The document discusses the MAHA sugar scam in Maharashtra involving the sale of sugar cooperative mills. It notes that [1] political parties across the spectrum were involved in the scam; [2] sugar mills were sold at nominal prices to private companies owned by politicians, resulting in massive losses of public money; and [3] development funds collected from farmers through cess were diverted for other purposes, worsening the financial situation of the mills. The systematic mismanagement and corruption rendered most sugar mills non-performing assets that were then sold off under the guise of debt recovery.

1. The MAHAThe MAHAThe MAHAThe MAHA –––– SUGARSUGARSUGARSUGAR ScamScamScamScam
ofofofof
MAHAMAHAMAHAMAHA ---- RASHTRARASHTRARASHTRARASHTRA

2. Size of the scam
Simply phenomenal………

3. Political Parties involved
Practically across all party lines
Except Aam aadmi party & a few more

4. Sugar Mills in Maharashtra

5. Disctrictwise contribution

6. Sugar Production

7. Sugar co-operative mills were started way back in 1948.
They were predominantly set up in Western Maharashtra,
the MARATHA STRONGHOLD.
How does a sugar mill get
sold at peanuts

8. Farmers offered their lands for the mills at nominal price to
the sugar mills. They also chipped in Rs 3000/- as their
share in starting the mill.
The breakup of capital was as under
10 % was put in by the farmers ( Share amount Rs 3000/-)
30 % was put in by State Governement
How the capital was raised…
60 % was put in by Central Governement

9. • Most of the farmers did not have the money
and hence borrowed it from a bank on interest.
• The farmer had to chip in Rs 305/- and the rest
was made available by the bank for which
interest was charged
• The initial share capital of the farmer was
Did the famers have the money ?
• The initial share capital of the farmer was
subsequently increased to Rs 5000/- by the
government and hence the farmers had to take
additional loan & pay additional interest

10. • After the Sugar mill was operational,Working capital &
Preseasonal loans were raised from banks
• Now here is where the corruption and mismanagement
starts
• Loans were raised which were spent irrationally. No
accounts were maintained.
How the Sugar mills were made
defunct.
accounts were maintained.
• Then started the mismanagement.

11. • The loan amounts kept mounting with heavy interest
burdens
• The mills were made to shut operations on the slightest
pretext to decrease profitability
• Farmers were offered miserable pricing for the sugarcane
leading to demonstrations & protests.
• Maharashtra State Co-operative bank got its new found
The Systematic loot ….
• Maharashtra State Co-operative bank got its new found
chairman. Ajit Pawar becomes the Chairman of
Maharashtra State Co-operative Bank.

12. • On May 7, 2011 when the Reserve Bank of
India- RBI, recommended the 44-member
board be superseded by state government
administrators, NCP President and agriculture
minister Sharad Pawar was quick to express
his displeasure: “The bank has disbursed loans
on the state government’s guarantee. There has
not been a recovery of such loans and that is
why it’s being shown as NPAs.”

13. The apex co-operative bank’s board has NCP
heavyweights
Manikrao Patil as chairman,
Maharashtra Deputy Chief Minister Ajit PawarMaharashtra Deputy Chief Minister Ajit Pawar
as director
and
Congress’s Balasaheb Karnik as vice-chairman.

14. For another, the largest concentration of non-
performing assets (NPAs) of the cooperative
bank was in the sugar sector, at 57.3 per cent.
Next to sugar, the other concentration of NPAs
was to spinning mills at 17.44 per cent.
The share of the sugar sector stood at 39 per centThe share of the sugar sector stood at 39 per cent
as on March 31, 2009. This increased to 48.9 per
cent by March 31, 2010. To put the numbers in
perspective, banks are allowed exposure of up to
25 per cent to a sector, but cooperatives do not
have any such limits.

15. The angst of both Sharad and Ajit Pawar is
obvious, because the Pawar family has had a
close association with the bank for over two
decades.
Sharad Pawar, though not in any executiveSharad Pawar, though not in any executive
position, played an active role for a decade –
between 1988 and 1998 – when the bank
released substantial amounts to the cooperative
sector, especially to sugar and cotton spinning
mills.

16. May 7, the appointment of two senior IAS
officers – state Agriculture and Marketing
Secretary S K Goyal and Planning Secretary
Sudhir Shrivastav- as administrators was doneSudhir Shrivastav- as administrators was done
after the bank was accused of overstatement of
profits in 2009-10 and non-compliance with
nine out of 11 RBI directives.

17. Maharashtra State co-operative bank sold 26 sugar co-
operative mills to private companies. Most of them went to
the political biggies across all party lines.
Sale of Sugar Mills to private
companies started

18. L. CO-OPERATIVE SUGAR FACTORIES SOLD OUT BY MSC /DCC
BANKS/DRTUNDER SECURITIZATION ACT
(AS ON 31/05/2013)
Sr.
No
Name of the Sugar Factory Purchased By Sales
Prices
(Rs. In
Lacs)
Remarks
1 Ambadevi Sah. Sakhar Karkhana
Ltd; Dist - Amravati
Kinetic Petrolium Mumbai
1525.00
---
2 Balaghat Sah. Sakhar Karkhana
Ltd;Dist - Latur
Siddhi Suagrs & Alied
industries Ld.,Dist - Latur
3051.00
---
3 Ram Ganesh Gadkari Sah.
Sakhar Karkhana Ltd; Dist -
Nagpur
Prasad Sugar Ltd; Dist -
Ahmednagar 1295.00
---
4 Mahatma Sah. Sakhar Karkhana
Ltd; Dist -Wardha
Mahatma Sugars & Powers
Ltd , Dist -- Wardha
1410.00
---
5 Vainganga Sah. Sakhar
Karkhana Ltd; Dist - Bhandara
M/s. Vainganga Suagar &
Power Ltd; Dist - Bhandara
1410.00
---
6 Akola District Sah. Sakhar
Karkhana Ltd; Dist - Akola
M/s. Venkateshwar Agro
Sugar Products Pvt Ltd;
Mumbai
1710.00
---
7 Gangapur Sah. Sakhar Karkhana
Ltd;Dist - Aurangabad
Rajaram Food Pvt. Ltd;
Andhei, Mumbai
2901.01
Dispute
in DRT
8 Jarandeshwar Sah. Sakhar
Karkhana Ltd; Dist - Satara
Guru Comodity Pvt. Ltd;
Mumbai
6575.00
---
9 Narshinha Sah. Sakhar Tridhara Sugars Ltd Dist -
4025.00
---9 Narshinha Sah. Sakhar
Karkhana Ltd; Dist - Parbhani
Tridhara Sugars Ltd Dist -
Parbhani
4025.00
---
10 Pushpadanteshwar Sah. Sakhar
Karkhana Ltd;Dist - Nandurbar
Astoriya Jwellary Pvt. Ltd;
Mumbai
4548.00
---
11 Raje Vijaysinh Daphale Sah.
Sakhar Karkhana Ltd; Dist -
Sangli
Rajarambapu S.S.K. Ltd;
Dist -Sangli 4780.00
---
12 Kondeshwar Sah. Sakhar
Karkhana Ltd;Dist - Amravati
Sudin Consultancy Ltd.,Dist
– Kolhapur
1401.00
---
13 Jalna Sah. Sakhar Karkhana Ltd;
Dist - Jalna
Tapadia Construction Ltd.,
Dist -Aurangabad
4231.00
---
14 Hutatama Jaiwantrao Patil Sah.
Sakhar Karkhana Ltd; Dist -
Nanded
Bhaurao Chavan Sah.
Sakhar Karkhana Ltd;Dist -
Nanded
4851.00
---
15 Jai Ambika Sah. Sakhar
Karkhana Ltd; Dist - Nanded
Kuturkar Sugars & Agro.
Ltd,Dist - Nanded
3350.00
---
16 Girna Sah. Sakhar Karkhana Ltd;
Dabhadi, Dist - Nashik
Armstrong Infrastructure
Pvt. Ltd, Dabhadi, Tal.
Malgaon, Dist. Nashik
2755.00
---
17 Shri.Datta Sah. Sakhar
Karkhana Ltd;Asurle-Porle,
Kolhapur
Dalmia Sugar ltd., Kolhapur
10800.00
---
18 Kannad Sah. Sakhar Karkhana
Ltd; Aurangabad
Baramati Agro ltd.,
Baramati, Dist Pune
5020.00 ---
19 Shriram Sah. Sakhar Karkhana
Ltd; Babdev, Dist. Nagpur
Venkateshwara Power
Project ltd., Shirol, Dist.
Kolhapur
1197.00
Sale
confirmed
by Admn.

19. 20 Shivshakti Adivashi Sah. Sakhar
Karkhana Ltd; Sujatpur, Dist.
Buldhana
Biz Secure labs P. Ltd, Pune
(Only Machinery) 1899.00
Board on
20-02-
2013
21 Grushneshwar Sah. Sakhar
Karkhana Ltd; Dist . Aurangbad
Umang Sugars P. Ltd,
Aurangbad
3562.71
22 Shree Bageshwari Sah. Sakhar
Karkhana Ltd; Jalna
Shraddha Energy & Infra
Project P. Ltd, Pune
4410.00
23 Barashiv Hanuman Sah. Sakhar
Karakhana Ltd; Jawalabajar, Tal.
Aundha Naganath, Dist. Hingoli
Purna Sahakari Sakhar
Karkhana ltd., Parbhani 2800.00
24 Jagadamba Sahakari Sakhar
Karkhana, Karjat, Dist –
Ahmednagar
Indocon-Ambalika Sugars,
Karjat,Dist - Ahmednagar 2800.00
25 Yashwant Sah. Sakhar Shri.Ganapati Krushi25 Yashwant Sah. Sakhar
Karakhana Ltd; Khanapur, Dist-
Sangali
Shri.Ganapati Krushi
Audyogik Sarva Seva
Sahakari Sanstha Ltd, Dist -
Sangali
5651.00
26 Tasgaon Sahakari Sakhar
Karkhana Ltd, Turachi, Dist-
Sangali
Shri.Ganapati Krushi
Audyogik Sarva Seva
Sahakari Sanstha Ltd, Dist -
Sangali
1451.00
Dispute
in DRT

20. One after another the co-operative sugar
mills started being sold under the
Securitisation and Reconstruction of
Financial Assets and Enforcement of
Security Interest Act (SRFAESIA), 2002
The Maharashtra State co-operative bank
which was being operated by the political
master, started selling these co-operative
mills. Valuations were done at absurd levels

21. • The Jarandeshwar Sahakari Sakhar Karkhana (SSK)
co-operative sugar mill near Satara, run by Shalinitai
Patil, rebel NCP leader and widow of former chief
minister and Rajasthan governor Vasantdada Patil,
could be taken over by a consortium of banks on
November 13, said DM Mohol, MD, Maharashtra
State Co-operative Bank (MSCB), the state's apexState Co-operative Bank (MSCB), the state's apex
co-operative bank.
• Mr Mohol is one of the close associates of Maratha
strongman Sharad Pawar, who, incidentally, has
been a target of Ms Patil of late. In the past, Mr
Pawar and the late Vasantdada Patil never got along.
In 1978, Mr Pawar pulled the rug from under Mr
Patil's feet to grab the chief minister's chair.

22. Game plan was systematic…

23. • HC issued orders that the bank which issued
loans for working capital, could recover the loans
from the sale of the property Under the
SRFAESIA 2002.
• Only the working capital loans were getting paid
off by the sale of the property. Neither theoff by the sale of the property. Neither the
farmers who had put in their land & share capital
nor the State and Central government stood to
recover the invested money.
• Land valuations were done at absurd levels to
bring down the value of the property.

24. • The Gujarat High Court held on 21st April
2013, that cooperative banks cannot use
the Securitisation and Reconstruction of
Financial Assets and Enforcement of
Security Interest Act (SRFAESIA), 2002 or
Orders from Gujarat HC
Security Interest Act (SRFAESIA), 2002 or
Securitisation Act, for recovery of debts
from its defaulters.

25. A division bench of Chief Justice Bhaskar
Bhattacharya and Justice J B Pardiwala in a
common judgement declared Central
government notification dated January 28,
2003, bringing the cooperative societies
within purview of Securitisation Act, as null
and void.

26. Another angle….

27. Two type of taxes are collected from the
farmers
• A) Sugar Development Fund with central
excise – which was Rs 14/- per quintal ofexcise – which was Rs 14/- per quintal of
sugar was increased to Rs 24/- from 2009
• B) Cane Development fund – which is
generally Rs 10/- per ton and which may
vary from factory to factory

28. With total sugar produce, the sugar
development fund collected may be
to the tune of Rs 200 crores per
year.
The Cane Development fund may
Money collected as development
fund
The Cane Development fund may
go up to 90 crores per year.

29. This Cess collected from the factories
sums up to approxiamtely 600 - 800
crores per year. This fund was supposed
available to sugar factories at 4 %
interest and was to be used forinterest and was to be used for
a) Modernization
b) Cane development programs
c) Fertilizers
d) Development of Seed plots

30. Sharad Pawar the master mind, diverted the use of
these funds by making 3 ammendments and made
the funds available for
1) Transport Subsidy – Transport costs from
factories to the port was subsidezed and funds
were made available to promote exports.
2) Capacity utilization of co-generation projects.2) Capacity utilization of co-generation projects.
Money was made available to projects where
steam from boilers were used to produce
electricity by using its own bagasse as fuel.
Most of this was on paper & never passed to the
farmers
3) Ethanol projects also started getting loans at 4%
interest

31. This decreased the money available to the
factories, compelling them to get into
borrowing money at higher costs from
banks.
Inpact….
banks.

32. Let us have a look at
approximate size of the
Sugar scam…..

33. Money lost per year by the 26 co-operative
sugar mill to Cane development fund was
9.6 crores.
Money paid as cess to the governement wasMoney paid as cess to the governement was
Rs 23.02 crores.
Even if this money could be reverted back to
the mills, a lot of co-operative mills would
be saved from defaults

34. Most of the Sugar co-operative mills are around
150 to 300 acres of land. These are in the prime
areas near cities or highways and hence the cost of
the land is generally 1 cr per acre.
Cost of buildings in the factory (taking into
consideration basic construction cost) and cost of
Land scam in Sale of
sugar co-operative mills
consideration basic construction cost) and cost of
the machinery generally works out to about Rs 300
to 400 crore. These have been auctioned at 10 %
value by MSC bank.

35. We are giving 3 examples
a) Girna Sahakari Sakhar Karkhana – Nasik
Bought by – Armstrong Infrastucture –
Chaggan Bhujbal
b) Kannad SSK – Bought by Baramati Agrob) Kannad SSK – Bought by Baramati Agro
– Rajendra Pawar / Ajit Pawar
c) Priyadarshani SSK – Bought by Amit
Dekhmukh s/o Late Shri Vilasrao Deshmukh

36. Girna SSK – Nasik
Total land – 294 acres ( Prime land)
With 7 godown
1 bank
1 petrol pump1 petrol pump
400 odd residential quarters
2 bungalows
Factory
Machinery
Total value not less than 500 cr
Sold for 27 cr

37. It does not stop here……
50 acres out of the 294 acres are kept mortgage
with Nasik District co-operative bank for 30 cr.
Hence net cost to company is zero.
If there is a default, the bank takes away 50 acres
and the company is left with 244 acres land plus
factory & several buildings at zero cost

38. Hence if there is an average loss of 300 crore per sugar co-
operative,
300 x 26 = 7800 crores till date (conservative figure)
This does not inclue the funds collected as caneThis does not inclue the funds collected as cane
development fund by the trusts
They are 9.6 cr x average 15 years = 144 cr
60 more co-operatives were to be sold. This has been stalled
on 5th September by a government order.

39. Aam Aadmi Party appreciates the State
governement’s stand of stalling the further sale of
co-operative sugar mills and demands immediate
reversal in the previous sale of the co-operative
sugar mills under securitization act.
AAP’s stand on Sugar Scam
AAP confirms that it will move the High court on
the securitization policy on the basis of the orders
passed by Gujarat High Court and will bring justice
to the 4,00,000 affected farmers of Maharashtra