(MENAFN- IANS) Bhopal, Aug 19 (IANS) In a long-awaited relief for workers of the defunct Morena Division Cooperative Sugar Factory, the Madhya Pradesh Cabinet has approved a package to clear pending salaries and dues.

The decision, taken on August 19, 2025, marks a significant step toward resolving years of financial stagnation at the Kailaras-based unit, which has remained closed since 2008-09.

The funds, to be routed through the MSME Department, will also cover payments to sugarcane farmers and other creditors. Alongside the financial settlement, the Cabinet has sanctioned the complete liquidation of the factory and the transfer of its 22.34 hectares of land to the state government.

The site will be handed over to the MSME Department for the development of employment-based industries in Morena district. Plant and machinery will be sold through a transparent process overseen by the Department of Public Asset Management. The initial plan was to establish an MSME complex on the defunct sugar mill site, but local farmers have expressed a preference for reviving the mill itself.

Urban Development Minister Kailash Vijayvargiya said on Tuesday that the government is open to either path. However, he noted that farmers have shifted away from sugarcane cultivation, which is essential for the mill's viability. If they resume growing sugarcane, the government will consider restarting operations at the mill.

Otherwise, efforts will be made to attract investment for the proposed MSME complex. The Kailaras sugar mill, registered in 1965 and operational from 1971-72 with a crushing capacity of 1,250 tonnes per day, has remained shuttered since 2008-09.

Chronic irrigation challenges, dwindling sugarcane supply, managerial lapses, and political interference contributed to its downfall. The unit has accumulated liabilities of Rs 54.81 crore, the minister said. This liquidation marks a shift from earlier revival efforts.

In 2010, the state government had proposed a bailout for cooperative sugar mills, including Kailaras. As recently as early 2025, officials from the Cooperative Department floated a Rs 35 crore working capital proposal to revive the unit. However, the Cabinet's latest decision signals a pivot toward industrial diversification rather than sugar production.

The move comes amid broader concerns over the viability of cooperative sugar mills in Madhya Pradesh. Of the seven such mills-five government-owned and two private-most are either non-operational or financially distressed. The Kailaras unit, once a cornerstone of Morena's agro-industrial economy, has now become a test case for MSME-led redevelopment.

While the government asserts that the transition will generate new employment opportunities, the decision has sparked local unrest.

In January 2025, farmers staged mass protests against the proposed auction of the mill's land, demanding revival instead of liquidation. The auction was temporarily suspended following public outcry, and assurances were made by district officials to explore alternatives.

With the Cabinet now formalising the liquidation, attention turns to how effectively the MSME Department can convert the site into a hub for small and medium enterprises. The success of this transformation could set a precedent for other defunct industrial units across the state.

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