The cooperatives have accumulated losses of over Rs 400 crore and are facing severe financial crunch.

Ironically, this is the third committee appointed to look into the same issue, though reports of Shivajirao Patil committee and the then cooperation secretary Prem Kumar are gathering dust. The Patil committee had recommended to the government to declare these cooperatives sick to enable them to avail certain concessions from the banks and financial institutions.

Maharashtra State Cooperative Sugar Factories Federation, a representative body of 121 sugar cooperatives has urged the government to declare these cooperatives sick.The issuance of such government resolution will benefit them as financial institutions and National Bank for Agricultural and RuralDevelopment (Nabard) can exempt 2 per cent interest rate on the loans. It will also restrict the government from resorting to coercive measures for the recovery of taxes from such cooperatives.

The Federation has stressed the need for setting up a separate body on the lines of Board for Industrial and Financial Reconstruction to help revive speedily. It has also demanded that the centre should reserve a certain amount from the Sugar Development Federation for the revival and rehabilitation of such cooperatives.

Cooperative like Shetkari - Dhamangaon (Amravati) has accumulated losses of over Rs 33.73 crore, Marathwada (Parbhani), Rs 31.07 crore, Jijamata (Buldhana) Rs 28.15 crore, Girni (Nashik) - Rs 22.75 crore, Kada (Beed) - Rs 18.54 crore, Sriram (Nagpur) - Rs 21.88 crore and Bhogawati ( Solapur) struggles with an accumulated losses totalling Rs 14.37 crore.

According to the the Patil committee, the cooperatives become sick when the losses incurred by them were more than net disposable resources andnet worth. Moreover, when the advanced share capital erodes and the ratio between current liabilities and current assets dips more than 0.75, the cooperatives become sick. Patil committee had recommended that taking into account the government share capital of Rs 20.52 crore, the government should stay its repayment for five years and thereafter make equal installments of 15 years. These factories have taken government loan worth rs 84.68 crore of which the interest amount was of Rs 30.43 crore. The committee has suggested that the government should write off the repayment of interest amount and convert the balance amount of Rs 54.28 crore into share capital and make installment for its repayment of 15 years.

The Prem Kumar committee has also called for conversion of arrears owed by these cooperatives to the government into the share capital, write off sugar purchase tax or covert it into the soft loan, revaluation of the assets and a share capital in such cooperatives.

The committee had also recommendedthat the government should charge Rs 5 per sugar bag from the economically sound cooperatives for the creation of a rehabilitation fund for providing loans to such sick units.