37365912 Indian Sugar Industry 2007

8/8/2019 37365912 Indian Sugar Industry 2007

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AA

PresentationPresentation

onon Indian Sugar Industry Indian Sugar Industry

Presented bySWAGAT MOHAPATRA(24)SWAGAT MOHAPATRA(24)

SASHIKANT JHA (25)SASHIKANT JHA (25)

DURGA SWAIN (3)DURGA SWAIN (3)

MBA(SAPM)MBA(SAPM)

HDF SCHOOL OF Management

CUTTACK


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INRODUCTIONINRODUCTION

SugarSugar industryindustry constitutesconstitutes oneone ofof thethe mostmost importantimportant agroagro--

basedbased industriesindustries inin IndiaIndia.. itit startedstarted growinggrowing inin anan organizedorganized

wayway duringduring thethe 19301930 afterafter introductionintroduction ofof thethe sugarsugar industryindustry

protectionprotection actact inin 19321932..

IndiaIndia hashas beenbeen knownknown asas thethe originaloriginal homehome ofof sugarsugar andandsugarcanesugarcane.. IndiaIndia isis thethe secondsecond largestlargest producerproducer ofof sugarcanesugarcane

nextnext toto BrazilBrazil outout ofof1010 largestlargest producerproducer ofof sugarsugar inin thethe worldworld..

sugarsugar industryindustry isis aa majormajor focusfocus pointpoint forfor sociosocio--economicaleconomical

developmentdevelopment inin thethe ruralrural areaarea


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Profile of Indian Sugar IndustryProfile of Indian Sugar Industry

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

4545 millionmillion--77..55%% ofof ruralrural populationpopulation engagedengaged asas sugarsugar canecanefarmersfarmers,, agriculturalagricultural laborerslaborers andand dependentsdependents..

EmploysEmploys 00..55 millionmillion skilledskilled && semisemi--skilledskilled workersworkers AreaArea underunder sugarsugar canecane :: 44..55 millionmillion hectareshectares cultivationcultivation

AverageAverage capacitycapacity ofofmillsmills:: 32003200 tonstons canecane perper dayday

ProductionProduction ofof sugarsugar :: 2020 millionmillion tonstons pa(organizedpa(organized sector)sector)

33

Sector Number

Co-operative 317

Private 229

Public 62

Total 608


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Objectives of the StudyObjectives of the Study

ToTo studystudy majormajor strategiesstrategies andand theirtheir impactimpact onon IndianIndian

sugarsugar industryindustry

To To AnalyzeAnalyze profitabilityprofitability andand growthgrowth ofof IndianIndian sugarsugar

industryindustry

ToTo findfind outout thethe majormajor issues/problemsissues/problems ofof IndianIndian sugarsugarindustryindustry

ToTo findfind outout thethe majormajor playersplayers ofof IndianIndian sugarsugar industryindustry

NonNon--financialfinancial AnalysisAnalysis ofof IndianIndian sugarsugar IndustryIndustry

ToTo studystudy financialfinancial analysisanalysis ofof IndianIndian sugarsugar industryindustry


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Major strategies and their impact onMajor strategies and their impact on

Indian sugar industryIndian sugar industry

Sugarcane pricing policy.Sugarcane pricing policy.

GovernmentGovernment controlcontrol onon sugarsugar..

GovernmentGovernment PoliciesPolicies..

GovernmentGovernment ReliefRelief toto SugarSugar IndustryIndustry andand SugarcaneSugarcaneFarmersFarmers..

CentralCentral GovernmentGovernment announcesannounces supportsupport measuresmeasures forfor

sugarsugar millsmills..

UPUP GovtGovt.. scrapsscraps capitalcapital subsidysubsidy cumcum benefitbenefit schemescheme forfor

sugarsugar millsmills..

55


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Profitability and growth of IndianProfitability and growth of Indian

sugar industrysugar industry

Sugar Area & ProductionSugar Area & Production

Year Area (Million

hectares)

Production

(Million tons)2001-2002 4.41 297.21

2002-2003 4.36 281.57

20032003--20042004 3.99 236.18

2004-2005 3.75 232.00

2005-2006 4.14 267.00

2006-2007 4.25 280.00

2007-2008 4.50 290.00


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State wise situation in major sugarState wise situation in major sugar

producing states in Indiaproducing states in India

StatesStates 20042004--20052005 20052005--20062006 20062006--20072007

Uttar PradeshUttar Pradesh 5.3825.382 6.36.3 9.659.65

MaharashtraMaharashtra 2.2052.205 5.1975.197 9.39.3

KarnatakaKarnataka 1.11.1 1.9`1.9` 2.42.4

Tamil Nadu Tamil Nadu 1.11.1 1.851.85 2.62.6

Andhra PradeshAndhra Pradesh 0.9820.982 1.21.2 1.41.4

GujaratGujarat 0.7970.797 1.1681.168 1.41.4

PunjabPunjab 0.3150.315 0.3380.338 0.50.5

Madhya PradeshMadhya Pradesh 00 0.1120.112 0.150.15


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States wise Per capitaStates wise Per capita

consumption of sugarconsumption of sugar

StateState 0606--0707

Uttar PradeshUttar Pradesh 35.235.2

MaharashtraMaharashtra 40.940.9

KarnatakaKarnataka 23.323.3

Tamil Nadu Tamil Nadu 29.129.1

GujaratGujarat 40.940.9

HaryanaHaryana 68.568.5

PunjabPunjab 71.571.5

The consumption of white sugar in India is generally urban based,

in rural areas the alternate sweeteners Gur and khandsari are

consumed predominately. The per capita sugar consumption is

high in the states of Punjab followed by Haryana and Maharashtra.

This is due to higher GDP and higher income level of that states.


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Export/Import situationExport/Import situation

FinancialFinancial

yearyear

(April(April--March)March)

QuantityQuantity

Lakh MTsLakh MTs

20032003--20042004 12.112.1

20042004--20052005 1.091.09

20052005--20062006 3.173.17

20062006--20072007 16.3616.36

20072007--20082008 5.405.40

Export


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Global SituationGlobal Situation

SugarSugar ProducedProduced inin 122122 Countries,Countries,

OutOut ofof 122122 CountriesCountries 6767 produceproduce sugarsugar fromfrom canecane andand 5555

fromfrom beetbeet..

7878 perper centcent ofof thethe sugarsugar producedproduced inin thethe worldworld isis createdcreated

fromfrom sugarcane,sugarcane, withwith beetbeet sugarsugar accountingaccounting forfor thethe restrest..

SugarSugar isis aa widelywidely tradedtraded commoditycommodity..


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World Sugar ProductionWorld Sugar Production

Country/Region 2007-08 2006-07 2005-06 2004-05 2003-04

Brazil 34.23 32.64 32.64 27.73 26.14

India 28.5 30.77 20.94 13.8 14.74

EU 17.45 17.38 21.03 21.95 20.21

China 13.59 13.04 9.58 9.86 10.9

USA 7.66 7.66 6.71 7.15 7.85

Thailand 7.89 7.03 5.08 5.43 7.28

Mexico 5.58 5.54 5.5 6 5.36

Sub-total Top 7 114.9 114.06 101.48 91.92 92.48% of Total World 68.00% 68.30% 67.10% 65.10% 64.30%

Others 53.98 52.9 49.79 49.18 51.28

World Total 168.87 166.95 151.27 141.09 143.75

Mt


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NonNon--financial Analysis of Indian sugarfinancial Analysis of Indian sugar

IndustryIndustry

SWOT AnalysisSWOT Analysis

Porters five forces analysisPorters five forces analysis

Pest AnalysisPest Analysis


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SWOT AnalysisSWOT Analysis

StrengthStrength

IndianIndian SugarSugar IndustryIndustry provideprovide anan essentialessential

commoditycommodity forfor TradingTrading && ExportExport..

IndianIndian SugarSugar IndustryIndustry helpshelps inin sociosocio--economiceconomic

developmentdevelopment inin ruralrural IndiaIndia..

DiversifiedDiversified cropscrops andand croppingcropping systemssystems

IrrigationIrrigation PotentialityPotentiality

StrongStrong governmentgovernment SupportSupport..


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WeaknessesWeaknesses

OldOld technologytechnology usingusing

LowLow installedinstalled productionproduction capacitycapacity

LackLack ofof professionalismprofessionalism

UnreliableUnreliable weatherweather

LackLack ofof R&DR&D SupportSupport andand inadequateinadequate trainedtrained

humanhuman resourceresource

PhysicalPhysical infrastructureinfrastructure


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OpportunitiesOpportunities

Technology up gradation, new advancedTechnology up gradation, new advanced

technology available for the byproducttechnology available for the byproduct

utilization.utilization.

NewNew varietyvariety


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ThreatsThreats

Sugar sector is vulnerable to political interest.Sugar sector is vulnerable to political interest.

Ground water availabilityGround water availability

Farmers are diverted in crop which required lessFarmers are diverted in crop which required less

irrigationirrigation


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Porters five forces analysisPorters five forces analysis

Threat of SubstitutesThreat of Substitutes Low

Share of Treacle and khandsari declining

Barriers to EntryBarriers to Entry Medium

The Govt. used to give incentives to set up new

plants by granting higher free sales quota for thefirst five to eight years of operations that had led to

mushrooming of small units


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Bargaining Power ofBuyersBargaining Power ofBuyers

Limited Govt. influences distribution, purchase price of levy

sugar and the free sale quota releases for sugar

Bargaining Power of SuppliersBargaining Power of Suppliers

High

As the Govt. allocates the area from where the

sugarcane can be procured and announces the

purchase price (SMP/SAP), it protects the interest of

the sugar cane farmers

Inter Firm RivalryInter Firm Rivalry

Intense


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PEST AnalysisPEST Analysis

PoliticalPolitical

On Indian Sugar Industry government keeping the vision.On Indian Sugar Industry government keeping the vision.

Government provides the loans and subsidies.Government provides the loans and subsidies.

Government organized the agriculture fair and krushiGovernment organized the agriculture fair and krushiMahotsav.Mahotsav.

Central government provides 2% rebate interest in cropCentral government provides 2% rebate interest in crop

loan of through NABARD bank.loan of through NABARD bank.

Government of Gujarat increases the irrigation andGovernment of Gujarat increases the irrigation and

electricity of the famers by which the farmer get higherelectricity of the famers by which the farmer get higher

production of sugarcane.production of sugarcane.


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EconomicsEconomics

Large Production of sugarcane.Large Production of sugarcane.

Employment and increase the standard ofEmployment and increase the standard of

leaving.leaving.

Export Increase.

Export Increase.

Economics status of farmer.Economics status of farmer.


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SocialSocial

CommonCommon consumptionconsumption

EducationalEducational UpUp gradationgradation


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TechnologyTechnology

Technology & Varietal up gradation.Technology & Varietal up gradation.

Latest technology help to reduce the loss duringLatest technology help to reduce the loss during

cultivation operation & post harvest losses.cultivation operation & post harvest losses.

Tissue due to use tissue culture latest highTissue due to use tissue culture latest highyielding varieties of crop should be produced.yielding varieties of crop should be produced.


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Financial AnalysisFinancial Analysis Trend AnalysisTrend Analysis

Assets


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Liabilities


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Income & Expense


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CashCash FlowFlow activityactivity


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This Ratio shows the Proportion of current assets to current Liabilities

Current Ratio:- Current Ratio / Current Liabilities

Ratio Analysis


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This Ratio shows the Proportion ofCurrent Liabilities to Equity fund

Debt to equity ratio:- Current Liabilities / Shareholder equity


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Interest coverage Ratio:- Profit before interest & Tax / Interest

expense

This Ratio shows the Industry has a sufficient income to cover its

Interest requirement


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Debtors turnover Ratio:- Net Sales / Average Debtors

This Ratio shows the number of each time debtors turn in to cash.

This Ratio provide some indication of quality of debtors


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Return on capital employed:- Net Profit / Capital

employed

In Index of Profitability of industry comparing Net profit with capital

employed


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Return on Total Assets:- Profit after Tax / Average

Total Assets


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Return on equity

Return on equity:- PAT / Shareholder equity


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FindingsFindings


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ConclusionConclusion

InIn sugarsugar IndustryIndustry GovtGovt hashas performperform aa moremore partpart becausebecause GovtGovt

controlcontrol thethe IndustryIndustry.. ButBut theythey areare notnot properproper focusfocus onon theirtheir managementmanagement soso becausebecause

ofof thisthis lotslots ofof millsmills areare notnot working,working,

GovtGovt hashas focusfocus onon notnot aa increasedincreased aa NoNo ofof millmill butbut focusfocus onon

theirtheir productionproduction oror areaarea.. BecauseBecause inin indiaindia fewfew statesstates areare

producedproduced moremore sugarsugar andand otherother statesstates contributioncontribution isis notnot moremoresoso GovtGovt hashas trytry toto increasedincreased theirtheir contributioncontribution levellevel forfor sugarsugar

productionproduction..

SuchSuch findingsfindings onon financialfinancial analysisanalysis wewe concludeconclude assetsassets isis

increasedincreased andand InvestmentInvestment performperform aa moremore partpart forfor itit soso

industryindustry useuse thisthis InvestmentInvestment inin aa properproper wayway

IndustryIndustry hashas trytry toto decreaseddecreased theirtheir liabilitiesliabilities forfor growthgrowth ofof

industryindustry andand increasedincreased thethe profitabilityprofitability..



industryindustry useuse thisthis InvestmentInvestment inin aa properproper wayway


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industryindustry useuse thisthis InvestmentInvestment inin aa properproper wayway IndustryIndustry hashas trytry toto decreaseddecreased theirtheir liabilitiesliabilities forfor growthgrowth ofof

industryindustry andand increasedincreased thethe profitabilityprofitability..

InIn IndustryIndustry flowflow ofof cashcash highhigh inin operatingoperating isis wellwell butbut alsoalso

IndustryIndustry hashas alsoalso focusfocus onon InvestmentInvestment activityactivity andand theirtheir

expansionexpansion activityactivity.. IndustryIndustry hashas focusfocus onon theirtheir industryindustry ratioratio becausebecause theythey

affectaffect onon theirtheir growth,growth,

IndustryIndustry hashas trytry toto workwork forfor theirtheir raterate ofof returnreturn onon theirtheir NetNet

worth,worth, capitalcapital employed,employed, andand NetNet totaltotal assetsassets andand alsoalso theirtheir

profitabilityprofitability alsoalso.. IndiaIndia isis aa secondsecond largestlargest countrycountry inin thethe worldworld forfor

productionproduction ofof sugarsugar onlyonly butbut theirtheir growthgrowth isis returnreturn oror

profitabilityprofitability isis lessless asas comparecompare toto otherother countrycountry..


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Thank youThank you

Documents

37365912 Indian Sugar Industry 2007