c


c 

Sugar is one of the oldest commodities in the world and traces its origin in 4th century AD in
India and China. In those days sugar was manufactured only from sugarcane. But both countries
lost their initiatives to the European, American and Oceanic countries, as the eighteenth century
witnessed the development of new technology to manufacture sugar from sugar beet. However,
India is presently a dominant player in the global sugar industry along with Brazil in terms of
production. Given the growing sugar production and the structural changes witnessed in Indian
sugar industry, India is all set continue its domination at the global level.

The report provides a comprehensive picture of the Indian sugar market. The status of
Indian sugar industry has been compared with the rest of the world in terms of raw material
availability, crushing period, size of the sugar mill, production cost and prices in the report. The
advantages that Indian sugar mills have over others in cost terms have been emphasized too.
Indian sugar industry is highly fragmented with organized and unorganized players. The
unorganized players mainly produce Gur and Khandari, the less refined forms of sugar. The
government had a controlling grip over the industry, which has slowly yet steadily given way to
liberalization. The report provides comprehensive analysis about the structure of Indian sugar
industry by explaining the above facets. Besides the classification of sugar products and
byproducts like molasses, their uses too have been extensively covered. The production
sugarcane is cyclical in nature. Hence the sugar production is also cyclical as it depends on the
sugarcane production in the country. The report provides extensive information on the
production of sugarcane, sugar and other sweeteners in the country in the recent years along with
trends and analysis. This also includes a discussion about existing capacities in the country,
trends in capacity additions, imports and production of by-products of sugar (molasses and
cogeneration of power).

The report features a detailed demand analysis discussing the actual demand for
sugar and other sweeteners, gur and khandari and their per capita consumption in India. This
includes a trend analysis in demand in various regions of the country. The role of exports in the
sugar industry has also been discussed. The report gives an exhaustive cost analysis along with
the pricing practices. Dual Pricing System is adopted in the Indian sugar industry, which includes
sugar price in Public distribution system and the free sale sugar price. An analysis has been
provided on the relationship between Indian and international sugar prices.

As the industry is a fragmented one, even leading players do not control more than 4
percent market in India. However, the situation is changing and players offlate are striving to
increase their market share either by acquiring smaller mills or by going for green field capacity
additions. Another notable trend is the shift from Gur and Khandsari to sugar in the rural areas.
This should further increase the per capita consumption of sugar in India (currently around 15.6
kg). Besides the Indian urban market is slowly moving towards branded sugar. The potential in
this segment seems to be very high. These trends along with the other trends like increase in the
production of by-products have been captured in detail.

Indian sugar industry, second largest agro-based processing industry after the Cotton textiles
industry in country has a lion's share in accelerating industrialization process and bringing
socioeconomic changes in under developed rural areas. Sugar industry covers around 7.5% of
total rural population and provides employment to 5 lakh rural people. About 4.5 crore farmers
are engaged in sugarcane cultivation in India. Sugar mills (cooperative, private, and public) have
been instrumental in initiating a number of entrepreneurial activities in rural India.

Sugar industry occupies an important place among organised industries in India. Sugar industry,
one of the major agro-based industrial in India, has been instrumental in resource mobilization,
employment generation, income generation and creating social infrastructure in rural areas.
Indeed, sugar industry has facilitated and accelerated pace of rural industrialization. At present,
there are 553 registered sugar factories having capital investment of Rs. 50,000 crores and annual
production capacity of 180 lakh metric tonnes (ISMA Report, 2004). The annual turnover of
industry is to the tune of Rs. 25,000 crores. The central and state governments receive annually
Rs. 2500 crore as excise duty, purchase tax, and cess. More than 4.50 core farmers are engaged
in sugarcane cultivation and about 5 lakh rural people have got direct employment in the
industry. Sugar industry has brought socioeconomic changes in rural India by way of facilitating
entrepreneurial activities such as dairies, poultries, fruits and vegetable processing, and providing
educational, health and credit facilities.

 c
   
Sugar is a controlled commodity in India under essential commodities act, 1955. Government of
India initiated de-licensing policy in sugar industry on 11th September, 1998 in view of
globalization process, and since then industry has experienced Significant changes. De-licensing
of sugar industry has led to mushrooming growth of sugar mills. During 1988-89 to 1991-92,
government had introduced partial control in accordance with levy free sugar ratio was 45:55. It
was 40:60 during 1992-93 to 1996- 97. Decontrol of sugar trade got momentum in due course
and at present (2005), levy free sugar ratio is 10:90. The Committee appointed by government
under chairmanship of S.K. Tuteja recommended decontrol of free sale sugar by October, 2005.

Central government announced statutory minimum prices (SMP) of sugarcane and on this basis
state governments fix state advised prices (SAP). Unfortunately, SAP is being used as a political
tool and has been main concern of sugar mills as it results in escalation of production costs.


c 
Both area and production of sugarcane fluctuate considerably from year to year. This is due to
variations in climatic conditions, the vulnerability of areas cultivated under rain fed conditions,
fluctuations, in prices of gur and Khandsari, and changes in returns from competing crops.
Despite this instability, both area and production of sugarcane have increased considerably over
the past three decades. The chief raw material for sugar production in India is Sugarcane. The
data shows that area under sugarcane and production had shown a mixed growth during 1994-95
to2003-04. Out of 10 years of the study, area under sugarcane had positive growth during 7 years
and negative growth was observed during 1997-78, 2002-03 and 2003-04. As far as sugarcane
production is concerned, it had negative growth during 1996-97, 2000-01, 2002-03 and 2003-04
due to lower rainfall. There had been considerable variations in area under sugarcane, sugarcane
production, and yield of sugarcane during 1994-95 to 2003-04.




Balrampur chini mills ltd,
Bajaj Hindustan Ltd,
Andhra sugars ltd,
Thiru Arooran Sugars Ltd and
Dhampur Sugar Ltd



c
 

There are about 507 sugar mills in India with an installed capacity of 17.87 million tonnes. Its
total sales as an industry for FY05 were about Rs 12,000 crores with net profit of about at Rs 500
crores.

  !""#
Private 174 34%
Public 33 7%
Co-operative 300 59%
507 100%

The industry was dominated by co-operative sugar mills, which contribute over 59% of the total
sugar product ion in India. State-wise, Maharashtra and Uttar Pradesh together contribute over
58% of the product ion. The situation is expected to tilt in favour of the private players as we
believe they will be able to wrest substantial chunk of market from the cooperatives.
$ c
c c
c

Sugar consumption rate is highest in India as shown in the statistics received from USDA
Foreign Agricultural Service. However, as per production is concerned, India has notched up 2nd
position following Brazil, the largest sugar producer in the world.

The Indian sugar industry uses sugarcane in the production of sugar and hence maximum
number of the companies is likely to be found in the sugarcane growing states of India including
Uttar Pradesh, Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Andhra Pradesh. Uttar Pradesh
alone accounts for 24% of the overall sugar production in the nation and Maharashtra's
contribution can be overall 20%.

There are 453 sugar mills in India. Co-operative sector has 252 mills and private sector
has 134 mills. Public sector boasts of around 67 mills.

$c c 
c
c c
c

Sugar is made from sugarcane, which was arguably discovered thousands of years ago in
New Guinea. From there, the route was traced to India and Southeast Asia. It was India which
began producing sugar following the process of pressing sugarcane to extract juice and boil it to
get crystals.

It was in 1950-51 the government of India made serious industrial development plans and
set the targets for production and consumption of sugar. It projected the license and instalment
capacity for the sugar industry in its Five Year Plans.


c
c c
c

The sugar industry can be divided into two sectors including organized and unorganized
sector. Sugar factories belong to the organized sector and those who produce traditional
sweeteners fall into unorganized sector. Gur and Khandsari are the traditional forms of
sweeteners.
 
c   
 %
 c   c
 c 
c
c

Several steps are usually followed to produce sugar. These steps can be mentioned as
below:
Step: 1) Extracting juice by pressing sugarcane

Step :2) Boiling the juice to obtain crystals

Step :3) Creating raw sugar by spinning crystals in extractors

Step :4) Taking raw sugar to a refinery for the process of filtering and washing to discard
remaining non-sugar elements and hue

Step :5) Crystallizing and drying sugar

Step :6) Packaging the ready sugar

& &c
 

Karnataka Sugar Industry ranks 3rd in terms of its contribution of sugar in the total sugar
production in the country. The Sugar Industry in Karnataka is able to manufacture sugar in such
huge quantities due to the fact that sugarcane is abundantly available in the state. In fact,
Karnataka stands 4th in the country in the cultivation of sugarcane.

The Sugar Industry in Karnataka has around 41 sugar factories which are distributed all
over the state. The various locations of the sugar factories of Karnataka Sugar Industry are
Konnur, Varuna, Koppa, Madapura, Dandeli, Jambagi, Hosur, Margur, Yelgur, Siddapur, and
Arsanghatta. The major benefits of Karnataka Sugar Industry are that it has generated many
facilities in the state such as communication, employment, and transport. It has also benefited the
state by helping in the development of the rural areas of the state by mobilizing the various
resources of the villages. The major sugar factories of Karnataka Sugar Industry are:
ý? Bannari Amman Sugar Ltd. with the sugarcane crushing capacity of 5000 TCD.

ý? Davangere Sugar Company Ltd. with the sugarcane crushing capacity of 2500 TCD.

ý? Sri Chamundeswari Sugars Ltd. with the sugarcane crushing capacity of 4000 TCD.

ý? Godavari Sugar Mills Ltd. with the sugarcane crushing capacity of 7500 TCD.

ý? Mysore Sugar Company Ltd. with the sugarcane crushing capacity of 5000 TCD.

ý? Athani Farmers Sugar Factory Ltd. with the sugarcane crushing capacity of 2500 TCD.

The Sugar Industry in Karnataka can be divided into 2 groups that are the unorganized
sector which comprises of the producers of the traditional sweeteners such as gur and khandsari
and the organized sector which consists of the sugar mills. The manufacture of khandsari and gur
is considered to be rural industry and are produced in huge quantities. The gur and khandsari are
consumed mostly by the rural people as sources of nutrition and also as sweeteners. The total
sugar production of Karnataka Sugar Industry came to 17.98 lakh tons in 2002-2003, in 2003-
2004 the figure came to 11.57 lakh tons, and in 2004-2005 the figure stood at 13 lakh tons.

The Sugar Industry in Karnataka contributes around Rs. 36 crore per year to the state
exchequer in central excise duty. It also contributes more than Rs. 900 crore in the form of
turnover tax and sales tax to the state exchequer. The state government in an attempt to boost
Karnataka Sugar Industry has set up the Karnataka Sugar Institute (KSI) which has emerged as a
center for education and training for sugar technology. The Karnataka Sugar Institute also
provides important support to the Sugar Industry in Karnataka by doing R&D in the various
aspects of sugarcane processing and production.

Karnataka Sugar Industry has contributed a great deal to India's total level of sugar production
and thus has helped the country to meet its demand for sugar. The Karnataka state government
must make more efforts in order to boost the sugar industry in karnataka.
Source: www.mapsofindia.com
'())'*+'*+
,-./
Avg.cane
Country No. Of Units Avg.production /day
Crushing/day(tonnes)
Thailand 45 10307 140540

Australia 28 9216 183321

Brazil 213 9168 64018

South Africa 13 6877 137769

Mexico 67 4749 71015

Columbia 10 4590 214900

Cuba 150 42290 45538

Hawaii 09 4111 44111

India 430 2527 35000

Table 1-Sugar production Per Unit in Various countries

(Source: www.sugarindustry.com)

c+'c+

No of Sugar Factories Established 506

Total capital employed Rs 50,000 Crs

Total Annual Turnover Rs 25,000crs

Total payment to Cane Growers Rs 18,000crs

Contribution to Central and State Exchequers Rs1,700crs+Rs.800Crs

Direct employment: Rural Educated Rs 5,00,000

Farmers Population/Families involved in Sugar cane
(7.5% of Rural population) Rs. 45 Million

Table 2- Indian sugar Industry at Glance

(Source: www.sugarindustry.com)
  
c 

FIG1-COMPANY PICTURE

(Source :Company Annuual Report)

 
c
$c  c

Name : SHRI HIRANYAKESHI SAHAKARI SAKKARE

KARKHANE NIYMIT SANKESHWAR.

Year of Establishment (Reg) : No G 277 DT 10.09.1956

First Crushing Season : 1961

Location of the Unit : Sankeshwar

Name of Concerned Banker : DCC Bank Kolhapur

DCC Bank Belgaum

Address for Correspondence : SHRI HIRANYAKESHI SSKN

SANKESHWAR

DIST ±BELGAUM,

STATE- KARNATAKA

Phone : (08333)b 273334,273338, 273354

Fax : 08333-273001

 
 $ 


c 


y? Shri Ramesh .V.Katti Chairman

y? Shri Shivanaik.V.Naik Vice-Chairman
y? Shri Prahlad.B.Patil Director
y? Shri Shrishailappa.B.Magadum Director
y? Shri Vishwanath.N.Bellad Director
y? Shri Babasaheb.P.Arbule Director
y? Shri Rajkumar.B.Patil Director
y? Shri Shivputra.S.Shirkoli Director
y? Shri Rajendra.M.Patil Director
y? Shri Basavanni.M.Sarnaik Director
y? Shri Udaykumar.S.Desai Director
y? Shri A.M.Patil Director
   
c


$
Shri Hiranyakeshi Sahakari Karkhane Niyamit Sankeshwar is one of the pioneers in the
cooperative sugar industries in the state of Karnataka, being on the boundary of Karnataka-
Maharashtra States. The idea of establishing a sugar factory in the cooperative sector was first
originated in the minds of Shri Appanagoudav Patil, the chief promoter of this factory and Late
Shri M .P. Patil, then the minister for cooperation, Bombay State with prime aims and objects;
a) To uplift the rural economy,
b) To facilities the credit facilities,
c) To facilitate thrift among the rural people,
d) To arrange and supply agricultural implements
e) To liaison between the factory and the cane growers, and
f) To acts as link between the rural people and banks
The industrial Licence No. L 8/55 dt. 05.01. 1955 was obtained from the Govt of India.
The society came into existence vide Registration No. G-277 DT. 10. 09 1956 and the first trial
crushing season commenced in the year 1961.
The area of the factory extended to 141 villages in Karnataka State and 77 villages in
Maharashtra State within a radius of 22 miles. Since the factory has its members both in
Karnataka and Maharashtra, it is governed under the multi state cooperative societies Act.
 c 
The City of sankeshwar in Belgaum District Which has been God gifted with major
rivers such as Ghataprabha, Markandeya, Doodhaganga, Krishna, and Malaprabha and other
small rivers like Vedganga and Hiranyakeshi. The factory is Situated about one Km.from
sankeshwar town in Hukkeri taluka of Belgaum District on the Quadrilateral National Highway
No.4and is accessible by Road and rail at distance of about48 kms from Belgaum to the North,
about 65K Ms from Kolhapur to the South, about 35 Km from gadihinglaj.This City is
surrounded by 85 villages of Maharashtra and 248 villages of Karnataka Where the Main crop is
sugarcane covering 47,543 Hectares of irrigated land. The factory is located on the bank of
Hiranyakeshi river Where We draw the water.
 The factory has got two millings tandems namely 28*56(old Mill) and 36*72 (New Mill).
The old Mill tandem compromises of six Mills giving an output of 20000TCD.The New Milling
tandem compromises of six Mills and a fibrizor capable of 4000 TCD.
Hiranyakeshi factory believes that even in an age of fast changing values.´Honesty is
The Best policy´. At the same time company is convinced that the µearly Birds gets the worm´
and Have accordingly tried to be as innovative as possible, and as early as possible.

0$c c

The main product of the factory is Sugar along with the by-products i.e. Distillery,
Arrack, Aerobic Compost, Cogeneration power, Ethanol, etc. The business carried by the factory
is seasonal one. Production of sugar takes place normally in the period of October to May. This
is the maturity of the sugar cane.
This business fully carried out by the central Govt of India. Only in the case of distillery
Section the government of Karnataka has the control on the factory.


 
  cc 
y? Expansion of industry towards optimal utilization of available resources.
y? Achieving target Production 30,000 MT cane crushing per day (Including all
Units)
y? Producing quality product to satisfy the domestic and international Market

cc 1cc 
2c c

³To continue to remain the largest producer of sugar in South of India, to aim to be in the
top three sugar manufacturing companies in India & to provide more value to the shareholders
by means of efficient capacity utilization of its sugar, power and distillery based facilities.´

cc 
³We are dedicated to deliver overall value to our customers by delivering high quality
products, exceptional financial performance to our share holders & complete satisfaction to cane
growers, employees & stakeholders´.

cc 
³Sugar will serve hard to retain its place as one of India¶s premier Sugar expansion of its
operation of core compliance at efficiencies of cost, quality & standard of customer servicing
and diversification to Liquor, co-generation to achieve competitiveness´.

2c c 

Hiranyakeshi factory, engaged in producing white crystal sugar. Industrial and portable
alcohol, Ethanol and power form non conventional source of energy company strives to be at
forefront of Indian sugar industry by adoption latest technology ,Disciplined quality
management system and continued improving on product quality.




c 


Fig 2-Product picture
Source: Google Images
Sankeshwar Hiranyakeshi factory is the manufacturer of the ³White crystal Sugar´.
Along with sugar some other main product manufactured in hiranyakeshi factory. Are,

y? Power
y? Dist iller y product
y? Bio-gas
y? Et hano l

$3

POWER:
The factory has set up 41 MW Co-generation based power plant using renewable source
of energy (i.e. Bagasse) out of which 26Mw is Exported to the Grid and 15MW is used foe
captive consumption. For this process they use 3 high capacity turbines imported from Japan.

DISTILLERY PRODUCT:
The Dist iller y product s are
y? Brandy
y? Whisk y
y? Rum
y? Gin
ETHANOL:
The Ethanol, being manufactured by Sugar industry has been successfully mixed to
certain percentage within petrol. This is relatively new area of the business for the sugar industry
in India.

RECTIFIED SPIRIT:
Rectified spirit is produced from cane molasses. The Molasses is diluted and using yeast
as a catalyst does fermentation, the rectified spirit is produced by means of fractional distillation
in a copper column. Finally the rectified spirit is collected and stored in M.S tanks. Rectified
spirit is used in the preparation of medicines, Syrups and perfumes. It is also used for the
preparation of extra natural alcohol, Ethyl Acitate and acetic acid.

MALT SPIRIT:
The Hiranyakeshi Factory is producing the quality Malt spirit for the last 20 years. The
matured malt spirit is used for blending of companies own IMFL Brands and also is sold to
outside parties.

ENA:
Extra Natural alcohol is used for producing various types of IML products .As per ISI
Requirement, company is having 2 ENA plants at distillery section with the capacity of 10 LPD
and 6.5LPD Respectively.

BAGASSE:
Bagasse is the residual material after the extraction of juice from sugar cane. In
hiranyakeshi sugar factory, It is actively used as a fuel by which the industry is self sufficient for
its fuel requirement. The saved bagasse can be selectively used as fuel in the lean period/off
season or sold to the interested parties.
BIO-GAS:

The company 1MW Bio-gas power generation plant for utilising Biogas available from Effluent
treatment plant jointly set up with Indian institute of science, Bangalore and National bio-energy
board.

FINAL MOLASSES:
It is highly viscous left over material sugar/ reducing sugar and organic/inorganic
impurities. It is raw material for distilleries of our organisation.

FILTER CAKE:
Filter cake commonly called as Press mud. It is the suspended impurities during the
process of cane juice clarification by the sulphitation process. The material is used as manure
and the factory manages to sell the filter cake to the cane growers at concessional rates and
achievers recycling of the market back to field.


 c 
The company operates in Regional, National and international levels. It is located in the
area where cane is grown as major Crop and also climatic conditions are suitable for sugar cane.
Employees in hiranyakeshi sugar factory are almost from local areas. The company operates
internationally as it exports sugar to different countries.

 c c
c 
In the taluka, nearby Hiranyakeshi sugar factory, new factories are already operating in
the area. The company is facing tough competition by these new firms. Some of the factories
situated in Maharashtra state also potential competitors¶ for Hiranyakeshi sugar factory. Some of
the competitors are as given below.
Halasiddanath sugar factory,Nippani.

Renuka Sugar factory, Kokatnure.

Satish sugar factory factory, Gokak

c

ccc
y? Good transportation facilities

y? Nearer to river(Hiranyakeshi)

y? Well established plant layout

y? Good safety measures

y? Well established residential Quarters for employees

y? Nearer to the state NH4 highway

y? Nearer to Raw material

 
 $ 

As we studied the Hira sugar organization they mainly having problems with their
supplier and production. Because the supply of sugars canes is very much to the
firm but the production capacity is bit low compared to the supply of raw
materials because they are having less capacity of crushing machines.

And also the Hira sugars don¶t having the marketing department in organization
so they are having some kind of the problems wit\h their marketing of products, so
I¶m studying these problems along with supplier satisfaction towards Hira sugars.

Along with all these, I¶m studying comparative study with Renuka sugars to chck
evaluate the performance of Hira Sugars.
 TITLE OF THE PROJECT: ³ + -' " ' +1  
+"c'4

OBJECTIVES:

ý? To study the distribution system

ý? To study the problems of Indian sugar industry
ý? To study the problems of HIRA sugars
ý? To study the regulations of government in sugar industry.


  

Location Sankeshwar

Instrument used observation method

Sampling techniques used convenient sampling

Statistics tool Tables; Pie-charts & Bar-charts are used in analyzing the data.



Observation Method

c :
The information is from
š? Departmental heads.
š? Discussion with managers of Firm
š? Marketing reports



  secondary data¶s are collected from
š? Office records
š? Files & manual
š? Internet and websites
š? News papers and magazines
 

$c$c  

www.google.com
www.economywatch.com?
www.sugaronline.com?