The General Management Club

Unleash the Intellect

Indias SUGAR INDUSTRY

According to USDA Foreign Agricultural Service India is the largest consumer and second largest producer (about 15.5%) of sugar in the world. The Indian sugar industry is the second largest agro-industry located in the rural India. Indias 2009-10 sugar production is to increase to 20.8 million tons up 24 percent from the 2008-09 estimates on improved sugarcane supplies due to expected higher cane planting and yields.

Owing to significant decline in production over past few years India has turned into sugar importer from sugar exporter.

Analysis of sugar industry financials show that profits have been increasing steadily by about 13% p.a. for the past 7 Fiscal years.

A Quick look Sugarcane and sugar production in India typically follows a 6 to 8 year cycle, wherein 3 to 4 years of higher production are followed by 2 to 3 years of lower production.

All India sugar consumption is 31.5 Kgs p.a. As income levels and GDP rises, it can be expected that there will be a gradual shift from consumption of alternate sweeteners to white sugar. The per capita consumption of sweeteners in rural India is much lower. There are 453 Sugar Mills in the country currently operational generating employment for 500,000 people both directly and Indirectly

There is a SUGARCANE (CONTROL) ORDER, 1966, which provides minimum support price for sugarcane purchased by sugar mills during each sugar season and also a SUGAR DEVELOPMENT FUND ACT, 1982 to provide financial assistance for rehabilitation and modernisation of sugar factories Govt. has introduced an Advanced Licensing Scheme under which mills are allowed to import raw sugar at zero duty against a future export commitment. The mills can refine the imported raw sugar and sell it in the domestic market, but must re-export 1.00 ton of refined sugar for every 1.05 ton of raw sugar imported within a specified period, which is currently 36 months.

BALRAMPUR CHINI MILLS

Balrampur Chini Mills or Balrampur Chini Mills Ltd. is an India-based integrated sugar manufacturing company. Its business activities involve manufacturing of Ethyl Alcohol and Ethanol, generation and selling of power, and manufacturing and marketing of organic manure.

The company is a pioneer and market leader in the sugar manufacturing and sugar crushing segment. It has four primary business segments: Sugar, Distillery, Co-generation and Organic Manure. It has registered net sales of Rs. 469.55crore for the year ended 31st March, 2010 and the company's net profit stands at Rs. 27.55 crore for the same period.

Though sales have increased over last year but there is a 58.66% decline in net profits as compared to last year.

It has 8 sugar factories with an aggregate sugar crushing capacity of 65,000 tons per day. The company is coming up with the company a green-field integrated sugar complex with a sugar crushing capacity of 8000 tons per day.

Source: www.business-standard.com www.economictimes.com

Compiled By: Nitin Vats Roll- 33/10 Sec-B