LAHORE - Pakistan Sugar Mills Association Punjab Zone Chairman Javed Kayani has said that State Bank of Pakistan should immediately withdraw BPRD Circular No 2 issued on Monday wherein SBP has issued instructions to all Banks and DFIs to enforce 50 per cent cash margin against pledge of sugar in order to restrict and discourage hoarding of sugar. He said the sugar industry is already facing difficult time and it is hard to off load sugar produced for twelve months in a period of three months from the date of close of Crushing Season. According to circular the stocks are to be cleared by 31st July 2009 which is impossible because the sugar is sold on day to day basis according to requirement of the market. Javed Kayani said the financing derived against pledge of sugar is utilized for payments to growers and under the present situation existing margin requirement of 25% is hard to fulfill because production capacity is not utilized at optimum level due to serious shortages of sugarcane. During this period the growers have been demanding cash payments for their sugarcane. The sugar industry is about to complete the crushing season and it would be very difficult to clear the balance payments of growers. He said the mis-perception of State Bank of Pakistan and the Government about hoarding of stocks is incorrect as the cost of production is driven by prevailing sugarcane prices which are hovering around Rs.150 per 40 kg. The major component in the production cost of sugar is the value of sugarcane and the industry is neither hoarding nor deliberately trying to manipulate prices as cost push factors are beyond our control. Chairman PSMA said that non-withdrawal of this circular would mean that banks would further increase their non-performing loans. He said that State Bank of Pakistan should not be hostile towards the sugar industry. He said the sugar industry should not be held responsible for non-availability of raw material at the Government's support price and SBP should follow business friendly policies as the investment climate in the country is already at its worst.