A A PresentationPresentation

onon“ “ Indian Sugar Industry”Indian Sugar Industry”

Presented by

DUSHYANT PATEL [22]DUSHYANT PATEL [22]

FALGUN PATEL [23]FALGUN PATEL [23]

JAYESH PATEL [25]JAYESH PATEL [25]

INRODUCTIONINRODUCTION

Sugar industry constitutes one of the most important agro-Sugar industry constitutes one of the most important agro-based industries in India. it started growing in an organized based industries in India. it started growing in an organized way during the way during the 19301930 after introduction of the sugar industry after introduction of the sugar industry protection act in protection act in 1932.1932.

India has been known as the original home of sugar and India has been known as the original home of sugar and sugarcane. sugarcane. IndiaIndia is the is the second largest producersecond largest producer of of sugarcane next to Brazil out of sugarcane next to Brazil out of 10 largest10 largest producer of sugar producer of sugar in the world.in the world.

sugar industry is a major focus point for socio-economical sugar industry is a major focus point for socio-economical development in the rural areadevelopment in the rural area

Profile of Indian Sugar IndustryProfile of Indian Sugar Industry

There are There are 608608 registered sugar factories in the country. registered sugar factories in the country.

45 million-7.5%45 million-7.5% of rural of rural populationpopulation engaged as sugar engaged as sugar cane cane farmersfarmers,, agricultural agricultural laborers and dependents.laborers and dependents.

Employs 0.5 million skilled & semi-skilled workersEmploys 0.5 million skilled & semi-skilled workers Area under sugar caneArea under sugar cane : : 4.5 million4.5 million hectares cultivation hectares cultivation Average capacity of mills:Average capacity of mills: 3200 tons3200 tons cane per daycane per day Production of sugar Production of sugar : : 20 million20 million tons pa(organized tons pa(organized

sector)sector)33

Sector NumberCo-operative 317Private 229Public 62Total 608

Major strategies and their impact Major strategies and their impact on Indian sugar industryon Indian sugar industry

Sugarcane pricing policy.Sugarcane pricing policy. Government control onGovernment control on sugar.sugar. Government Policies.Government Policies. Government Relief to Sugar Industry and Sugarcane Government Relief to Sugar Industry and Sugarcane

Farmers.Farmers. Central Government announces support measures for Central Government announces support measures for

sugar mills.sugar mills.

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Profitability and growth of Indian Profitability and growth of Indian sugar industrysugar industry

Sugar Area & ProductionSugar Area & Production

Year Area (Million hectares)

Production (Million tons)

2001-2002 4.41 297.21

2002-2003 4.36 281.57

2003-20042003-2004 3.99 236.18

2004-2005 3.75 232.00

2005-2006 4.14 267.00

2006-2007 4.25 280.00

2007-2008 4.50 290.00

State wise situation in major State wise situation in major sugar producing states in Indiasugar producing states in India

StatesStates 2004-20052004-2005 2005-20062005-2006 2006-20072006-2007

Uttar PradeshUttar Pradesh 5.3825.382 6.36.3 9.659.65

MaharashtraMaharashtra 2.2052.205 5.1975.197 9.39.3

KarnatakaKarnataka 1.11.1 1.9`1.9` 2.42.4

Tamil NaduTamil Nadu 1.11.1 1.851.85 2.62.6

Andhra PradeshAndhra Pradesh 0.9820.982 1.21.2 1.41.4

GujaratGujarat 0.7970.797 1.1681.168 1.41.4

PunjabPunjab 0.3150.315 0.3380.338 0.50.5

Madhya PradeshMadhya Pradesh 00 0.1120.112 0.150.15

States wise Per capita States wise Per capita consumption of sugarconsumption of sugar

StateState 06-0706-07Uttar PradeshUttar Pradesh 35.235.2MaharashtraMaharashtra 40.940.9KarnatakaKarnataka 23.323.3Tamil NaduTamil Nadu 29.129.1

GujaratGujarat 40.940.9HaryanaHaryana 68.568.5PunjabPunjab 71.571.5

The consumption of white sugar in India is generally urban based, in rural areas the alternate sweeteners Gur and khandsari are consumed predominately. The per capita sugar consumption is high in the states of Punjab followed by Haryana and Maharashtra. This is due to higher GDP and higher income level of that states.

Global SituationGlobal Situation

Sugar Produced in 122 Countries,Sugar Produced in 122 Countries, Out of 122 Countries 67 produce sugar from cane and 55 Out of 122 Countries 67 produce sugar from cane and 55

from beet.from beet. 78 per cent of the sugar produced in the world is created 78 per cent of the sugar produced in the world is created

from sugarcane, with beet sugar accounting for the restfrom sugarcane, with beet sugar accounting for the rest.. Sugar is a widely traded commodity. Sugar is a widely traded commodity.

World Sugar ProductionWorld Sugar Production

Country/Region

2007-08

2006-07 2005-06 2004-05 2003-04

Brazil 34.23 32.64 32.64 27.73 26.14India 28.5 30.77 20.94 13.8 14.74EU 17.45 17.38 21.03 21.95 20.21China 13.59 13.04 9.58 9.86 10.9USA 7.66 7.66 6.71 7.15 7.85Thailand 7.89 7.03 5.08 5.43 7.28Mexico 5.58 5.54 5.5 6 5.36Sub-total Top 7 114.9 114.06 101.48 91.92 92.48% of Total World 68.00% 68.30% 67.10% 65.10% 64.30%Others 53.98 52.9 49.79 49.18 51.28World Total 168.87 166.95 151.27 141.09 143.75

Mt

Non-financial Analysis of Indian Non-financial Analysis of Indian sugar Industrysugar Industry

SWOT AnalysisSWOT Analysis Porters five forces analysisPorters five forces analysis

SWOT AnalysisSWOT Analysis

StrengthStrength

Indian Sugar Industry provide an essential Indian Sugar Industry provide an essential commodity for Trading & Exportcommodity for Trading & Export..

Indian Sugar Industry helps in socio-economic Indian Sugar Industry helps in socio-economic development in rural India.development in rural India.

Diversified crops and cropping systemsDiversified crops and cropping systems Irrigation Potentiality Irrigation Potentiality Strong government Support.Strong government Support.

WeaknessesWeaknesses

Old technology usingOld technology using Low installed production capacityLow installed production capacity Lack of professionalismLack of professionalism Unreliable weatherUnreliable weather Lack of R&D Support and inadequate trained Lack of R&D Support and inadequate trained

human resourcehuman resource Physical infrastructure Physical infrastructure

OpportunitiesOpportunities

Technology up gradation, new advanced Technology up gradation, new advanced technology available for the byproduct technology available for the byproduct utilization.utilization.

New varietyNew variety

ThreatsThreats

Sugar sector is vulnerable to political interest.Sugar sector is vulnerable to political interest. Ground water availabilityGround water availability Farmers are diverted in crop which required Farmers are diverted in crop which required

less irrigationless irrigation

Porter’s five forces analysisPorter’s five forces analysis

Threat of SubstitutesThreat of Substitutes Low Share of Treacle and khandsari declining

Barriers to EntryBarriers to Entry Medium The Govt. used to give incentives to set up new

plants by granting higher free sales quota for the first five to eight years of operations that had led to mushrooming of small units

Bargaining Power of BuyersBargaining Power of Buyers Limited Govt. influences distribution, purchase price of levy sugar

and the free sale quota releases for sugar

Bargaining Power of SuppliersBargaining Power of Suppliers High

As the Govt. allocates the area from where the sugarcane can be procured and announces the purchase price (SMP/SAP), it protects the interest of the sugar cane farmers

Inter Firm RivalryInter Firm Rivalry Intense

ConclusionConclusion In sugar Industry Govt has perform a more part because Govt In sugar Industry Govt has perform a more part because Govt

control the Industry.control the Industry. But they are not proper focus on their management so But they are not proper focus on their management so

because of this lots of mills are not working, because of this lots of mills are not working, Govt has focus on not a increased a No of mill but focus on Govt has focus on not a increased a No of mill but focus on

their production or area. Because in india few states are their production or area. Because in india few states are produced more sugar and other states contribution is not produced more sugar and other states contribution is not more so Govt has try to increased their contribution level for more so Govt has try to increased their contribution level for sugar production. sugar production.

Such findings on financial analysis we conclude assets is Such findings on financial analysis we conclude assets is increased and Investment perform a more part for it so increased and Investment perform a more part for it so industry use this Investment in a proper way industry use this Investment in a proper way

Industry has try to decreased their liabilities for growth of Industry has try to decreased their liabilities for growth of industry and increased the profitability. industry and increased the profitability. 

Such findings on financial analysis we conclude assets is Such findings on financial analysis we conclude assets is increased and Investment perform a more part for it so increased and Investment perform a more part for it so industry use this Investment in a proper way industry use this Investment in a proper way

Such findings on financial analysis we conclude assets is Such findings on financial analysis we conclude assets is increased and Investment perform a more part for it so increased and Investment perform a more part for it so industry use this Investment in a proper way industry use this Investment in a proper way

Industry has try to decreased their liabilities for growth of Industry has try to decreased their liabilities for growth of industry and increased the profitability. industry and increased the profitability. 

In Industry flow of cash high in operating is well but also In Industry flow of cash high in operating is well but also Industry has also focus on Investment activity and their Industry has also focus on Investment activity and their expansion activity. expansion activity. 

Industry has focus on their industry ratio because they Industry has focus on their industry ratio because they affect on their growth, affect on their growth, 

Industry has try to work for their rate of return on their Industry has try to work for their rate of return on their Net worth, capital employed, and Net total assets and Net worth, capital employed, and Net total assets and also their profitability also. also their profitability also.

India is a second largest country in the world for India is a second largest country in the world for production of sugar only but their growth is return or production of sugar only but their growth is return or profitability is less as compare to other country.profitability is less as compare to other country.

  

Thank youThank you