Sugar mills in southern India are reeling under low production and extremely low cane crushing capacity utilisation due to lower availability of cane
Drought in south India has led to lower availability of cane, resulting in low capacity utilisation of sugar mills. The mills also have to deal with increasing fixed cost and price falls, which are impacting their bottom line and financial viability.
According to latest data from Indian Sugar Mills Association (ISMA), 21 sugar mills in Andhra Pradesh and Telangana produced only 190,000 tonnes of sugar till December 31, 2017, which is 16,000 tonnes lower than the sugar produced by 25 mills in 2016-17 SS (sugar season) till December 31, 2016. Sugar season is October to September.
In Tamil Nadu, 20 sugar mills are in operation, down from 34 on December 31, last year. Sugar mills in Tamil Nadu produced 170,000 tonnes of till December 31, 2017 as against 186,000 produced a year ago during the corresponding period.
Sugarcane area under cultivation in Tamil Nadu has been shrinking. Quality too has started deteriorating, and sugar content of canes is drying up. As a result, from a peak of 2.55 million tonnes produced 4-5 years ago, production last year dropped to around 1.2 million tonnes, and this season the output will be around 600,000 tonnes, which is hardly 25 per cent of the capacity during the October-September period.
At 20-25 per cent capacity utilisation, cost of production for sugar has also increased to Rs 50 a kg, compared to Rs 30-36 a kg, when the capacity utilisation was around 95-100 per cent.
Sugar production capacity of Tamil Nadu mills is close to three million tonnes.