Management of Cost Structure and Profitability of Sugar Industry a Case Study of Maharashtra

Abstract

India is one of the major sugar producing countries in the world and the first three being Russia, Brazil and Cuba. Sugar industry, one of the major agro-based industries in India, has been instrumental in resource mobilization, employment generation, income generation and creating social infrastructure in rural areas. Indeed, sugar industry has facilitated and accelerated pace of rural industrialization. At present, there are 553 registered sugar factories which have capital investment of Rs. 50,000 cr. and annual production capacity of 180 lac metric tons. The annual turnover of industry is to the tune of Rs. 25,000 cr. The central and state governments receive annually Rs. 2500 as excise duty, purchase tax, and cess. More than 4.50 crore farmers are engaged in sugarcane cultivation and about 5 lac rural people have got direct employment in the industry. Sugar industry has brought socio-economic changes in rural India by way of facilitating entrepreneurial activities such as dairies, poultries, fruits and vegetable processing, and providing educational, health and credit facilities. newlineThe global sugar production exceeded 170 million tons (MT) a year in 2011-12. Approximately 80% of the output was sourced from sugarcane, which is largely grown in tropical countries. The remaining 20% is produced from sugar beet, which is grown mostly in the temperate zones of the northern hemisphere. The ten largest sugar producing nations represent roughly75% of the world sugar production. Brazil alone accounts for newlinealmost 25% of the world production. Though the industry was characterized by production deficits in 2008-9 and 2009-10, surplus output was seen in 2010-11 and 2011-12 as sugar crop areas expanded on the back of the higher prices. World consumption of sugar has also grown at an average annual rate of 2.7 % over the past 50 years, driven mostly by rising incomes, population growth and changes in diet in the developing economies. newline