Growth and Trend Position of Sugar Industry

Growth and Trend Position of Sugar Industry

CHAPTER IV GROWTH AND TREND POSITION OF SUGAR INDUSTRY 4.1. SUGAR INDUSTRY OVERVIEW 4.1.1. HISTORY OF SUGARCANE Sugarcane is a renewable, natural agricultural resource because it provides sugar, besides biofuel, fibre, fertilizer and myriad of by products/co-products with ecological sustainability 1. The world demand for sugar is primarily derived from sugar cane. Sugar cane accounts for eighty per cent of sugar produced and the rest is made from sugar beets. Sugarcane predominantly grows in the tropical and subtropical regions, and sugar beet predominantly grows in colder temperate regions of the world. A few merchants began to trade in sugar - a luxury and an expensive spice until the 18 th century. Before the 18 th century, cultivation of sugarcane was largely confined to India. Sugarcane plantations, like cotton farms, were a major driver of large human migrations in the 19 th and early 20 th century 2. 4.1.2. SUGARCANE IN INDIA Sugarcane is one of the significant cash crops. The production has grown dramatically over past several years. Sugarcane growing area in India may be broadly classified into two agro-climate regions: Region Sub - Tropical Tropical States Uttar Pradesh, Bihar, Punjab, Haryana Maharashtra, Gujarat, Tamil Nadu, Andhra Pradesh, Karnataka Sugarcane industry was initially set up in the sub-tropical region. Till 1950s, ninety per cent of area under sugarcane was in this region. With commencement of 73

planning process, sugarcane found its route in tropical area. Sugarcane being a tropical crop finds favourable agro climatic conditions for its growth in this region - i.e., higher yields. Now the tropical region is already developed and reached near saturation level. The biggest state in this region, Maharashtra faces acute problem of lack of water which effects cultivation of sugarcane. The sub-tropical belt, with fertile land, high water table and irrigation, appears to be the area for future growth 3. 4.1.3. INDIAN SUGAR INDUSTRY OVERVIEW The Indian sugar industry is a key to the rural development, supporting India's economic growth. The industry is inherently inclusive supporting over fifty million farmers and their families, in an era where there is a need for inclusive growth; the sugar industry is amongst the few industries that have successfully contributed to the rural economy. It has done so by commercially utilising the rural resources to meet the large domestic demand for sugar and by generating surplus energy to meet the increasing energy needs of India. In addition to this, the industry has become the mainstay of the alcohol industry 4, and delivers value addition at the farm side. In general, sugarcane price accounts for approximately seventy percent of the ex-mill sugar price 5. The Indian sugar industry is characterised by the coexistence of private, cooperative and public sector. It is rural centric and hence a key driver of village level wealth creation. It has tremendous transformational opportunities to meet food, fuel and power needs and earn carbon credit. Sugarcane and sugar production are seasonal with more than ninety per cent happening in the winter months of November to March. Crushing season lasts an average for 100-150 days in a year depending on the region, weather, irrigation, 75

cultivation practices as well as sugar cane availability. The cyclicality of Indian sugar is less driven by nature and more accentuated by radical change in Government policies 6. The sugar industry caters to an estimated twelve per cent of rural population in these nine states through direct and indirect employment. Effectively, each farmer 7 contributes to the production of 2.9 MT. of sugar every year. The traditional sweeteners of India like Gur and Khandsari are consumed mostly by the rural population in the country. In the early 1930s nearly two third of sugarcane production was used for the production of alternate sweeteners like Gur and Khandsari. As accordingly because of the better standard of living and higher incomes, the sweetener demand has shifted to white sugar. Currently one third of sugarcane production is used by the Gur and Khandsari sectors 8. India has, in recent years emerged as the largest sugarcane and sugar producing country in the world, The cane sugar industry of India spread over vast regions of the country occupies an important place in the economic and social life of the country in view of the wealth generated as well as the employment provided to lakhs of people in rural areas of the country. The industry has the potential to produce a number of essential chemicals from it s by products and generate extra power for supply to other industries or to state grids. The modern sugar industry of India since it was established in the early thirties has witnessed vast technological changes over the past six decades, thanks to the research and development work carried out in the field of sugar cane manufacture in the country and also in the world sugar industry. Subsequent growth of the industry has been accompanied by the technological advance in the production of raw material as well as the manufacture of sugar and the country is 75

now in a position to export both raw and white sugar after meeting the internal demand of this sweetening agent. However, technological progress is key to any further growth in the manufacturing sector and it is essential for the technologists engaged in the sugar cane manufacture to keep abreast of the developments taking place in different parts of the world in the field of technology of sugar production 9. In the year 1930 there was an advent of modern sugar processing industry in India which was started with grant of tariff protection to the sugar industry. In the year 1930-31 the number of sugar mills increased from thirty to one hundred and thirty five. In the year 1935-36 production was increased from 1.20 lakh tonnes to 9.34 lakh tonnes under the dynamic leadership of the private sector. In the year 1950-51 the era of planning for industrial development began and Government laid down targets of sugar production and consumption, licensed and installed capacity, sugarcane production during each of the sugar companies have been established in large sugarcane growing states like Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamil Nadu, and Andhra Pradesh and are the six states contributing more than eighty five per cent of total sugar production in India. Fifty seven per cent of total production is together contributed by Uttar Pradesh and Maharashtra. Indian sugar industry has been growing horizontally with large number of small sized sugar plants set up throughout India as opposed to the consolidation of capacity in the rest of the important sugar producing countries and sellers of sugar, where there is greater concentration on larger capacity of sugar plants. 76

Figure 4.1 Production of Sugarcane in Major States of India Source:http://www.sugarcane.res.in/index.php/mis/sugarcane-statistics/281 Both sugar and sugarcane are treated as essential commodity. The Government s focus to give high sugar cane price to farmer and concomitantly maintain low sugar price for the consumer is socially unexceptionable but economically unsustainable. Low sugar price leads to unremunerative sugar cane price and its delayed payment forcing the cultivator to switch over to other crops. This kick-starts sugar shortage and high sugar price, in turn prompting higher sugar cane price to lure the farmer back to sugar cane. This cycle gets repeated endlessly with resultant spike in sugar production causing demand-supply disequilibrium and driving sugar prices on a roller-coaster ride. The Indian sugar factories are located largely in rural areas and directly contributing to rural economic development and employment. Industrial user s viz., beverage, biscuit, confectionary manufacturers are the largest consumers of Indian sugar accounting to sixty five per cent of the Indian sugar production. The comparative sugar productions in the last two sugar seasons (Oct - Sep) are given below: 77

Particulars 2010-11 (in lakh tonnes) 2011-12 (Estd.) (in lakh tonnes) Opening stock as on 1st Oct 49.80 68.00* Production 243.94 260.00 Total availability 293.74 328.00 Demand - Internal consumption - Exports 207.69 26.00 215.00 35.95 Closing stock 60.05 77.05 Source: ISMA Journal May, 2012,* as posted in the website of Dept. of Food & Public Distribution Government has been encouraging setting up of new sugar mills as well as expansions upto 5000 TCD allowing upto one hundred per cent of sugar for new mills and eighty per cent for expanded units, to be marketed in free market for certain number of years. Thus the growth has been lateral. Today there are four hundred and forty eight mills with installed capacity of 12.5 MT with average size of 2150 TPD with some units of 10000 TCD and few of 5000 TCD. Indian sugar production has crossed twenty six million tonnes in sugar season 2011-12. However, production estimate for 2012-13 has been lowered by Indian Sugar Mills Association (ISMA) to twenty four million tonnes due to poor monsoon. ISMA has repeatedly stressed the Government that there is enough stock to meet the domestic needs besides a marginal surplus available for exports, despite a fall in output estimate 10. 78

4.1.4. MAJOR LEGISLATIONS The major legislation and policies concerning the sugar industry in India are as follows: (i) The Essential Commodities Act, 1955 (ii) Sugar Control Order, 1966 (iii) Sugarcane Control Act, 1966 (iv) Levy Sugar Supply (Control) Order, 1979 (v) Sugar (Packing and Marking) Order, 1970 (vi) Sugar Export Promotion Act, 1958 (vii) Sugar Cess Act, 1982 (viii) Sugar Development Fund Act, 1982 and 2002 (ix) Levy Sugar Price Equalization Fund Act, 1976 (x) Molasses Control Order, 1961 and Decontrol, 1993 (xi) Excise and Custom Rules (xii) State Sugar Policies (xiii) Power Purchase Agreements (xiv) Environment Norms by State Pollution Control Boards. 4.1.5. ABOUT TAMIL NADU SUGAR INDUSTRY The agro based sugar mills play an important role in the economic growth of rural areas with the sole aim to generate large scale direct employment. Tamil Nadu sugar industry is responsible for about ten per cent of the total sugar production in India. Majority of sugar units in Tamil Nadu lies with the co-operative 79

sector, with some private player s also gathering momentum 11. The sugar industry generates large-scale direct employment, apart from providing indirect employment to thousands of persons in rural areas who are involved in cultivation, harvesting, transport of cane and other services 12. Sugarcane is one of the most important industrial crops in our state and also emerging as a multi product crop contributing to the production of sugar, jaggery, alcohol, electricity, paper and other allied products. The sustenance of the sugar mills and well being of the sugarcane growers are mutually interlinked. Hence the major focus is towards enhancing sugarcane productivity and production thereby improving the living standard of the sugarcane growers. South India, Tamil Nadu in particular, has many advantages for sugar productions are as follows: Cane productivity and sugar recovery per unit area is highest. The average farm size is less than a hectare and is owned by farmers. Geographically, Tamil Nadu has the advantage of good soil and abundant water and yield is highest among the various states in India. Farmers are willing to adopt new farming practices and cultivation methodologies, including mechanisation, to improve yield, access to ports to reach export market, improved development of infrastructure facilities, to ensure adequate sugar cane availability and supply, to ensure timely availability of newer varieties of sugar cane 13. Around 3.50 Lakh farmers are cultivating sugarcane in Tamil Nadu which is five per cent of the total cultivable area. During 2011-12 sugar seasons, the sugarcane crop was cultivated in 3.16 lakh hectares in the state and the total estimated sugarcane production was 342.52 L.Mt. During 2012-13, it is programmed to cultivate Sugarcane in 3.60 L.Ha. with a production target of 493.50 L.Mt. 80

Out of the total sugarcane production, sixty to seventy per cent of the cane was drawn and crushed by the sugar mills of Tamil Nadu during 2011-12 and this crushing rate is expected to be increased during 2012-13 sugar season. 4.2. ANALYSIS OF SELECTED VARIABLES OF SUGAR INDUSTRY The analysis of financial performance can also significantly prove through the selected variables of a company or of the industries as a whole. All techniques have been adopted to appraise the financial performance of the sugar industries in this chapter. An attempt has also been made to estimate trend co-efficients for selected variables of selected sugar industries in Tamil Nadu during the study period by fitting a linear regression model. The liner model fitted is as follows. P = α + βt + e Where P is rate of selected variables, t is the time and α and βt are the parameters [intercept and co-efficients respectively] and e is the error term. To test whether the difference between actual selected variables and estimated selected variables was significant or not, the following hypothesis is framed and tested. There is no significant difference between actual values and the trend values of selected variables among different years. The annual production and consumption of world sugar industry, area, yield, production of sugarcane and sugar, consumption of sugar and sugar recovery of Indian sugar industry, annual production, sales, crushing of sugar canes in selected sugar companies in Tamil Nadu were analysed from the year 2002-03 to 2011-12. Further, the annual production and consumption of world sugar industry, area, yield, production of sugarcane and sugar, consumption of sugar and sugar recovery of Indian sugar industry, annual production, sales, crushing of sugar canes in selected sugar companies in Tamil Nadu over the study period are achieved through estimation of mean, co-efficient of variation and compound annual growth rate. 81

Table 4.1 Annual Production and Consumption of World Sugar Industry (2001-2002 to 2011-2012) (in MT) Year Production Consumption Actual Growth Actual Growth 2002-03 137.45 100 134.67 100 2003-04 141.75 103.13 137.39 102.02 2004-05 141.1 102.66 143.1 106.26 2005-06 144.26 104.95 147.99 109.89 2006-07 148.97 108.38 151.19 112.27 2007-08 167.2 121.64 156.44 116.17 2008-09 167.1 121.57 160.69 119.32 2009-10 152.98 111.30 164.32 122.02 2010-11 159.89 116.33 167.13 124.10 2011-12 165.6 120.48 168.3 124.97 Mean 154.48 154.46 S.D 12.59 12.39 CV 8.15 8.02 CAGR 0.023 0.022 Source: Secondary Data The production and consumption of world sugar industry have been shown in Table 4.1. The highest growth of production in the year 2007-08 is 121.64 and consumption in the year 2011-12 is 124.97. The mean values of production and consumption of world sugar industry are 154.48 and 154.46 respectively. 82

The compound annual growth rate of world sugar production which worked out as 0.023 and in world sugar consumption is 0.022. The coefficient of variation indicates that the annual production and consumption of world sugar industry are moderately fluctuated during the study period. Table 4.2 Estimates of trend co-efficients for World sugar industry (2002-03 to 2011-12) S. No. Particulars P = α + βt + e α βt R 2 F-value p-value S/NS 1 Production 134.57 3.32 76.4% 29.21 0.000** S 2 Consumption 132.44 3.67 96.5% 247.15 0.000** S ** P<0.01 S - Significant Hypothesis: There is no significant difference between actual value and the trend value of production and consumption of world sugar industry among different years. The results estimate of trend co-efficient for world sugar industry presented in Table 4.2. It is clear that, the p-value is less than 0.01 per cent, the null hypothesis is rejected at one per cent level of significance. Hence, there is significant difference between actual value and the trend value of production and consumption of world sugar industry among different years. 83

consumption Production Figure 4.2 Trend Analysis for Production of World Sugar Industry Trend Analysis Plot for Production Yt = 134.568 + 3.31905* t 190 180 170 160 MA PE 2.8034 MA D 4.4519 MSD 33.9457 150 140 2002 2004 2006 2008 2010 2012 2014 2016 Figure 4.3 Trend Analysis for Consumption of World Sugar Industry Trend Analysis Plot for consumption Yt = 132.440 + 3.66977*t 190 180 170 160 MA PE 1.16013 MA D 1.81778 MSD 4.90372 150 140 130 2002 2004 2006 2008 2010 2012 2014 2016 84

Table 4.3 Projections for Annual Production and Consumption of World Sugar Industry (2012-13 to 2016-17) (in MT) Year Production Consumption 2012-13 174.40 176.48 2013-14 177.72 180.15 2014-15 181.03 183.82 2015-16 184.35 187.49 2016-17 187.67 191.16 Source: Computed The projections obtained for world sugar industry by linear growth models listed in Table 4.3. It shows production and consumption have been growing marginally. The trend movement of the production units is 187.67 Mt. that will be the highest in the year 2016-17 and the production units will be the lowest (174.40 Mt.) in the year is 2012-13. In other hand the trend movement of consumption the highest in the year 2016-17 that is 191.16 Mt., will be the lowest that is 176.48 Mt. in the year 2012-13. 85

Year Table 4.4 Area, Yield, Production of Sugarcane, Production of Sugar, Consumption of Sugar and Sugar Recovery of Area (ha) Indian Sugar Industry (2002-2003 to 2011-2012) Yield (t/ha) Sugarcane Production (MT) Production of Sugar (MT) Consumption of Sugar (LT) Sugar Recovery (per cent) Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth Actual Growth 2002-03 4361 100 64.6 100 281.575 100 20.145 100 183.84 100 10.36 100 2003-04 3938 90.30 59.4 91.95 233.862 83.05 13.546 67.24 172.85 94.02 10.22 98.65 2004-05 3662 83.97 64.8 100.31 237.088 84.20 12.69 62.99 185 100.63 10.17 98.17 2005-06 4201 96.33 66.9 103.56 281.172 99.86 19.267 95.64 189.45 103.05 10.21 98.55 2006-07 5151 118.12 69 106.81 355.52 126.26 28.328 140.62 201.6 109.66 10.16 98.07 2007-08 5055 115.91 68.9 106.66 348.188 123.66 26.357 130.84 220 119.67 10.55 101.83 2008-09 4415 101.24 64.6 100.00 285.029 101.23 14.539 72.17 230 125.11 10.03 96.81 2009-10 4175 95.73 70 108.36 292.302 103.81 18.912 93.88 210 114.23 10.19 98.36 2010-11 4944 113.37 68.6 106.19 339.168 120.45 24.394 121.09 207.36 112.79 10.17 98.17 2011-12 5093 116.79 70.3 108.82 325.9 115.74 25.8 128.07 214.12 116.47 10.17 98.17 Mean 4500 66.71 298 20.4 201.42 10.223 S.D 529 3.39 43.3 5.65 18.17 0.14 CV 11.76 5.08 14.53 27.72 9.02 1.37 CAGR 0.0174 0.0094 0.0164 0.0279 0.0171-0.0021 Source: Secondary Data 86

The area, yield, production of sugarcane, production of sugar, consumption of sugar and sugar recovery of Indian sugar industry have been shown in Table 4.4. The highest growth of area in the year 2006-07 is 118.12, yield (t/ha) is 108.82 of 2011-2012, sugarcane production (million tonnes) in the year 2006-07 is 126.26, production sugar (million tonnes) is 140.62 in the year 2006-07, consumption of sugar (LT) in the year 2008-09 is 125.11 and sugar recovery (percentage) in the year 2007-08 is 101.83. The mean values of area, yield, production of sugarcane, production of sugar, consumption of sugar and sugar recovery of Indian sugar industry are 4500, 66.71, 298, 20.4, 201.42 and 10.223 respectively. The compound annual growth rate of area, yield, production of sugarcane, production of sugar, consumption of sugar and sugar recovery of Indian sugar industry which worked out as 0.0174, 0.0094, 0.0164, 0.0279, 0.0171 and -0.0021 respectively. The coefficient of variation indicates that the area, yield, production of sugarcane, production of sugar, consumption of sugar and sugar recovery of Indian sugar industry were moderately fluctuated during the study period. Table 4.5 Estimates of Trend Co-Efficients for Area, Yield, Production of Sugarcane and Sugar, Consumption of Sugar and Sugar Recovery of Indian Sugar Industry (2002-03 to 2011-12) S. P = α + βt + e Particulars No. α βt R 2 F-value p-value S/NS 1 Area (ha) 3941.47 101.46 33.7% 4.07 0.078 NS 2 Yield (t/ha) 62.22 0.816 53.2% 9.09 0.017* S 3 Sugarcane Production (MT) 250.77 8.58 36% 4.50 0.067 NS 4 Production of Sugar (MT) 15.67 0.859 21.2% 2.15 0.181 NS 5 Consumption of Sugar (LT) 175.45 4.72 61.9% 13.02 0.007** S 6 Sugar Recovery (Per cent) 10.29 0.0128 6.9% 0.59 0.464 NS ** P<0.01 *P<0.05 S Significant NS Not Significant 87

Hypothesis: There is no significant difference between actual value and the trend value of area, yield, production of sugarcane, sugar of production, consumption of sugar and sugar recovery of Indian sugar industry among different years The results estimate of trend co-efficient for area, yield, production of sugarcane, sugar production, consumption of sugar and sugar recovery of Indian sugar industry are presented in Table 4.5. It is observed that, the p-value is less than 0.01 per cent in consumption of sugar, the null hypothesis is rejected at one per cent level of significance. Hence, there is significant difference between actual value and the trend value of consumption of sugar in Indian sugar industry among different years. It is noted that, the p-value is less than 0.05 per cent in yield of sugar cane in Indian sugar industry, the null hypothesis is rejected at five per cent level of significance. Hence, there is significant difference between actual value and the trend value of yield of sugar cane in the Indian sugar industry among different years. It is clear that, the p-value is more than 0.05 per cent in area, production of sugar cane, sugar production and sugar recovery, the null hypothesis is accepted at five per cent level of significance. Hence, there is no significant difference between actual value and the trend value of area, production of sugar cane, production of sugar and sugar recovery of Indian sugar industry among different years. 88

Figure 4.4 Trend Analysis of Area of Sugar Cane Cultivated in Indian Sugar Industry Trend Analysis Plot for Area Yt = 3941.47 + 101.461* t Yield t/ha A rea 5500 5000 4500 4000 3500 Figure 4.5 MA PE 8 MA D 350 MSD 167099 Trend Analysis of Sugar Cane Yield in Indian Sugar Industry 76 74 72 70 68 66 64 Trend Analysis Plot for Yield t/ha Yt = 62.22 + 0.816364* t MA PE 2.72048 MA D 1.76764 MSD 4.83669 62 60 89

Sugar (Million tons) Sugarcane(million tons) Figure 4.6 Trend Analysis of Sugar Cane Production in Indian Sugar Industry Trend Analysis Plot for Sugarcane(million tons) Yt = 250.768 + 8.58410* t 400 350 300 MA PE 9.60 MA D 28.22 MSD 1079.91 250 Figure 4.7 Trend Analysis of Sugar Production in Indian Sugar Industry Trend Analysis Plot for Sugar (Million tons) Yt = 15.6716 + 0.859309* t 30 25 20 MA PE 21.9823 MA D 4.0371 MSD 22.6868 15 90

Sugar Recovery% Consumption of Sugar(LT) Figure 4.8 Trend Analysis of Consumption of Sugar in Indian Sugar Industry 250 240 230 220 210 200 190 180 170 Trend Analysis Plot for Consumption of Sugar(LT) Yt = 175.451 + 4.72206* t MA PE 4.265 MA D 8.784 MSD 113.088 Figure 4.9 Trend Analysis of Sugar Recovery in Indian Sugar Industry 10.6 10.5 10.4 10.3 Trend Analysis Plot for Sugar Recovery% Yt = 10.2933-0.0127879* t MA PE 0.809690 MA D 0.083479 MSD 0.016312 10.2 10.1 10.0 91

Table 4.6 Projections for Area, Yield, Production of Sugarcane, Production of Sugar, Consumption of Sugar and Sugar Recovery of Indian Sugar Industry (2012-13 to 2016-17) Year Area (ha) Yield (t/ha) Sugarcane Production (MT) Production of Sugar (MT) Consumption of Sugar (LT) Sugar Recovery (per cent) 2012-13 5057.53 71.2012 345.193 25.1242 227.393 10.1527 2013-14 5158.99 72.0164 353.777 25.9833 232.115 10.1399 2014-15 5260.45 72.8327 362.361 26.8426 236.837 10.1271 2015-16 5361.92 73.6491 370.945 27.7019 241.564 10.1143 2016-17 5463.38 74.4655 379.529 28.5612 246.282 10.1015 Source: Computed The projections obtained for area, yield, production of sugarcane, production of sugar, consumption of sugar and sugar recovery of Indian sugar industry by linear growth models are listed in Table 4.6. It shows the area, yield, production of sugarcane, production of sugar, consumption of sugar and sugar recoveries have been growing marginally. The trend movement of area, yield, production of sugarcane, production of sugar and consumption of sugar is 5463.38, 74.4655, 379.529, 28.5612 and 246.282 respectively. It will be highest for the year 2016-17 and the sugar recovery is 10.1527 in 2012-13. The area, yield, production of sugarcane, production of sugar and consumption of sugar will be the lowest in the year 2012-13 and the sugar recovery in the year 2016-17. 92

Table 4.7 Annual Production of Sugar in Selected Sugar Companies in Tamil Nadu (2002-2003 to 2011-2012) (in MT) Year BASL DSCL EID RSCL SSL TASL Actual Trend Actual Trend Actual Trend Actual Trend Actual Trend Actual Trend 2002-03 105279-675224 62515 41481 284136 227081 148108 129770 122176 105731 103867 101592 2003-04 38403-372769 35280 56801 184559 238717 96505 136824 28291 125662 69688 104501 2004-05 37178-70315 34329 72121 187521 250353 116147 143878 90549 145594 90286 107410 2005-06 94774 232140 113097 87441 317850 261990 193559 150932 284849 165525 161287 110319 2006-07 110513 534595 135399 102761 374811 273626 204580 157987 306209 185457 165724 113228 2007-08 76589 837050 143172 118081 256568 285263 179162 165041 215086 205388 107542 116136 2008-09 61394 1139505 94708 133401 248157 296899 139395 172095 169103 225320 99624 119045 2009-10 73655 1441959 103224 148721 213506 308536 140136 179149 122791 245252 70607 121954 2010-11 2635452 1744414 201030 164040 289746 320172 168743 186203 336538 265183 129795 124863 2011-12 3624987 2046869 181454 179360 437591 331808 228802 193258 278635 285115 148400 127772 Mean 685822 110421 279445 161514 195423 114682 S.D 1309487 56754 80974 41073 104222 35118 CV 190.94 51.40 28.98 25.43 53.33 30.62 CAGR 0.482 0.126 0.049 0.050 0.096 0.040 Source: Secondary Data 93

The annual production of sugar by the private sugar companies in Tamil Nadu have been shown in Table 4.7. There was fluctuation in production of sugar in all the selected sugar companies in Tamil Nadu. The highest mean values of Bannariamman Sugar Ltd., is 685822 Mt., in EID Parry (India) Ltd., is 279445 Mt., and 195423 Mt. in Sakthi Sugars Ltd.,. The compound annual growth rate of annual production which worked out as 0.482 of Bannariamman sugars Ltd., is the highest in the selected private sector sugar companies. The coefficient of variation indicates that the annual productions of selected private sector sugar companies are moderately fluctuated during the study period. Table 4.8 Estimates of Trend Co-Efficients for Production of Sugar in Selected Private Sector Sugar Companies in Tamil Nadu (2002-03 to 2011-12) S.No. Companies P = α + βt + e α Βt R 2 F-value p-value S/NS 1 BASL 977679 302455 48.9% 7.66 0.024* S 2 DSCL 26161.4 15319.9 66.8% 16.09 0.004** S 3 EID 215444 11636.4 18.9% 1.87 0.209 NS 4 RSCL 122715 7054.22 27% 2.96 0.123 NS 5 SSL 85799.1 19931.6 33.5% 4.03 0.079 NS 6 TASL 98682.7 2908.97 6.3% 0.54 0.485 NS ** P<0.01 *P<0.05 S- Significant NS Not Significant Hypothesis: There is significant difference between actual value and the trend value production of sugar among different years. 94

The results estimate of trend co-efficient for production of sugar in selected private sector sugar companies in Tamil Nadu is presented in Table 4.8. It is clear that, the p-value is less than 0.01 per cent production of sugar in Dharani sugars and Chemicals Ltd., the null hypothesis is rejected at one per cent level of significance. Hence, there is significant difference between actual value and the trend value of production of sugar in Dharani sugars and Chemicals Ltd., among different years. It is noted that, the p-value is less than 0.05 per cent in production of sugar in Bannariamman Sugars ltd., the null hypothesis is rejected at five per cent level of significance. Hence, there is significant difference between actual value and the trend value of production of sugar in Bannariamman Sugars Ltd., except EID Parry (India) Ltd., Rajshree Sugars and Chemicals Ltd., Sakthi Sugars Ltd., and Thiru Arooran Sugars Ltd., among different years. 95

Dharani Bannariamman Figure 4.10 Trend Analysis of Production of Sugar in Bannariamman Sugars Ltd., 4000000 3000000 Trend Analysis Plot for Bannariamman Yt = -977679 + 302455*t 2000000 1000000 MA PE 7.31388E+02 MA D 7.53665E+05 MSD 7.88580E+11 0 Figure 4.11 Trend Analysis of Production of Sugar in Dharani Sugars and Chemicals Ltd., Trend Analysis Plot for Dharani Yt = 26161.4 + 15319.9*t 250000 200000 150000 MA PE 37 MA D 28700 MSD 962653755 100000 50000 96

Rajshree EID Parry Figure 4.12 Trend Analysis of Production of Sugar in EID Parry (India) Ltd., 450000 400000 Trend Analysis Plot for EID Parry Yt = 215444 + 11636.4* t 350000 300000 MA PE 24 MA D 63977 MSD 4784052340 250000 200000 Figure 4.13 Trend Analysis of Production of Sugar in Rajshree Sugars and Chemicals Ltd., 240000 220000 200000 180000 160000 140000 120000 100000 Trend Analysis Plot for Rajshree Yt = 122715 + 7054.22* t MA PE 21 MA D 31445 MSD 1107790075 97

Thiru A rooran Sakthi Figure 4.14 Trend Analysis of Production of Sugar in Sakthi Sugars Ltd., Trend Analysis Plot for Sakthi Yt = 85799.1 + 19931.6* t 400000 300000 200000 MA PE 66 MA D 67515 MSD 6498522882 100000 0 Figure 4.15 Trend Analysis of Production of Sugar in Thiru Arooran Sugars Ltd., Trend Analysis Plot for Thiru Arooran Yt = 98682.7 + 2908.97* t 160000 140000 120000 MA PE 25 MA D 26260 MSD 1040141211 100000 80000 60000 98

Table 4.9 Projections for Production of Sugar in Selected Private Sector Sugar Companies in Tamil Nadu (2012-13 to 2016-17) (in MT) Year BASL DSCL EID RSCL SSL TASL 2012-13 2349324 194680 343445 200312 305046 130681 2013-14 2651778 210000 355081 207366 324978 133590 2014-15 2954233 225320 366718 214420 344909 136499 2015-16 3256688 240640 378354 221475 364841 139408 2016-17 3559143 255960 389990 228529 384773 142317 Source: Computed The projections obtained for production of selected private sector sugar companies in Tamil Nadu by linear growth models listed in the above table. It shows the private sector sugar companies in Tamil Nadu have growing marginally. The trend movement production of selected private sector sugar companies in Tamil Nadu for the year 2016-17, the production units will be the highest in EID Parry (India) Ltd., and followed by Sakthi sugars Ltd., The production units will be the lowest in Thiru Arooran sugars Ltd., 99

Table 4.10 Annual Sales of Selected Private Sector Sugar Companies in Tamil Nadu (2002-2003 to 2011-2012) (Rs. in crores) Year BASL DSCL EID RSCL SSL TASL Actual Trend Actual Trend Actual Trend Actual Trend Actual Trend Actual Trend 2002-03 345.550 514.333 134.790 32.224 1288.30 644.31 219.80 110.073 308.95 349.20 81.92 115.425 2003-04 467.310 528.095 81.500 101.114 560.37 719.17 161.22 169.040 290.09 485.43 127.36 171.629 2004-05 488.610 541.856 160.490 170.003 717.20 794.04 178.91 228.008 618.86 621.66 297.92 227.833 2005-06 632.640 555.618 315.390 238.893 926.18 868.90 256.01 286.975 879.86 757.89 298.71 284.036 2006-07 793.220 569.379 275.350 307.782 551.72 943.76 383.78 345.942 748.25 894.12 347.09 340.240 2007-08 524.720 583.141 198.540 376.672 616.45 1018.62 334.52 404.910 1023.16 1030.35 336.39 396.444 2008-09 698.840 596.902 222.610 445.561 755.57 1093.48 352.36 463.877 1372.82 1166.58 595.21 452.648 2009-10 877.040 610.664 578.310 514.451 1147.30 1168.35 522.01 522.844 2137.85 1302.81 428.10 508.851 2010-11 816.260 624.425 840.590 583.340 1536.65 1243.21 614.89 581.812 1121.27 1439.04 581.88 565.055 2011-12 118.411 638.187 614.699 652.230 1712.17 1318.07 730.76 640.779 1121.27 1575.27 588.84 621.259 Mean 576.3 342.2 981 375.4 962 368.3 S.D 235.3 250.0 419 191.6 543 182.8 CV 40.84 73.05 42.74 51.03 56.43 49.62 CAGR -0.112 0.184 0.032 0.143 0.154 0.245 Source: Secondary Data 100

The annual sales of sugar by the private sugar companies in Tamil Nadu have been shown in Table 4.10. There was fluctuation in sales of sugar in all the selected sugar companies in Tamil Nadu. The highest mean values of EID parry (India) Ltd., is Rs.981 crores, in Sakthi sugars Ltd., is Rs.962 crores, and Rs.576.3 crores in Bannariamman Sugars Ltd., The compound annual growth rate of annual sales which worked out as 0.245 of Thiru Arooran Sugars Ltd., is the highest in the selected private sector sugar companies. The coefficient of variation indicates that the annual sales of selected private sector sugar companies are moderately fluctuated during the study period. Table 4.11 Estimates of Trend Co-Efficients for Annual Sales of Selected Private Sector Sugar Companies in Tamil Nadu (2000-01 to 2010-11) S. No. Companies P = α + βt + e α Βt R 2 F -value p-value S/NS 1 BASL 500.57 13.76 3.1% 0.26 0.625 NS 2 DSCL 36.67 68.89 69.6% 18.32 0.003** S 3 EID 569.45 74.86 29.2% 3.3 0.107 NS 4 RSCL 51.11 58.97 86.8% 52.78 0.00** S 5 SSL 212.98 136.23 57.7% 10.91 0.01** S 6 TASL 59.22 56.20 86.7% 52.07 0.00** S ** P<0.01 S- Significant NS Not Significant Hypothesis: There is no significant difference between actual value and the trend value of annual sales of sugar among different years. 101

The results estimate of trend co-efficient for sales of selected private sector sugar companies in Tamil Nadu presented in Table 4.11. It is clear that, the p-value is less than 0.01 per cent annual sales of sugar in Dharani sugars and Chemicals Ltd., Rajshree sugars and Chemicals Ltd., Sakthi Sugars Ltd., and Thiru Arooran Sugars Ltd., the null hypothesis is rejected at one per cent level of significance. Hence, there is significant difference between actual value and the trend value of sales of sugar in Dharani Sugars and Chemicals Ltd., Rajshree Sugars and Chemicals Ltd., Sakthi Sugars Ltd., and Thiru Arooran sugars Ltd., except Bannariamman Sugars Ltd., and EID parry (India) Ltd., among different years. 102

Dharani Bannariamman Figure 4.16 Trend Analysis of Sales of Sugar in Bannariamman Sugars Ltd., Trend Analysis Plot for Bannariamman Yt = 500.572 + 13.7615* t 900 800 700 600 500 400 300 200 100 MA PE 63.2 MA D 172.2 MSD 48278.3 Figure 4.17 Trend Analysis of Sales of Sugar in Dharani Sugars and Chemicals Ltd., Trend Analysis Plot for Dharani Yt = -36.6652 + 68.8895*t 1000 800 600 MA PE 38.0 MA D 100.0 MSD 17100.1 400 200 0 103

Rajshree EID Parry Figure 4.18 Trend Analysis of Sales of Sugar in EID Parry (India) Ltd., Trend Analysis Plot for EID Parry Yt = 569.451 + 74.8618* t 1750 1500 1250 MA PE 32 MA D 278 MSD 112061 1000 750 500 Figure 4.19 Trend Analysis of Sales of Sugar in Rajshree Sugars and Chemicals Ltd., Trend Analysis Plot for Rajshree Yt = 51.1053 + 58.9674* t 900 800 700 600 500 400 300 200 100 0 MA PE 17.47 MA D 54.12 MSD 4348.45 104

Thiru A rooran Sakthi Figure 4.20 Trend Analysis of Sales of Sugar in Sakthi Sugars Ltd., Trend Analysis Plot for Sakthi Yt = 212.975 + 136.230* t 2500 2000 1500 1000 MA PE 24 MA D 233 MSD 112291 500 0 Figure 4.21 Trend Analysis of Sales of Sugar in Thiru Arooran Sugars Ltd., Trend Analysis Plot for Thiru Arooran Yt = 59.2213 + 56.2038*t 900 800 700 600 500 400 300 200 100 0 MA PE 17.51 MA D 50.20 MSD 4004.21 105

Table 4.12 Projections for Annual Sales of Sugar in Selected Private Sector Sugar Companies in Tamil Nadu (2012-13 to 2016-17) (Rs. in crores) Year BASL DSCL EID RSCL SSL TASL 2012-13 651.948 721.119 1392.93 699.747 1711.50 677.463 2013-14 665.709 790.009 1467.79 758.714 1847.73 733.666 2014-15 679.471 858.898 1542.65 817.681 1983.96 789.870 2015-16 693.232 927.788 1617.52 876.649 2120.19 846.074 2016-17 706.994 996.677 1692.38 935.616 2256.42 902.278 Source: Computed The projections obtained for annual sales of selected private sector sugar companies in Tamil Nadu by linear growth models are listed in Table 4.12. It shows the private sector sugar companies in Tamil Nadu have been growing marginally. The trend movement sales of selected private sector sugar companies in Tamil Nadu for the year 2016-17, the sales will be the highest in Sakthi sugars Ltd., and followed by EID Parry (India) Ltd., the annual sales will be the lowest in Bannariamman Sugars Ltd., 106

Year Table 4.13 Annual Crushing of Sugar Canes by Selected Sugar Companies in Tamil Nadu (2002-2003 to 2011-2012) (in MT) BASL DSCL EID RSCL SSL TASL Actual Trend Actual Trend Actual Trend Actual Trend Actual Trend Actual Trend 2002-03 977246 148265 665951 541022 2954526 2358890 1429034 1273653 1247672 1284803 977246 1358421 2003-04 370187 380227 372919 670519 1937186 2503029 928868 1364093 278226 1451099 370187 1289951 2004-05 387288 612189 389126 800015 2052195 2647168 1136340 1454532 992062 1617395 387288 1221482 2005-06 944189 844150 1264649 929512 2825282 2791308 2045334 1544972 3046861 1783691 944189 1153013 2006-07 1089582 1076112 1500723 1059008 4106477 2935447 2140204 1635411 3240162 1949988 1089582 1084544 2007-08 775437 1308074 1547093 1188504 3462929 3079586 1916428 1725851 3074090 2116284 775437 1016074 2008-09 579221 1540036 1055849 1318001 2624760 3223725 1455989 1816290 1847036 2282580 579221 947605 2009-10 750835 1771997 1204317 1447497 2473677 3367865 1594328 1906730 1348315 2448876 750835 879136 2010-11 2585486 2003959 1328721 1576994 2835736 3512004 1725139 1997169 2356303 2615173 2585486 810667 2011-12 3461458 2235921 1908214 1706490 4802397 3656143 2434644 2087609 2900630 2781469 3461458 742197 Mean 1192093 1123756 3007517 1680631 2033136 1050309 S.D 1015264 508011 893928 465826 1038655 503682 CV 85.17 45.21 29.72 27.72 51.09 47.96 CAGR 0.151 0.124 0.055 0.061 0.098 0.151 Source: Secondary Data 107

The annual crushing of sugar cane by the private sugar companies in Tamil Nadu has been shown in Table 4.13. There was fluctuation in crushing of sugar cane in all the selected sugar companies in Tamil Nadu. The highest mean values of EID Parry (India) Ltd., is 3007517 Mt., in Sakthi Sugars Ltd., is 2033136 Mt., and 1680631 Mt. in Rajshree sugars and Chemicals Ltd., and the compound annual growth rate of crushing of sugar cane which worked out as 0.151 of Bannariamman Sugars Ltd., and Thiru Arooran Sugars Ltd., is the highest in the selected private sector sugar companies. The coefficient of variation indicates that the crushing of sugar cane of selected private sector sugar companies are moderately fluctuated during the study period. Table 4.14 Estimates of Trend Co-Efficients for Annual Crushing of Sugar Canes by Selected Sugar Companies in Tamil Nadu (2002-03 to 2011-12) S. No. Companies P = α + βt + e α Βt R 2 F-value p-value S/NS 1 BASL 83696.7 231962 47.9% 7.34 0.027* S 2 DSCL 411526 129496 59.6% 11.78 0.009** S 3 EID 2214750 144139 23.8% 2.5 0.152 NS 4 RSCL 1183214 90439.5 34.6% 4.22 0.074 NS 5 SSL 1118506 166296 23.5 2.46 0.156 NS 6 TASL 1426890 68469.2 47.9% 7.34 0.027* S ** P<0.01 *P<0.05 S- Significant NS Not Significant Hypothesis: There is no significant difference between actual value and the trend value of crushing capacity of sugar cane among different years 108

The results estimate of trend co-efficient for annual crushing capacity of selected private sector sugar companies in Tamil Nadu are presented in Table 4.14. It is clear that, the p-value is less than 0.01 per cent and 0.05 per cent in crushing of sugar cane in Dharani sugars and Chemicals Ltd., and Bannariamman Sugars Ltd., Thiru Arooran sugars Ltd., respectively the null hypothesis is rejected at one per cent and five per cent level of significance respectively. Hence, there is significant difference between actual value and the trend value of crushing of sugar cane in Dharani sugars and Chemicals Ltd., Bannariamman Sugars Ltd., and Thiru Arooran sugars Ltd., except EID Parry (India) Ltd., Rajshree sugars and Chemicals Ltd., and Sakthi sugars Ltd., among different years. 109

D h a r a n i Bannariamman Figure 4.22 Trend Analysis of Crushing of Sugar Cane by Bannariamman Sugars Ltd., 3500000 3000000 2500000 C 2000000 1500000 1000000 500000 Trend Analysis Plot for Bannariamman Yt = -83696.7 + 231962*t Actual Fits Forecasts Accuracy Measures MAPE 5.85912E+01 MAD 5.49911E+05 MSD 4.83783E+11 0 Figure 4.23 Trend Analysis of Crushing of Sugar Cane by Dharani Sugars Ltd., T r e n d A n a l y s i s P l o t f o r D h a r a n i L i n e a r T r e n d M o d e l Y t = 4 1 1 5 2 6 + 1 2 9 4 9 6 * t 2 5 0 0 0 0 0 2 0 0 0 0 0 0 1 5 0 0 0 0 0 V a r ia b le A c tu a l F o r e c a s ts A c c u r a c y M e a s u r e s M A P E 3. 5 7 5 4 5 E + 0 1 M A D 2. 9 2 4 1 9 E + 0 5 M S D 9. 3 9 2 1 0 E + 1 0 1 0 0 0 0 0 0 5 0 0 0 0 0 In d e x 110 110

Rajshree EID Parry Figure 4.24 Trend Analysis of Crushing of Sugar Cane by EID Parry (India) Ltd., Trend Analysis Plot for EID Parry Yt = 2214750 + 144139*t 5000000 4500000 4000000 3500000 MA PE 2.25835E+01 MA D MSD 6.66047E+05 5.47794E+11 3000000 2500000 2000000 Figure 4.25 Trend Analysis of Crushing of Sugar Cane by Rajshree Sugars Ltd., Trend Analysis Plot for Rajshree Yt = 1183214 + 90439.5* t 2600000 2400000 2200000 2000000 1800000 1600000 MA PE 2.18088E+01 MA D 3.39630E+05 MSD 1.27815E+11 1400000 1200000 1000000 111

Thiru Arooran Sakthi Figure 4.26 Trend Analysis of Crushing of Sugar Cane by Sakthi Sugars Ltd., 4000000 3000000 2000000 Trend Analysis Plot for Sakthi Yt = 1118506 + 166296* t MA PE 7.20297E+01 MA D 7.26062E+05 MSD 7.42774E+11 1000000 0 Figure 4.27 Trend Analysis of Crushing of Sugar Cane by Thiru Arooran Sugars Ltd., 2000000 1500000 1000000 Trend Analysis Plot for Thiru Arooran Yt = 1426890-68469.2* t MA PE 6.23971E+01 MA D 3.61646E+05 MSD 1.89649E+11 500000 0 112

Table 4.15 Projections for Annual Crushing of Sugar Cane by Selected Private Sector Sugar Companies in Tamil Nadu (2012-13 to 2016-17) (in MT) Year BASL DSCL EID RSCL SSL TASL 2012-13 2467882 1835986 3800283 2178048 2947765 673728 2013-14 2699844 1965483 3944422 2268487 3114061 605259 2014-15 2931806 2094979 4088561 2358927 3280357 536790 2015-16 3163768 2224476 4232701 2449366 3446654 468320 2016-17 3395729 2353972 4376840 2539806 3612950 399851 Source: Computed The projections obtained for annual crushing of sugar cane by selected private sector sugar companies in Tamil Nadu by linear growth models listed in Table 3.15. It shows the private sector sugar companies in Tamil Nadu have been growing marginally. The trend movement crushing of sugar cane by selected private sector sugar companies in Tamil Nadu for the year 2016-17, the crushing of sugar cane will be the highest in EID Parry (India) Ltd., and followed by Thiru Arooran sugars Ltd., The crushing of sugar cane units will be the lowest in Dharani sugars and Chemicals Ltd., 113

REFERENCES 1. http://www.sugarcane crops.com/introduction/ 2. http://en.wikipedia.org/wiki/sugarcane 3. http://www.fao.org/docrep/005/x0513e/x0513e16.htm 4. ISMA Indian sugar year book 2005-06 5. KPMG Analysis 6. www.industrialeconomist.com/march%202011/46.pdf 7. AC Nielsen, Business World Marketing White book 2006. Sugar production for the year 2007 has been estimated to be 27 million MT Source: ISMA 8. http://www.indianmirror.com/indian-industries/sugar.html 9. http://www.sugarresearch.library.qut.edu.au/108/1/cane_sugar_manufacture _in_india.pdf 10. http://www.ponnisugars.com/attachments/indupd.pdf 11. http://business.mapsofindia.com/sugar-industry/tamil Nadu.html 12. http://www.tn.gov.in/sugar/dept.htm 13. http://www.eidparry.com/the-company/about-us.aspx, Profile: E.I.D-Parry (India) Ltd 114