Conventional Sugar Plant
Modern Sugar Plant
The quality of the sugar manufactured at Nayaagarh Sugar goes through a strict quality process parameters. The other Quality standards which we maintaining are :
1) Good sanitation at mills and in the boiling house
2) Using minimum, tested, good quality chemicals for processes
3) Adopting latest technologies for juice and syrup
4) Doing analysis to ensure optimum ICUMSA of all intermediate products and the final product.
5) Promoting the farmers to use more of organic fertilizer rather than the inorganic ones.
6) Maintaining process parameters strictly e.g. ph of juice, temperature of mixed juice and syrup juice.
Every year Nayaagarh Sugar complex Ltd conducts a survey of its command area to bring on record the cane cultivated area of the farmers. This also takes care of the different varieties of sugarcane that are grown by farmers. Total of 10,000 acres (year 2007) of culturable land under the command area. This area covers 316 villages and has 9 centres. It purchases cane from more than 10,000 farmers. Assuming a family of 5 per household, the economy of over 60,000 households is dependent on NSCL. In a crushing season NSCL plans to generate 4500 mandays employment directly and indirectly per day.
GLOBAL SUGAR SCENARIO
During the 2006/07 crop cycle, production exceeded consumption by over 10 mln tons. Global cane sugar production shot up to 131 mln tons from 110 mln tons in 2005/06, a jump of 19%. World sugar production totaled 162.6 mln tons, balance contributed by Beet Sugar. Global consumption grew by 5.3 mln tons to 152.4 mln tons. The year on year consumption growth increased to 3.5% from 1.8% in 2005/06. 2006/07 saw a major swing from deficit to surplus, with much of the growth in production coming from the Asian countries, especially India which turned into an exporter in January, 2007 and has thus swung the world sugar balances in the other direction.
Source: Company Research, ISO monthly Sugar Update, Aug 2007
India and Brazil continue to dominate the global sugar production followed by China, Thailand Mexico and Australia. In SY 2006-07 India and Brazil together contributed more than 60 mln MT out the total 131 mln MT of sugar produced from cane. Top ten countries produced more than 80% of the total production.
Source: Company Research, Czarnikow research reports
Currently 69% of the world’s sugar is consumed in the country of origin whilst the balance is traded on world markets. India is the largest consumer of sugar and consumption has grown faster in Asia than across the world. Long-term potential for consumption growth, particularly in Southern African countries, remains positive. Consumption growth in China has increased as a result of the bouyant economic conditions currently being experienced in that country. dx
According to the International Sugar Organization (ISO) said that 2007-2008 sugar production would reach 165.6 million tons, up 3 million tons on the year. It also said the 2007-2008 surplus would be around 10.8 million tons. World consumption is projected at 156.8 million tons, up 2.3% from 2006- 2007. The ISO also predicted that India would become the world’s largest sugar producer in 2007-2008, replacing Brazil. They forecast India’s production at a record 33.15 million tons, up 2.55 million tons on the year.
World Sugar Prices
Higher world market prices during the past two years provided the incentive amongst sugar producers worldwide to expand their cane and beet sugar crops. The resultant increased sugar availability has served to dampen world market prices which have fallen from US20 cents/lb in February 2006 to less than 9.5 US cents/lb at the end of July 2007.
Globally sugar is standardized as either raw sugar, which is traded on the NYBOT or Refined Sugar traded on the LIFFE exchange, London. There are a lot of other regional exchanges in Major producing countries like Brazil and India, but liquidity and participation remains dominant in the NYBOT and the LIFFE.
Preferential prices in the EU and US remain at a significant premium to the world sugar price. In terms of the EU Sugar Regime reform, a uniform price is now being paid for ACP (African, Caribbean and Pacific) and EBA (Everything But Arms) sugar protocol exports.
The EU sugar regime has changed from the year 2006/07 with most of the preferential quota being abolished by the April 2005 WTO ruling. This created a glut of refined sugar globally in March – May 2007 leading the prices rally to more than 400$ per tonne.
A lot of standalone refineries have been announced to fill the gap left by the exit of the European Sugar which have again depressed the world refined sugar prices to the lows of 270$ per tonne in August 2007.
Going forward India is going to play a very crucial role in World Sugar Trade. Policy decisions and Production figures in India would have substantial impact on the world sugar prices.
Indian Sugar Industry - 2006-07
India is the largest consumer and second largest producer of sugar in the world (Source: USDA Foreign Agricultural Service). In SY 2006/07 India produced 28.5 mln tons and consumed 20 mln tons of sugar. India has exported around 1.5 mln tons of sugar after the ban on sugar exports was lifted in January, 2007. With an opening stock of 4 mln tons in 2005-06, India will end the year with stocks of more than 11 mln tons.
The following table shows the supply demand balances since 2000. India has swung itself from a net importer to a potentially big exporter in a matter of 2 years. This shows the cyclicity of the Sugar industry in India.
The Indian sugar industry is the second largest agro-industry located in the rural India. The Indian sugar industry has a turnover of Rs. 700 billion per annum and it contributes almost Rs. 22.5 billion to the central and state exchequer as tax, cess, and excise duty every year (Source: Ministry of Food, Government of India). It is the second largest agro-processing industry in the country after cotton textiles. With more than 600 operating sugar mills in different parts of the country, Indian sugar industry has been a focal point for socio-economic development in the rural areas. About 50 million sugarcane farmers and a large number of agricultural labourers are involved in sugarcane cultivation and ancillary activities, constituting 7.5% of the rural population. Besides, the industry provides employment to about 2 million skilled/semi skilled workers and others mostly from the rural areas. (Source: ISMA)
In 2006/07, India produced 28.5 mln tons of sugar. UP and Maharashtra together contributed more than 67% to the total production. Maharashtra overtaking UP became the largest producer of sugar. Maharashtra’s production increased from 5.9 mln tons to 9.6 mln tons this year. Higher yields and greater cane acreage contributed to this increase. Following table shows region wise distribution of production.
Current Industry Status
In 2005/06, there were 581 installed sugar mills in the country with a production capacity of 190 lakh MTs of sugar, of which only 455 are working. These mills are located in 18 states of the country. Around 312 of the total installed mills are in the cooperative sector, 205 in the private sector and 64 in the public sector (Source: Directorate of Sugar). The no. of factories in the private sector has increased by more than 15% which shows the corporatization of sugar production. But majority of the industry is still fragmented with more than 50% of the industry represented by the co operatives. Maharashtra has been the most enterprising of the states in starting new factories which increased from 102 in 2004/05 to 142 in 2005/06.
Sugarcane occupies about 4.2% of the total kharif area under cultivated area and it is one of the most important cash crops in the country. The area under sugarcane has gradually increased from 2.7 million hectares in 1980-’81 to 4.3 million hectares in 2005-06, mainly because of much larger diversion of land from other crops to sugarcane by the farmers for economic reasons. From a level of 154 MMT in 1980-1981, the sugarcane production increased to 241 MMT in 1990-1991 and further to 297 MMT in 2006-2007 (Sugar India Yearbook).
Source: ICRA sugar sector analysis
Most of the sugar in India is manufactured and sold as “Plantation White Sugar” which is produced by Double Sulphitation Process, while the norm in developed and emerging nations is refined sugar which is produced by the Phosphoflotation Process.
“Plantation White Sugar” is generally between 100 to 150 ICUMSA which is a middle range product between the Raw Sugar and the Refined Sugar. This colored sugar has good demand in India for domestic consumption, but it cannot be used by corporates for industrial usage. Therefore the EC –II grade sugar which is refined sugar matching EU norms is in greater demand across the world.
Most of the mills in India are not equipped to make refined sugar. Mills which are designed to produce refined sugar can manufacture sugar not only from sugarcane but also from raw sugar which can be imported. Therefore, such mills can run their production all the year round, as opposed to single stage mills which are dependent upon the seasonal supply of sugarcane
Due to good demand and bulk requirement, a lot of millers have shown interest in producing Raw Sugar this year. It is to be seen if this latent demand can be converted into an opportunity and India can establish itself as a bulk exporter of Raw Sugar.