towards interest on term loans given by NCDC for cogeneration projects under National Programme on bagasse based co-generation being implemented by MNES.

3. NCDC'S assistance provided as on 31.3.2006

During the year 2005-06, the Corporation has sanctioned and released assistance of Rs.90323.20 lakhs and Rs.80011.46 lakhs respectively, for the development of cooperative sugar industry. Cumulatively, it has provided assistance of Rs.276749.20 lakhs up to 31.03.2006.

During 2005-06, SDF have sanctioned and released assistance of Rs.1276.20 lakhs and Rs.1101.00 lakhs, respectively, for the modernisation-cum- expansion projects implemented with NCDC's assistance. This assistance has been routed through NCDC. SDF has up to 31.03.2006, provided assistance of Rs.34920.56 lakhs through NCDC. Scheme-wise/State-wise details of assistance sanctioned and released cumulatively as on 31.3.2006 are given in Tables 1 & 2.

4) Eligibility criteria and procedure involved

A. Investment loan for share capital participation in new cooperative sugar factories.

In view of the high project cost, limited resources available with the farmers and in order to promote cooperative sugar factories, the State Govts. have been contributing to the share capital of new cooperative sugar factories. This scheme is intended at supplementing the resources of State Govts. to enable them to contribute to the share capital of cooperative sugar factories so as to expedite the project implementation. Under the scheme, Corporation provides investment loan assistance to the State Govts. up to 100% share of their stipulated equity, which is equivalent to 30% of the project cost of new mill. 60% of the project cost is raised as term loan from banks/ financial institutions and remaining 10% is to be contributed by farmer members.

Eligibility Criteria for Assisting New Mills

· Term loans tied up

· Placed orders for plant and machinery

· Adequate sugarcane potential

· Techno-economic feasibility

B. Term loan assistance for Modernisation-cum-Expansion of cooperative sugar mills.

In order to improve overall performance of the existing cooperative sugar factories, NCDC has been providing assistance for implementing modernisation-cum-expansion of sugar factories up to a capacity of 10000 TCD. The debt-equity ratio is normally 1:1. The Sugar Development Fund (SDF) of the Ministry of Food, Public Distribution and Consumer Affairs, Govt. of India, provides soft loan to meet shortfall in promoters' contribution towards equity participation up to a maximum of 40% of the project cost, depending on financial resources of the coop. Sugar factories. The balance not less than 10% of the project cost is to be met by the society either by way of raising as additional shares capital or from its internal accruals.

NCDC also provides term loan assistance for undertaking expansion of capacity beyond 10000 TCD. The debt-equity ratio is normally up to 65:35. The equity part of 35% of the project is to be met by the society by way of additional share capital from members or out of its surplus funds. The NCDC’s assistance is provided through the State Govt. as well as directly to the mill societies subject to fulfilment of eligibility criteria for direct funding.

Eligibility Criteria for Assisting Modernisation cum Expansion Projects

· Adequate cane potential

· Techno-economic feasibility

· Capable of raising own share of project cost

C. Term loan assistance for establishment of sugar bye-product units.

With the shifting of profit centre of the sugar industry towards effective utilisation of bye-products of sugar industry, NCDC has been providing term loan assistance for setting up of projects based on bye-products' utilisation such as distillery/ethanol production, co-generation of power, alcohol based chemical plants etc. The debt equity ratio is 65:35. The equity is to be met by the society and/or State Govt. However, the State Govt. can avail investment loan assistance up to 26% of the project cost from NCDC for equity participation. Soft loan from Sugar Development Fund is also available towards ethanol production & bagasse based projects.

Eligibility Criteria for Assisting Sugar By Product Units

· Adequate cane potential

· Techno-economic feasibility

· Capable of raising own share of project cost

D. Term loan assistance towards margin money requirements.

Corporation is also implementing a scheme to provide term loan towards margin money requirements of cooperative sugar factories for raising working capital from banks. Assistance is sanctioned as loan to the State Govts. for passing on the same to beneficiary cooperative sugar mills in the form of share capital/interest free long term loan/loan as stipulated by NCDC. Quantum of short/medium term loan assistance will be on case to case basis.

E. Working capital requirements

NCDC has introduced a scheme to provide short/medium term loan towards meeting part of working capital requirements of cooperative sugar factories. The assistance can be provided directly to the good working cooperative sugar mills or through the State Govt... The assistance can also be extended through the State Apex Coop. Banks providing working capital assistance to the sugar mill(s) directly/through DCCB.

Eligibility Criteria for Loan for Meeting Working Capital Requirements

· Should have a minimum turnover of Rs.5.00 crores

· Should have earned cash profit during past 3 years

· Should have positive networth

· Should not be a defaulter to any financial institution

5) Impact of NCDC’s assistance in the sector

· The role played by NCDC in promoting and financing cooperative sugar mills has given a real boost to sugar industry. Consequently, the share of cooperatives in the national production of sugar has risen to about 37% during 2004-05 seasons as against 0.5% in the 1950-51 seasons.

· Increase in number of installed sugar mills from 84 in 1973-74 to 311 as on 31.03.2006.

· Increase in share of cooperatives in sugar production from 15.54 lakh tons in 73-74 to 46.53 lakh tons in 2004-05. The share of cooperatives in National sugar production during the season 1998-99 to 2002-03 ranged between 51% & 58%. However, during 2004-05, it dropped to about 36.7% due to natural calamities.

· Improvement in the socio-economic standards of farmers.

· Cooperative sugar mills are acting as NUCLEI for area development.

· Value addition and remunerative price to sugarcane growers.

6. REGISTRATION OF MANUFACTURERS / SUPPLIERS OF SUGAR MILL MACHINERY TO SUGAR COOPERATIVES

In order to formulate more precise, comprehensive & upto date guidelines to advise the State Level Advisory Committees regarding selection of machinery manufacturers/suppliers, standardization of tendering and negotiation procedure and civil works, the Union Ministry of Agriculture, Department of Agriculture & Cooperation constituted a National Level Standing Committee(NLSC), vide O.M. dated 13.8.1986. The Committee is headed by Joint Secretary (Sugar) in the Ministry of Consumer Affairs, Food and Public Distribution, Govt. of India with representatives from National Federation of Cooperative Sugar Factories, New Delhi; Directorate of Sugar, Govt. of India; National Sugar Institute, Kanpur; Director General of Technical Development and Chief Director (Sugar), NCDC as member-secretary. The terms of reference of the said Committee are as under:

· To evolve guidelines regarding selection of machinery manufacturers/ suppliers, standardization of tendering and negotiating procedures and standardization of civil works taking into account the local conditions

· To prepare a penal of machinery suppliers for turnkey projects; and supply of equipment.

· To review the said penal from time to time.

· To advise on matters relating to guidelines to the State Level Advisory Committee and

· To review the experience of the State Level Advisory Committee.

Subsequently, the Department of Agriculture & Cooperation, vide letter dated 10.6.1988, constituted a Sub-Committee of the National Level Standing Committee to register manufacturer/suppliers of critical equipments. Chief Director (Sugar), NCDC is the Convener and other members of the NLSC are members of the Sub-Committee. The following 8 equipments have been categorized as critical:

· Mills

· Transmission gears for mills.

· Boilers

· Turbo-alternators

· Clarifiers

· Vacuum filters

· Centrifugal machines

· Pressure feeders

Criteria for Registration of Manufacturers/ Suppliers

For Complete Plants on Turnkey basis.

· For enlisting the suppliers of complete sugar plants on turn key basis, the following points are taken into account:

· The firm should be registered for manufacture/supply of at least one critical equipment preferably mills, boilers or centrifugal machines.

· Workshop facilities available with the applicant.

· Technical collaboration available, in case of critical items.

· Tie up with the suppliers of bought out items.

· Testing facilities available with the suppliers.

· Views of users about the life and performance of the equipment supplied by the applicant.

· Quality control facilities available in the workshop of the applicant.

· Technical experts employed by the firm.

· Financial position of the applicant firm.

For Critical Equipments

· For individual equipment, the suppliers should have either collaboration with some reputed Indian/Foreign manufacturers or else the equipment already supplied by the firm should have given satisfactory performance or alternatively the firm should satisfy the Committee about their technical and financial competence to manufacture the equipment of suitable design, quality and performance standard.

· Firms which intend to undertake only trading activity and do not have any programme of creation of manufacturing facilities of their own will not be encouraged. The firms having manufacturing facilities or intending to establish the same in near future shall only be considered.

· In case of those firms which have not entered into technical collaboration with some reputed manufacturer in the concerned field and supplied the critical equipment of their own design, registration shall not be given based on the performance certificates made available by the firm from the concerned sugar factories.

The proforma for registration as manufacturer/supplier of complete sugar plants on turn-key basis and for individual critical equipments downloadable. The application for registration, supported with the requisite documents, may be addressed to Chief Director (Sugar), N.C.D.C., 4, Siri Institutional Area, Hauz Khas, New Delhi – 110016.