Riga Sugar seeks deferment of excise duty, VAT payment for two years

Riga Sugar Co Ltd has sought financial assistance of Rs 30 crore by way of deferment of excise duty and VAT for two years from the Bihar Government.

O P Dhanuka, CMD of Riga Sugar, told BusinessLine that the company, which has a sugarcane crushing and refining unit in the State, sought the deferment of excise and VAT for the forthcoming financial years — 2015-16 and 2016-17.

According to the proposal which is now being considered by the State Government, Riga has committed to pay off the money in the next five years. Reeling under losses owing to the higher cost of production and lower realisation in the past four years, Riga is facing a financial crunch.

“This is also the general scenario for the sugar industry in the country, causing huge cane payment arrears to the farmers. We have sought assistance to clear the dues to the local cane growers,” he said.

As of now the company owes around Rs 90 crore to the farmers. “The financial assistance in addition to the sugar sales realisations will help us clear the backlog fully,” he added.

As security for the assistance, the company said it was ready to create a second charge in favour of the State Government. The company’s Rs 304-crore worth of fixed assets are hypothecated to the bank for Rs 42 crore past borrowing.

The Centre, which had promised similar financial assistance to the ailing sugar mills, is yet to formally announce such a scheme. The Centre is also expected to deregulate the industry so that the cost of production of sugar remains less than its sales realisations.

A bumper crop in the country and across the globe, particularly Brazil, the largest sugarcane producer of the world, has depressed prices internationally.

“The proposal for creating a sugar buffer stock of 20 lakh tonne by the Centre has also not taken off yet,” Dhanuka added.

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