Co-op sugar mill wants to raise funds through sale of shares

PUNE: The Shri Chhatrapati Shahu cooperative sugar factory in Kolhapur, which has won a national award for quality management practices, has asked the state cooperation commissioner if they can raise funds by selling their shares in the market.

The proposal states that farmers, who do not have agricultural land in the factory's jurisdiction, should be allowed to become shareholders. The management suggests that farmers be allowed to buy shares at market value and not at the basic price fixed by the Cooperative Societies Act.

As per the existing Act, a farmer growing sugarcane on his own land that falls in the factory's jurisdiction, can be a shareholder of the cooperative factory. "Though there are about 130 such factories in the state, Shahu factory, with its quality performance in crushing, recovery, maintaining quality of sugar and by-products, has repaid all loans availed from the government. Now, it wants to make it more dynamic by selling its shares at market rates, which turns out to be much higher than the present value of Rs 10,000 per share. The money thus raised will be utilized for factory's modernization and expansion," said Vijay Autade, managing director of the Shahu factory.

Vickramsinh Ghatge, founder and chairman of the Shahu factory, has drafted the proposal and the state government is checking the legal and practical aspects of it. "The factory is not looking to launch an initial public offer (IPO), and it can not do so due to cooperative laws. To raise funds, we want to get more shareholders, who may be having agricultural land out of factory's jurisdiction. This will attract potential shareholders but they will have to buy shares at the market value," said Ghatge.

State cooperation minister Harshvardhan Patil said, "The factory's identity as a cooperative entity will not be changed, but a better performing factory can aim for more dynamic growth within the ambit of cooperative rules. The proposal to relax shareholder's regulation is under consideration. The state government will look into the legal issues."

There are about 170 sugar factories in the state, which 130 cooperative units. The annual turnover of the sugar industry in the state is estimated to be Rs 20,000 crore. The private sugar factories, like any other private enterprise, can go to public by launching an IPO to raise money from the market.

source: timesofindia.indiatimes