CHAPTER NO - III

MANAGEMENT PRACTICES IN SUGAR INDUSTRY

3.1 Introduction ……………………………………………………………… 127

3.2 Management Practices in Indian Sugar Industry ………………… 128
3.2.1 Sugar Industry system ………………………………………… 129
2.3.2 Key Processes in Sugar Industry …………………………… 133
3.2.3 Sugarcane Development and Procurement .………………. 133
3.2.4 Cane Survey ……………………………………….……………… 135
3.2.5 Calendaring …………………………………..……………………. 136
3.2.6 Supply Ticket/Purchy…………………………………………... 138
3.2.7 Payments to sugarcane growers………………………………. 139
3.3 Cane Out-centers…………………………………………………………. 139
3.4 Manufacturing Process of Sugar Industry ……………..…………. 139
3.4.1 Sugar Unit……………………………………….………………. 140
3.4.2. Milling Section ……………………………………….…………. 141
3.4.3 Boiling House……………………………………………………. 141
3.4.4 Dryer House……………………………………………………. 142
3.4.5 Effluent Treatment Plant (ETP)…………………………….. 142
3.5 By Products of Sugar Industries…………………………………… 143
3.5.1 Cogeneration Unit…………………………………………….. 143
3.5.2 Distillery Unit………………………………………………….. 144
3.6 Sales and Marketing of Sugar……………………………………. 145
3.6.1 Sugar Handling Agents…………………………………….. 145
3.6.2 Sugar Trading…………………………………………………. 146
3.6.3 Sale to Industrial Users……………………………………… 146
3.6.4 Retail Sale……………………………………………………… 146
3.6.5 Sales and Marketing – Others……………………………… 146
3.7 Importance of agro based industries in the rural development… 147
3.7.1 Co-Operative sugar industry………………………………….. 150
3.7.2 Sugar cane Position in India………………………………… 151
3.7.3 Development of sugar industry in India…………………. 152
3.7.4 The Co-Operative sugar industry after 1947…………… 153
3.7.5 Progress of sugar industry in India………………………. 155
3.7.6 Co-Operative movement and sugar industry………….. 156

125
 3.7.7 Permit system in sugar industry………………………….. 158
3.7.8 Assessment by the permit commission of
Indian government……………………………………………. 159
3.7.9 Managing committee………………………………………….. 161
3.7.10 Co-Operative sugar mills federation………………………… 161
3.7.11 National co-operative board & co-operative
sugar factories…………………………………………………… 162
3.8 Pilot Survey of Cooperative Sugar Industries of Pune District….. 165
3.8.1 Crushing Capacity Utilization.......................................... 166
3.8.2 Sugar Loss % Of Cane During Last 3 Years……………….. 167
3.8.3 Factory Wise Hours Lost To Available Hours………………. 168
3.8.4 Factory Wise Sugarcane Crushing And Sugar Production. 169
3.8.5 Results of Pilot Study…………………………………………….. 170
3.9 Conclusion ......................................................................... 171
Bibliography

126
3.1 Introduction:

In this chapter an attempt is made to overview the management

practices in the Indian cooperative sugar industry, it also gives an

insight picture of the development of the Sugar Industry. The

management practices undertaken in the cooperative sugar are an

important aspect of the research, how the process of management is,

what the different activities are, how the information flow is and what

the aspects are needed for improvements. This process is an activity

based process one activity is depending on the other activity which is

managed by Activity Management System (ABM).

The cost to manage the activity is called as Activity Based

Costing (ABC) which is being understood while studying the

management practices of sugar industries. Managing the process and

activities will reduce the losses and the productivity will be increased.

If the process is in the streamline it will reduce uncertainties in the

sugar industries. The word “Industry” refers to the production of

goods through utilization of the available material resources. Growing

of crops on a farm, the processing of raw materials, manufacturing a

finished product or fabrication of parts and components of goods are

all grouped under the category “Industry”. The new DSS system will

overcome the difficulties faced by the management.

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3.2 Management Practices in Indian Sugar Industry

The majority of the commercially manufactured sugar is white

granulated sugar, which is then classified as extra coarse, coarse,

standard, fine, or extra fine granulated. Other types of sugar, such as

brown sugar, are produced with a slight variance from that of white

sugar. Brown sugar is made by retaining much of the molasses during

processing. Candy sugar, used mainly by the brewing industry,

consists of very large white crystals of sugar. Liquid sugar is made

chiefly from cane sugar, while cubed sugar is processed by moldings

granular sugar with a sugary liquid to help cement the crystals

together.

The sugar industry in India is mainly divided into organized and

unorganized sectors. Sugar factories belong to the organized sector

and those who produce traditional sweeteners (Gur and khandsari)

fall into unorganized sector. Sugar factories can be further classified

into co-operative, private and public sectors. There are around 651

sugar factories operating in India with a collective sugarcane crushing

capacity of about 21.39 million tons per day. These factories are

spread majorly in sugar cane growing states, viz., Uttar Pradesh,

Maharashtra, Gujarat, Tamil Nadu, Karnataka and Andhra Pradesh.

Uttar Pradesh alone accounts for 32% of the overall sugar production

in the nation and Maharashtra's contribution is 28%.

The integrated aspect of the sugar industry is depicted below:

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 Fig 3.1 Overview of Integrated Sugar Industry

3.2.1 Sugar Industry System:

The sugar industry in India is divided into organized and

unorganized sectors. Sugar factories belong to the organized sector

and those who produce traditional sweeteners (Gur and Khandsari)

fail into unorganized sector. Sugar factories are further classified into

cooperative, private and public factories. The total sugar factories in

India as of 31/12/2011 there are 667 of which 324 are cooperative

sugar industries, 281 are private and 62 are publicly undertaken. 1

The sugarcane crushing season is about six months in this period

1 Annual Report 2011-12 –Dept of foods and public distribution, Ministry of

consumer affairs, food and public distribution, Government of India.

129
most of the people are employed in harvesting, loading and

transportation activity.

Almost all sugar mills depend for their supplies of sugar on a

large number of independent farmers. If the yield of sugarcane per

hectare is improved, the benefit goes to the growers while if the cane is

rich enough in sugar content; it becomes profitable to the mills.

Sugarcane is an essential commodity under the essential commodity

act, 1965 as such the government is empowered to control its

production, distribution and supply. 2 The harvesting season ranges

from 2 ½ months to 11 months the harvested sugarcane should be

crushed within 24 hours to get good recovery of sugar. Transportation

facility and harvesting facility should be provided to the farmers with

nominal charges.

A group of harvesters under the supervision of the agricultural

development officer of the sugar factory will harvest the crop and then

load to the vehicles in the presence of the crop farmer. Sometimes

sugarcane harvester machines are being used by the sugar factory

where the land and furrow conditions are suitable otherwise the

sugarcane is cut by hand cane cut knives and loaded in the bullock

cart or truck or tractor trailer. Weighing is located near to the

crushing center, once the weighing is completed, then the weight of

the cane is noted in the ERP computer software prepared by the VSI

Sugar and then the cane weight receipt is provided to the farmer and

2Indian Sugar sector network report, Network overview- 2002, SINET conference
Secretariat –India.

130
the transporter for further use. The payment is received in the first

installment through the bank account of the farmer.

Figure 3.2 Sugar Industry Network

The fig 3.2 shows the sugar industry network of different

activities involved in the production of sugar and its byproducts. The

second level starts when the collected sugarcane is then conveyed into

the cane leveler where it is cut and chopped. The cut cane is then fed

to the tandem of the mill, where in it is crushed and the juice is

131
extracted. The extract is actually conducted as a counter current

process using fresh hot water at one end being pumped in the

opposite direction to the cane. The fibrous cane material after the

extraction of juice, called the bogus goes to the boiler, where in the

same is burned to produce steam. The extracted juice is heated to 60-

65oC in juice heater and passed to a reaction tank where liming and

sulphantation takes place. This limited and sulphid juice is pumped

back to a clarifier after heating 100oC which remains there for 3

hours.

The juice is then clarified and is called clarified juice. It is then

passed through evaporator which boils the excess water under

vacuum concentrating it gradually, as it passes from one evaporator

to another, finally the concentrated juice is called the sugar syrup is

sent to the pan for crystallization. 3 A viscous solid mass consisting of

sugar crystals and mother liquor is dropped in a crystallized and then

it is passed through the pug mills to centrifugal machines, due to a

very high gravity factor.

The viscous mother liquor passes through the opening in the

sugar is retained on the screen and it is dropped in the hopper. The

sugar is then passed on to a unit called grader which grades the sugar

in different grades and sizes as per the Indian sugar standards. The

sugar is bagged in the pre stamped empty gunny bags, weighted; the

3Indian Sugar sector network report, Case study (Draft) 2002, SINET conference
Secretariat –India.

132
grades and a number are marked on the bags and these bags are

stored in the godowns.

3.2.2 Key Processes in Sugar Industry

The key processes in the sugar industry are shown below in the

“Sugar Business Value Chain”. The main operations of sugar industry

are Sugarcane Procurement, Manufacturing and sales and marketing

of the sugar. The most essential factors in sugarcane procurement are

the sugarcane development by using different varieties and getting

maximum yield using good varieties which gives maximum recovery

under the given area. The

Fig. 3.3 Sugar Business Value Chain

3.2.3 Sugarcane Development and Procurement

Given the huge competition for cane following capacity

expansion of most of the mills, a mills effort in terms of cane

development activities has a key bearing on cane availability. Hence

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cane development and procurement department is one of the key

departments for any sugar factory. Typically, factories co-ordinate

with about 7500 to 10,000 growers/farmers for procurement of

sugarcane. Since area allotted to factory is fixed by the Government so

as to ensure consistent supply of cane, it becomes all the more

important to develop harmonious and good relations with these

growers so that they do not switch to alternate cash crops.

Hence, generally as cane development initiatives a factory might

come up with the following measures:

• Distribution of seeds at subsidized rate/free to cane

growers.

• Distribution of loans for seed and irrigation facilities.

• Distribution of agricultural supplements.

• Distribution of fertilizers, insecticides and pesticides.

• Conducting general awareness through village meetings.

The Government also carries out some of these initiatives

through various Cane Societies set up by them. These societies are

cooperative in nature and bridge the gap between the factory and the

growers. Normally, in states where these societies exist, a grower need

to first become member of these societies in order to supply cane to

the factory.

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 The process of cane procurement starts almost 6 to 7 months in

advance starting with survey process. It is highly regulated by state

government and every phase is monitored closely.

Figure 3.4 Key Steps in Cane Procurement

3.2.4 Cane Survey

Cane Survey is the process conducted by team of Sugar Mill’s

member and Co-operative society member (or Government

Representative) to assess the amount of cane grown by the growers.

Typically, sugarcane crops take about 10 months to 13 months to

mature. The survey is carried out close to 5 months before the start of

the crushing season, i.e., when the crop has reached almost half of its

life. In survey following are the key things to be recorded:

(i) Grower’s Name

(ii) Father’s Name

(iii) Village

(iv) Crop Type (Plant/Ratoon)

(v) Crop Variety

(vi) Crop Season (Autumn/Spring)

(vii) Measurement of all four sides of field

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 (viii) Total Plot Area

It takes about 2 months for one factory to complete the survey

of all the villages. Once the survey is completed it is fed in the

software (if used, else done manually), then the village-wise ‘Display’

list is generated.

The display list of a village needs to be displayed in the village

with prior intimation of date of display to the villagers. During the

display stage, growers can identify any changes or, alternatively, give

their consent on the survey of their fields. After display there is

window of specified days where a grower can submit an application for

any changes in the society, before the survey is finalized.

3.2.5 Calendaring

After finalization of display, Calendaring is done on the basis of

bonding with the grower. Bonding is the quantity of cane that Sugar

Mill agrees to purchase from the grower and is based on the following

parameters:

• In case of normal yield:

The current year yield is based on the average yield data

provided by the Cane Commissioner or average 2 years supply by the

farmer whichever is lower is taken as the yield.

• General increase:

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 Increasing trend is allowed based on the information provided

by the society

• Additional increase:

If some farmer expects an exceptional increase in the yield,

additional increase would be entered in the system based on the

request of the farmer to the Society and its evaluation.

Depending upon daily crushing requirement, a calendar is

prepared by the Sugar Mill as per the Bonding Policy, issued by the

State Government. General principles of the policy are as follows:

• Farmers can be divided into three categories based on land:

Small farmer (0 – 1 Hectare); Marginal farmer (1 – 2

Hectares); Big Farmer (2-5 Hectares).

• Based on supply, farmers are divided into two categories:

Small (up to 60 quintals); Medium (greater than 60

quintals). Only 85% of the production can be bonded for

any farmer, subject to the average quantity supplied by him

in the last two years.

• Ratoon crop needs to be bought within 45 days from the

start of the factory, whereas plant crop need to be bought

within 45 days from February.

• Bonding with farmer is subject to a cap of 750 qtls, 1500

qtls and 3500 qtls for small, marginal and big farmers.

These principles are liable to change from time to time and,

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 accordingly, the internal auditor should refer to the latest

Policy issued by the Government. Once a calendar is

prepared then it is given to the growers of that area.

fig.3.5 Improved Method of Sugarcane Cultivation-5 Feet distance

between furrows

3.2.6 Supply Ticket/Purchy

Once the crushing season starts, mill personnel generate supply

ticket specifying grower, grower name, variety, quantity to be supplied

and supply date, and send it to the societies. Respective societies are

responsible for distribution of supply tickets to growers, on the basis

of which cane can be supplied to the Sugar Mill.

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 3.2.7 Payments to sugarcane growers

Post supply of the cane, payment is transferred to the grower’s

bank account on fortnightly basis or as directed by the Government.

The mill is allowed to make deductions on account of any loans given

to grower before making the payment.

3.3.8 Cane Out-centers

Cane out-centers are set up by the mill as directed by the

Government, for the convenience of the growers.

A grower can supply cane either at the mill gate or at the out-

centers. Sugarcane needs to be crushed within 24 hours of

harvesting, else it starts deteriorating (driage of cane, resulting in

reduced recovery of sugar from the sugarcane). The distance of out-

center of the mill can vary from 10 kms to around 70 kms or more.

Hence, there is need for out-centers so that cane can reach a factory /

mill at the earliest. Out-center should maintain facilities of weighing

bridge and labour for loading and unloading the cane.

3.4 Manufacturing Process of Sugar Industry

The sugar industry is energy intensive industry, therefore, apart

from sugar cane, steam and electricity are essential for running the

mill. For this reason, most of the sugar mills have a cogeneration unit

for supply of steam and electricity.

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 3.4.1 Sugar Unit

Sugar Mill consists of the following three major areas:

• Milling Section

• Boiling House

• Dryer House

Though milling section and dryer house are continuous

processes, boiling house processes mainly occur in batches. Thus, we

can term sugar industry as semi-continuous. It takes about 2 to 3

days to complete the whole cycle from cane milling to packing. These

lags should be kept in mind while analyzing any production related

data. The norms set up by the management and benchmarking with

other sugar industries should be referred to evaluate the

manufacturing process of sugar unit, so as to provide a reasonable

value addition to the management.

Figure: 3.6 Overview of Sugar Manufacturing

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 3.4.2. Milling Section

Sugarcane is cut into pieces, chopped and fed to mills for

extraction of juice. Sucrose (Sugar content), being perishable in

nature, starts decomposing right from this stage. It becomes

important to add certain chemicals at the milling stage to prevent the

degradation. Cane is passed through sets of 3 or 4 mills so as to have

maximum extraction, before discarding the fiber content as bagasse.

Sugar content and moisture are two key parameters for which bagasse

needs to be monitored at regular intervals. Bagasse so generated can

be directly fed to boiler of cogeneration unit or stored in the yard for

use later on. Bagasse is also consumed by the paper industry and can

be sold in the open market. The juice extracted in the milling section

is sent to Clarifiers for further processing.

3.4.3 Boiling House

The first process of boiling house is clarification. This involves

adding chemicals to the juice to remove dirt and other impurities.

These impurities are then discarded as press mud which can be used

as fertilizer. Clear juice so produced is further concentrated by

evaporation through application of steam.

Through the centrifuge, molasses are discarded as by-product.

The molasses from first set is subject to about three more sets of

evaporators and centrifuges before being discarded as molasses, so as

to extract maximum amount of sugar. The key parameter to be noted

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in molasses is the amount of sugar content in molasses, so as to

ensure efficiency of boiling house.

The concentrated juice is sent for crystallization through

centrifugal vacuum pans or any alternate methods. The sugar crystals

are then sent to dryer house.

3.4.4 Dryer House

Sugar crystals are dried in dryer house and passed through

grader so that it can be separated into different grades depending

upon the size of the crystals. The quality of the sugar being packed is

determined on the basis of ICUMSA (International Commission for

Uniform Methods of Sugar Analysis). A ICUMSA rating is an

international unit for expressing the purity of the sugar in solution,

and is directly related to the color of the sugar. Whiter the sugar,

lower is its ICUMSA value. Apart from these three processes, there

may be additional refining processes to meet the specific customer

requirements.

3.4.5 Effluent Treatment Plant (ETP)

Sugar industries have very stringent guidelines for treatment

and disposal of effluent discharged prescribed by the State Pollution

Control Board (SPCB). A NOC needs to be obtained / renewed from

SPCB depending upon the capacity of mill to crush the cane per day

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before the start of the season. Operational efficiency of ETP should be

closely monitored.

3.5 By Products of Sugar Industries

3.5.1 Cogeneration Unit

Cogeneration unit consist of following three major areas:

• Reverse Osmosis (RO) Plant

• Boiler

• Turbine

• RO Plant

Water is required for production of steam; however ground

water cannot be directly used as it contains minerals, which can

damage the boiler when water is converted to steam. Accordingly, it is

very important to treat this water in an RO plant or Demineralization

of water. The cost of treatment is quite high, hence it is important to

check that steam in the process is condensed and used, so as to

minimize the amount of make-up water from RO plant. Normally,

different factories fix norms/standards for make-up water so as to

measure the efficiency of the production process.

• Boiler

There are different types of boilers used in the sugar industry.

The type of boiler is determined by the type of fuel used and its

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capacity to produce steam. Normally, bagasse-fed boilers are very

common, but there is an increasing trend to use multiple fuel boilers,

so that in off-season alternative cheaper fuels can be used to produce

electricity. Buy products from the boiler or boiler ash and flue gas, for

which there prescribe the standards by pollution control board so as

to minimize damage to the environment.

• Turbine

Steam generated from the boiler is passed in turbine to produce

electricity, before being sent to sugar unit. Electricity, thus, generated

is used in-house and any excess generation can be sold to State

Electricity Boards.

A cogeneration unit cannot be run in off-season because if a

sugar plant is not running, steam generated will have to be vented in

the atmosphere, which will cause pollution. Hence, these days’

cogeneration units have installed condenser units so that steam can

be condensed back to water in off-season.

3.5.2 Distillery Unit

The key raw material for distilleries is molasses and steam.

Molasses is first fermented in the fermentation tank by the application

of yeast. Fermentation is the process by which sugar content in the

molasses is converted to alcohol. Fermented liquid is then passed

through several distillation columns to draw the products as per the

requirement. The distillery is highly regulated by the excise laws and

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all the raw material and finished product are closely monitored by the

excise officer

3.6 Sales and Marketing – Sugar

Sales and marketing in sugar industry is highly regulated by

various laws as sales of sugar are controlled by Sugar Orders released

by Directorate of Sugar every month. These orders are available at

website of Department of Food and Public Administration.

• Sugar handling agents

• Purchase of levy sugar by government and its various

agencies

• Sugar trading on commodity exchanges

• Sale to industrial users

• Retail sale.

3.6.1 Sugar Handling Agents

Maximum amount of free sugar is sold through network of

agents spread across the country. To save on the transportation cost,

major amount of sugar sale happens in local or nearby markets.

Agents bridge the gap between retail stockist and sugar producer and

work on commission basis. Most of the sugar is sold on the ex -

factory basis through the agents. Purchase of Levy Sugar by

Government and its Various Agencies

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 Sugar producer needs to sell levy quota to various government

agencies or government for sale through public distribution system (in

line with the Government notification).

3.6.2 Sugar Trading

Sugar is traded at the commodity exchanges in India namely,

National Commodity and Derivatives Exchange Ltd, Multi Commodity

Exchange of India Ltd and National Multi Commodity Exchange of

India Ltd.

3.6.3 Sale to Industrial Users

In certain food processing industries like, beverages, hotels, etc.

there is huge demand for high quality sugar. Mill owners produce

desired quality of refined sugar for these industrial users.

3.6.4 Retail Sale

Mill owners also have the option of doing retail sale of sugar .

This requires building up marketing capability/value chain so as to

ensure returns commensurate with the increased cost of production

and marketing overheads.

3.6.5 Sales and Marketing – Others

This includes the sale of Electricity, Distillery products and

byproducts like Bagasse, Molasses and Press-mud.

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 (a) Electricity - Sale of electricity can be either in-house

consumption at the plant or township, or transfer to Grid.

(b) Distillery products - Sale of distillery products is regulated

by excise laws in India. Currently, it is sold to breweries or chemical

manufacturers. In India, though the Government has prescribed

certain timelines for blending of ethanol with petrol, it is still not

mandatory. Once it is done mandatorily, it will give a boost to demand

of alcohol.

(c) Molasses - Again, highly controlled by the Government due to

its usage in local hooch manufacture, wherever, mill owners have not

put up their own distilleries, it is being sold either to other distilleries

or to alternate users like, hooch manufacturers or breweries, etc.

(d) Bagasse - Due to its requirement in boiler running coupled

with high cost of transportation, it is being sold by the mill owners to

different industrial users (usually on as is where is basis).

(e) Press-mud - It is usually provided free of cost or at a nominal

price to the farmers/growers by the mill owners as part of cane

development activities.

3.7 Importance of agro based industries in the rural

development:

In the developing country like India, the birth rate is far higher

than the income rate; therefore the agricultural field is over burdened.

Even today 70% population depends on agriculture in India. There is

147
tremendous ‘disguised unemployment. Like disguised unemployment,

there are also industrial unemployment and seasonal unemployment.

Prof. Arthur Lewis and Prof. Nacarse have presented their theory that

the unemployment of the rural areas may be advantageous to make

capital. According to them, it is necessary to encourage rural

development in order to reduce the rate of unemployment. Their

theory has proved itself effectively in India and other undeveloped

countries. In the period of Industrial Development, more and more

industries sprang up in the urban areas, so countless job hunters

migrated to big cities. As a result, big cities like Mumbai, Chennai,

Kolkata and Delhi are over populated. We come across several

problems arising from growing urbanization. In order to avoid such

problems in future, the one and only remedy is to start industries

depending on agriculture, in rural areas only. Spinning mills, oil mills,

rice mills and sugar factories should be started to provide ‘job for the

rural population. It will also put an end to ‘migration’ to some extent.

It will certainly help to maintain balance of economical development.

This agricultural products may be preserved and the farmers will get

reasonable prices of them. It will also raise the standard of living in

the rural areas.

India as a developing country is in need of rapid

Industrialization but at the same time, the fact should not be

forgotten that basically India is an agricultural country. The main

occupation of a large number of Indians is farming. So only lop-sided

development with the help of Industrialization and neglecting the

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agriculture would not prove beneficial to India. The second thing is

for such type of industrialization, India has to depend on the foreign

help say in the form of technical know-how, different machinery and

parts and sometimes financial assistance also. Without neglecting the

importance of industrialization, one can definitely say that it is

desirable for India to concentrate on industries which are based on

agriculture that is Agro-based industries, such as cotton, jute, oil

seeds, and sugar and so on. With the help of these agro-industries,

India can achieve balance and self-reliant development at the same

time; the agricultural production can be used as a raw material in a

proper manner. Normally the farmers grow cash crops like cotton,

sugarcane etc. Because of these agro-industries, there are chances of

social as well as economic development of the rural areas. The sugar

industry is one of the important Agro-Industries. India is the second

largest sugarcane producing country in the world. There are a number

of references in Puranas regarding sugarcane production.

Vishwamitra provided Sugarcane a luxury to Trishanku. Cane has

been grown in India from time unmemorable. Mention of it occurs in

the Vedic literature (500 B.C.). Chinese writers of the 8th Century B.C.

have recorded that knowledge of sugarcane and its products was

derived from India. In 600 AD, the Chinese Emperor Tsai Hang sent

agents to Bihar in India to learn the art of sugar manufacture 4.

4
http://coopsugar.org/history.php accessed on 2nd january 2014

149
Alexander, the Great and his soldiers took back with them sugar cane.

So it can be believed that India is the original home of sugarcane.

Production of sugar from sugar cane is a very old process in

India. In olden days sugar cane was cultivated in almost all the parts

in the country was being turned into “Gur”.

3.7.1 Co-Operative sugar industry:

We come across certain evidence proving that India knew the

art of producing sugar and its by-products four hundred years B.C.

Such evidences are not in the ‘Arthshastra of Kautilya’ as well as in

the ‘Rigveda’ Many countries learnt the sugar making process from

India. Sri Lanka, Java, Persia, Spain, Egypt learnt the technique of

growing sugarcane from India only. In the historical period, sugar was

taken as a thing of luxury. Common people could use it only in the

form of medicine. India exported sugarcane on a large scale to the

European countries in the 15th Century. After 1835, sugar was

regularly exported to India.

We do not get evidences to know exactly in what regions sugar

cane was grown, but it is noted that the Dutch people tried to produce

sugar on a large scale at Magadh in the Bihar state. The British tried

to open a sugar factory in the 18th Century. Thus sugar industry was

started. The first factory was opened in 1784 at Sukhsagar. Then L.T.

Paterson started the second sugar factory in Bihar. Later the strength

of sugar factories grew gradually. Of course, all the factories were

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private. In the beginning, these factories got sugarcane from the

farmers but in order to run the factories properly, some land was

purchased and sugarcane was grown on it for the sake of existence.

3.7.2 Sugar cane Position in India

Sugarcane and its main product have been known in India since

ancient times. The earliest reference of sugarcane appears in Atharva

Veda. The sacred book of Hindus composed between 5000 and 1000

B.C. Efforts to establish a modern sugar industry, however go back

only to the beginning of the present century. India lies entirely to the

north of equator. Hence, sugar cane is grown in nearly all parts of

India.

A hundred years ago or more, sugarcane was attracted

throughout the world by a mysterious disease which almost killed it.

It was thought that the days of sugarcane cultivation had come to an

end. A batch of scientists undertook a tour of the world to find out if

any variety of sugarcane was to be found anywhere at all. They visited

all the countries which were traditional cultivators of sugarcane. After

visiting many countries in vain, they reached India and started

touring all the sugarcane areas. They came to Bihar. To their great

surprise they found that in Saran district of this state, there was left a

variety of sugar cane, which had not suffered the fate that all other

varieties had met with, throughout the world. Not a stalk had been

attached by the disease that had caused havoc else-where 2. By

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careful breeding they were able not only to save sugar cane from

extinction, but also to evolve many new varieties. Bihar and India can,

therefore, be justly proud of being the progenitor of the hundreds of

sugarcane varieties that now flourish in the world viz. Adasali,

Autumn, Spring (419,449,527) etc. The research center for sugarcane

was established at Pusa in 1935 by Lord Curzon, the then Viceroy of

India. 3 Today it is one of the biggest sugarcane research centers in

the world. It has two sub-stations and besides them, zonal centers

dispersed over the White Sugar belt where varietal, manorial and

cultural tries are conducted for evolving varieties suitable for different

areas and regions of India.

3.7.3 Development of sugar industry in India

The first sugar factory in India was started in 1784 by a civilian,

Croftes, at Sooksagar which was privately owned. The second factory

was started in 1791 in Bihar by L.T. Paterson. 4 Then Mr. Edward

Campbell strove to start another sugar factory at Trichinapaly in

Madras State, but he did not succeed. But at the same time, Robert

Campbell succeeded in establishing a sugar factory in the same area.

According to Mr. Robert Campbell, a sugar factory cannot succeed

unless it possessed it’s own sugarcane farm. For the sake of supply of

sugarcane, it has to depend on sugarcane cultivators mainly

interested in manufacturing of gur from the sugarcane. So it was

found necessary for a sugar factory to have a farm of sugarcane

owned by itself. Attempts were made to start a sugar factory in

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Bombay province. Eventually, various sugar factories were established

in the private sector till the period of Independence. The protection

policy of 1932 also provided a great impetus for the development of

the sugar industry and up to 1938-39, nearly 139 sugar factories were

established in India.

A logical extension of the co-operative philosophy in the sugar

industry was first made in 1933 when four sugar manufacturing

enterprises in the co-operative sector were established at Biswan

(Uttar Pradesh), Thummpala, Etikoppaka and Vuyyaru (now in

Andhra Pradesh). These were established immediately after the sugar

industry in the country was granted protection, Out of these, only the

factory of Ettikoppaka has survived. But this surviving

There were 29 sugar factories in India, but sugar production

was only 120 thousand tons only (1930-31). The production was poor

if compared with its need. As a result India had to import 940

thousand tons of sugar. In 1936-37, there were 137 factories and

sugar production was increased to 1128 thousand tons. Therefore, the

import of sugar decreased to 24000. Later there was almost no import

of sugar. India was divided in 1947 but the partition could not affect

our sugar industry.

3.7.4 The Co-Operative sugar industry after 1947

After 1947, there were ups and downs in the prices of sugar and

gap and the farmers had to suffer a lot at the hands of the factory

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owners, therefore, the Indian government brought its distribution,

price fixation and production under its control. In those days, the

farmers in the Ahmednagar District, from Shrirampur took the

decision opening a sugar factory on co-operative basis. Prof.

Dhananjayrao Gadgil the great economist of the age and Padmashri

Dr. Vithalrao Vikhe Patil strove in that direction. The first sugar

factory was built at Pravaranagar in 1949. It was started in 1950-51.

The first co-operative sugar factory began to run successfully so

other farmers from the different part of India launched the same

project and within 40 years (1951 to 1990), 218 co-operative sugar

factories sprang up on the Indian soil. In this way, sugar industry

flourished tremendously after independence.

Before 1947, not a single co-operative factory was existing in

our country but in the four decades, later, 55.18 per cent of total

numbers of factories were built here. The government encouraged the

co-operative factories with the view of rural development. Such

factories caused the down fall of private factories. Even today the co-

operative system is put into practice on a large scale.

In the year 1955-56, there were only 3 co-operative factories.

They could produce merely 1.2 per cent of total sugar production. In

1960-61, 30 co-ordinary people, certain quality of sugar-cane was

also used for making “Khandasari” i.e. “Deshi Sugar” for confectioning

and other similar use.

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 3.7.5 Progress of sugar industry in India

The Traffic Board of 1931-32 recommended that protection

should be granted to the industry for a period of 15 years. With the

grant of protection, there was a remarkable development of the sugar

industry. In 1931-32, there were only 31 factories with a total

production of 1,58,000 Tonnes. With the grant of protection the

number of factories rose to 135 with a production of 9,19,000 Tonnes

in 1935-36. As a result of increase in production, there had been a

sharp decline of imports. The protection continued till 1950 as the

result of the Tariff Board’s recommendation from time to time.

Due to World War-II, the growth of industry was retarded. A

Sugar famine developed during the war period. The Government was

forced to introduce sugar control. It continued until 1947.

Production declined in this period. Due to restrictions, consumption

also declined.

In spite of this fact, it was only at the end of the 19th Century

Sugar Factories in the modern sense commenced operating in India.

It is said to have been first introduced by the Duchino North Bihar in

about 1840. But this was an unsuccessful attempt. Successful

attempts have been first made in 1903 by the Britishers. Until 1930,

India’s Sugar Industry was in its infancy and could not compete with

the foreign sugars. The Government decided to grant protection to the

home industry.

• After Independence:

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 In 1947, India got her freedom and accepted Mixed Economy.

Free India adopted socialistic pattern of society for all round

development of the country. India accepted the policy of economic

planning. The planning period started from the year 1950-51.

Of 7th plan, there were 377 sugar factories which produced

109.8 lakh tonnes of sugar per annum. This is a record production of

sugar in the world.

3.7.6 Co-Operative movement and sugar industry

Within the rural economy, co-operation is of vital importance as

a means of raising the level of productivity as a means of raising the

level productivity, extending improvements in technology and creating

greater and greater, employment opportunities. Once the progress of

economic progress gathers momentum, the co-operative movement

has an increased to cater to the existing needs of the community

opportunities.

The co-operative movement has played a major role in

developing the sugar industry in India. The growth of sugar industry

should be thus attributed to the Government's role in the development

process as well as to the success of sugar co-operative in

Maharashtra. As mentioned in the five year plans and other

Government policy guidelines, preference was given to new sugar

factories in the co-operative sector over public and joint sectors. As a

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result, with the help of State Government sugar cane grower’s

established co-operative sugar factories in the country.

The first co-operative sugar factory was established at

Pravaranagar, Dist - Ahmednagar, Maharashtra under the leadership

of Shri. Vitthalrao Vikhe-Patil and Dr. D. R. Gadgil, an eminent

economist. Since then, inspired by the success of this co-operative

factory and due to the supportive role played by the State Government

the number of co-operative sugar factories number of co-operative

sugar factories has grown rapidly. In 1950 there was only one co-

operative factory out of 40 factories. In 1961-62, out of 180 factories

34 were co-operative factories. The contribution of the co-operative

sector to total sugar production was 17.4 %. After a decade, i.e. in

1970-71 there were 73-co-operative sugar factories; out of a total

number of 215 factories, and they contributed 33.8% of total sugar

production in 1989-90, there were 377 sugar factories in operation,

out of these 211 were in the co-operative sector. Also the contribution

of the co-operation sector to sugar production was as high as 60 %

Thus, the co-operative sector has played a dominant role in the Indian

sugar industry. Table No.2.1 shows the contribution of co-operative

sector in the sugar industry.

There are various reasons for the dominant position enjoyed by

co-operative sector in the sugar industry. Unlike private factories, co-

operatives are owned by cane growers. So, the co-operative aim of

paying higher prices, and more and more facilities to the cane

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growers. The co-operative sugar factories have played a positive and

effective role in stabilizing sugarcane and sugar production and hence

agricultural incomes in their area of operation. This has been done

through development of irrigation resources and assuring a steady

market and remunerative prices for sugarcane.

3.7.7 Permit system in sugar industry:

In order to get permission for the sugar industry, the promoters

of the factory have to apply for it through proper channel, according to

the government policy. It may be a co-operative sugar mill or a private

one. Even though, the Indian Government has cancelled the permit

system, according to the new policy in June, 1991 for 8 main

Industries, it is required. As sugar industry is included in them, the

permission is a must for starting a new sugar mill or to extend the old

one. The application is sent to the Industries Department of

Government of India.

• Documents to be sent with the application

• Techno Economic Feasibility Report.

• Detailed Information about the Industrialist.

• Information about the roads, railways, transportation,

electricity, place of factory area under irrigation.

A certificate from experts giving information regarding the land

under sugarcane growth and possible area for more sugarcane

cultivation
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 Detailed information about availability of workers, permanent as

well as temporary labors for cutting and transporting sugarcane in the

season

• A regional map sharing all the villages included in the area

and their distance from the factory to be newly built.

• The estimate of capital required for the new factory.

• Information regarding the future progress of factory in a

period of ten years.

The application, attached to all the documents, is sent through

the Sugar Promoter, Maharashtra State to the Industrial Department

of the Central Government to the Promoter assesses the applications

before sending them to the Government.

3.7.8 Assessment by the permit commission of Indian

government

All the applications are sent to the Food Department under the

control of the Central Agricultural and Irrigation Ministers. Experts

consider them and permission is granted by taking into account the

reports of satisfactory technical and economical condition of

applicants. If necessary, a sub-commission is appointed to survey the

site. Considering its report permission is granted.

Some restrictions are also made as follows:

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 10% of the project expenditure must be collected in a fixed

period. The application must be sent to the Industrial Financial Board

in time. The certificate of recognition of the factory site should be

obtained from the State Government. The detailed information about

the machinery to be purchased later must be sent to the sugar

industry promoter for recognition. Thus, various conditions are

fulfilled and the new factory. In the past, the expenditure to be made

on the project was less so the promoter had to collect only 10 % of it.

Now a day it is approximately 34 to 36 crore Rupees so the percentage

is 7.5.

The Central and the State Governments have adopted the policy

of giving a performance in the rural areas for building new factories.

Construction and management of co-operative sugar factories:

After getting permission to open a sugar factory, its promoter

sells shares to the members. The price of each share of the co-

operative sugar mills is generally Rs. 2000/- Preference is given to the

sugarcane cultivating farmers. Farmers from the factory area get the

membership. We find 3 categories of the members. Cultivating

members, non cultivating members and Institutional members.

Farmers growing sugarcane is included in the first category second

category has farmers who do not grow sugarcane whereas the third

category includes the members of the Central co-operative bank and

other co-operative societies.

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 3.7.9 Managing committee

Its members are elected after every 3 years. Now it is after every

5 years. President and Vice-president are elected from among them.

The committee forms schemes regarding the working of the co-

operative sugar factories. In order to execute it, called Managing

Director is also elected. The Managing Director as well his secretary,

both are the paid servants of the Sugar factory. Both of them are

responsible for exercising powers.

Finance: - If the permission to open a sugar factory is granted,

the Industrial Finance Corporation gives 60% of total expenditure to

be made for purchasing required machinery. The State Government

also provides a 20 % loan. The co-operative banks, State Bank of India

sanctions long period loan. The loan is to be paid back after the

factory starts production.

3.7.10 Co-Operative sugar mills federation:-

All the sugar factories in the state have their federation. The

federation of sugar factories in Maharashtra is known as Maharashtra

State Sahakari Sakhar Sangh. Its office is Sakhar Bhavan located at

Mumbai. The federation guides the factories and solves their various

problems. All the factories are the members of the federation.

In 1960, the co-operative federation has established a natural

federation on the national level in Delhi. It is the National Federation

of co-operative Sugar Factories. All the co-operative federations of

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various states are its members. The Federation strives to solve

problems on a national level.

3.7.11 National co-operative board & co-operative

sugar factories:

It works to implement the various schemes of the Indian

Government for the development of the factories. Shares of new

factories are to be purchased by the State Government so the Board

works according.

A. First Five Year Plan:

The production of the industry in 1950-51 was 11.14 lac

Tonnes of sugar. The measures were taken to utilize the idle capacity.

Unfavorable located factories were shifted to more suitable sites.

Efforts were made to increase the supply of the sugarcane to factories

so as to increase the average numbers of working days.

The production was increased up to 14.94 Lac Tonnes in 1951-

52. There was an increase in production of sugar mainly due to the

introduction of free sales of sugar. Factories were allowed to sell in

excess of 10.7% of production in 1948-59 and 1949-50. Prior to this,

factories bad to sell the entire output under controlled prices, this

gave no incentive to increase production.

Production of sugar again declined in 19552-53 and 1953-54

due to decrease in number of factories in actual operation from 133 to

86 and heavy opening stocks with the factories, the old and obsolete

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machinery and diversion of sugar cane to the production of “Gur” due

to increasing demand for liquor cane and diversion of cane supplies to

joggery. The result was the shorter duration of the season for sugar

factories. The total production of sugar production in the year 1965-

66 was 35.4 lac tonnes.

B. Fourth Plan:

There was aim to achieve an output level of 47 lakh tones by

1973-74. The production program was partly through the expansion

of existing units and partly through the establishment of next units.

Primarily in the co-operative sector, there was sugar production of

42.50 lack tones in 1969-70, but sugar production fell in 1970-71 and

19971-72 to 37.40 and 31.10 lac tones respectively. With the rise in

open market price of sugar, its production in 1972-73 again shot up

and stood at 38.8 lack tones. In the final year of 4th Plan 1973—74,

sugar production further rose to 39.5 lac tones.

C. Fifth Plan:

It was expected to step up sugar production to 5.70 million tons

by the end of Fifth Plan. Additional capacity was to be encouraged for

the prosperity into the co-operative sector, with emphasis being laid

on integrated and larger plans to secure advantage of economies of

large scale. This was to facilitate economic utilization byproduct of

the industry leading to an overall improvement in the performance.

Diversification of raw material based on the production of best sugar

163
was also expected. The cultivation of sugar beet program- formed a

part of agricultural development.

In the year 1973-74, that was the beginning of the Fifth Plan

production was 39.5 lacs tonnes and by the year 1976-77 that is at

the end of the Fifth Plan, it was 48.4 lac tonnes.

D. Sixth Plan:

The target of output for the sugarcane in the sixth five year plan

period was as under: -

Table 3.1. Annual Growth rate of sugarcane during sixth plan period
Annual Compound
Sugarcane 1979-80 1984-85
Growth rate
(Million
128 200 to 215 9.3 to 10.9
Tonnes)

Agricultural sector performed very well during the Sixth Plan

and some of the targets were overfull filled for the first time since the

first plan. Sugarcane production was almost on the target.

E. Seventh Plan:

During the Seventh Plan, the agriculture sector is expected to

grow at an average annual rate of 4% in terms of gross output. The

growth rate of output is expected to be 3.8% in sugarcane. Target of

sugar fixed in Seventh Plan was as below: -

Table 3.2. Annual Growth rate of sugarcane during seventh plan period
Compound Annual
Commodity Unit 1984-85 1989-90
Growth
Million
Sugar 6.2 10.2 10.5
Tonnes

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 F. Eighth Plan

During the eighth plan the agro industry is expected to grow at

annual average rate 5.3% in terms of gross output. The growth of

output is expected to be 4.3%. In sugarcane target of sugar fixed for

Eighth plan as under.

Table 3.3. Annual Growth rate of sugarcane during Eighth plan period
Compound Annual
Commodity Unit 1990-91 1995-96
Growth
Million
Sugar 6.2 10.2 13.2
Tonnes

Agricultural sector performed well in eighths plant and target

overall fulfill. The sugar cane production was almost as per target.

This trend continued in the ninth plan till 2001 on words.

The introductory part of this study enabled the researcher to

know about the growth and development of the sugar industry and

especially the co-operative sugar industry movement pertaining to

India during the pre and post independence period.. This will help the

researcher to study the cooperative movement in Maharashtra State

in the light of national development and planned approach.

3.8 Pilot Survey of Cooperative Sugar Industries of Pune

District:

A pilot survey was undertaken on selected six cooperative sugar

industries based on crushing capacity more than 2500 M. Ton/day to

find out the problems of the sugar industries. The researcher visited

the selected six co-operative sugar industries of pune district,

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collected the data from their previous records and the annual reports.

The following problems were identified.

3.8.1 Crushing Capacity Utilization:

Table 3.4 Crushing capacity utilization

Sr.No. Name of the Expected Capacity

Sugar Year Standard Utilization
Factory Norms (%) Average (%)
1
MSSK 2007-2009 100 93.08
2
SSSK 2007-2009 100 121.39
3
CSSK 2007-2009 100 98.14
4
NBSSK 2007-2009 100 188.14
5
KSPSSK 2007-2009 100 111.83
6
GSSK 2007-2009 100 152.02

Fig. 3.7 Crushing capacity utilization

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 The expected standard norms are 100 % utilization of the

crushing capacity the pilot survey was conducted for the year 2007-

2009 and it has been observed that the MSSK is using low capacity

utilization (93.08 %) as compared to the other sugar factories and

NBSSK is utilizing the highest capacity utilization (188.14 %) of its

total production of sugar. The capcity utilization is one of the

technical norm for cost effectiveness and it is found that the MSSK is

lacking in crushing capcity utilization due to less sugarcane in the

area of operation and the sugar cycle affects the area of operation of

this sugar factory.

The available crushing capacity and it can utilize more that 100

% of its capcity. Less crushing capacity utilization increases the cost

of sugar production.

3.8.2 Sugar Loss % Of Cane During Last 3 Years:

Table 3.5 Sugar Loss % Of Cane During Last 3 Years

Sr. Name of the Year Expected Average

No. Sugar Factory Norms (2%) Sugar Loss

1 MSSK 2007-2009 2 1.76

2 SSSK 2007-2009 2 1.89

3 CSSK 2007-2009 2 1.84

4 NBSSK 2007-2009 2 1.65

5 KSPSSK 2007-2009 2 1.95

6 GSSK 2007-2009 2 1.54

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 Fig 3.8 Sugar Loss % Of Cane During Last 3 Years:

The expected standard norms are 2 % sugar losses are allowed

of total recovery of sugar in the pilot survey, it is being observed that

the KSPSSK is having the maximum losses in sugar recovery (1.95 %)

as compared to the other sugar factories. And GSSK is having

minimum sugar losses (1.54 %) of its total recovery of sugar.

3.8.3 Factory Wise Hours Lost To Available Hours:

Table 3.6 Factory Wise Hours Lost To Available Hours:

Sr. Name of the 2006-

2007-2008 2008-2009 Average
No. Sugar Factory 2007

1 MSSK 308 284 207 266.33

2 SSSK 497 200 269.15 322.05

3 CSSK 348.58 332.25 330.45 337.09

4 NBSSK 114 132 79 108.33

5 KSPSSK 238 181 117 178.66

6 GSSK 161 112 77 116.66

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 Fig 3.9 Factory Wise Hours Lost To Available Hours

The expected that there should minimize lost hours to available

hours in sugar production in the pilot survey, it is being observed that

the CSSK has lost the maximum hours two available hours in sugar

production (337 Hours) as compared to the other sugar factories. And

NBSSK has lost minimum hours to available hours (178.66 Hours) of

its total hours of sugar production.

3.8.4 Factory Wise Sugarcane Crushing And Sugar

Production:

The expected that the sugar factory should crush more

sugarcane and have more recovery and production of sugar it is being

observed that the KSPSSK has crushed more sugarcane and has more

production from year 2007-2009 as compared to the other sugar

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factories. And MSSK and SSSK has showing fluctuations in the sugar

cane crushing and sugarcane production from year 2007-2009.

Table 3.7 Factory Wise Sugarcane Crushing And Sugar Production

Name of 2006-07 2007-08 2008-09

Sr. the
Sugar S.C. S. S.C. S.C S.C. S.C
No. Crush Prod. Crush Prod. Crush Prod.
Factory

1 MSSK 8.06 9.57 8.19 10.30 6.22 7.47

2 SSSK 6.93 8.03 6.61 8.06 5.32 6.27
3 CSSK 8.06 9.57 8.19 7.30 8.09 9.67
4 NBSSK 5.32 6.29 6.95 8.05 8.20 9.90
5 KSPSSK 12.34 14.06 12.11 14.16 9.89 11.31
6 GSSK 8.19 9.98 5.31 5.99 6.61 8.06

Fig. 3.10 Factory Wise Sugarcane Crushing And Sugar Production

3.8.5 Results of Pilot Study:

• The problems of the cooperative sugar factories were mainly of

the crushing capacity utilization, which is based on the

availability of the sugarcane. Those sugar factories that have

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 limited areas of operation or not planned sugarcane cultivation

well are facing problems.

• The next problem is sugar loss the average sugar losses are

more as compared to the standard given by government.

• The sugarcane crushing and production was undertaken which

shows that some sugar factories the availability of sugarcane is

less as compared to other factories.

• The lost hours are due to a shortage of sugarcane are observed

more than the other stoppages which can be reduced by proper

planning of cultivation of sugarcane, harvesting activity

management and reducing the losses in transportation of

sugarcane.

• The results of the pilot study give a criteria for selecting one of

the sugar factories of the above six selected factories of the Pune

district and the pseudo implementation of model in the The

Malegaon Sahakari Sakhar Karkhana Ltd Malegaon Tal Barmati

was selected.

3.9 Conclusion:

The Indian sugar industry is the real backbone of the rural

India. The management practices involved in the different activities

done by the sugar industry for production of the sugar from

sugarcane. The management process involves the sugarcane

development department which comes under the agriculture

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department and the role of this department is to give information to

the farmers about sugarcane cultivation. Keep the records of

cultivation and prepare the harvest program and accordingly give the

details of cultivation to production department so the further planning

of crushing season can be made possible.

This department work independently and the information given

by this department shows variations in each season, about the actual

cultivation and the actual production of sugar.

Bibliography :

Annual Report 2011-12 –Dept of foods and public distribution, Ministry

of consumer affairs, food and public distribution, Government of India.
Indian Sugar sector network report, Network overview- 2002, SINET
conference Secretariat –India.
Indian Sugar sector network report, Case study (Draft) 2002, SINET
conference Secretariat –India.

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