Sugarcane Industry - to Grow or Not to Grow

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Sugarcane Industry - to Grow or Not to Grow

By | June 2011
Page 1 of 9
Presentation Content

TO GROW OR NOT TO GROW

At some point many profitable companies face a dilemma: Should they keep growing or stay the same size?

We will give you an idea of the Sugar Industry of India, its strengths, opportunities, weaknesses and risks/threats through the case study of Selvan Sugar Ltd.

What happened with Selvan Sugar Ltd. is a practical life situation faced by the many sugar factories of India.

India is a major source of sugar and sugarcane. The sugar industry of India is the second biggest manufacturer of sugar after Brazil. At present more than 5million hectare of land is allocated for sugarcane cultivation with a productivity of 69 tonnes on each hectare. Sugar industry constitutes one of the most important agro-based industries in India. Although this industry has a long tradition in this country, it started growing in an organized way during the 1930s after introduction of the sugar industry protection act in 1932.

Selvan Sugar Ltd. is located in Tamil Nadu, one of the 6 largest producers of sugarcane which contribute to 85% of total sugar produced. The tropical climate, soil conditions and sufficient rain and water supply boost sugarcane cultivations in states like Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamil Nadu and Andhra Pradesh. Banking on the locational advantage Selvan Sugar Ltd. prospered significantly.

The state posed problems during expansion. The Sugar Industry is the only agro based industry regulated and controlled by the Government. Unfortunately, despite liberalisation and global assimilation, this industry continues to be highly regulated with controls imposed on almost every step. The political sensitivity of this industry has been one of the reasons why this industry has not developed as fast as those in other countries like Brazil . The state imposed regulations towards acquisition of sick sugar mills in the state and even the procurement of cane was limited by the state policy. The...