PRODUCING PROFITS WITH SUGAR SUGAR MILLS HAVE A TOUGH TIME MANAGING PROFITS Sugar industry in India is amongst the most challenged as a result of government policies. The industry faces strong government controls, minimum support price for cane, levy sugar quota, fixing of sugar price, limitations on capacity expansion etc. These limitations have meant that sugar mills have been forced to look at all levers for making operations efficient. One of South India’s largest sugar mills was faced with the challenge of improving the profitability of its operations. The mill faced difficulties in achieving peak production consistently due to challenges with cane availability, and low recovery as compared to best in the industry. Valcon carried identified opportunities and developed a roadmap for improving profitability in the following areas: • Cane supply management • Crushing and refining • Cane availability management CANE SUPPLY MANAGEMENT IS COMPLEX BUT CAN YIELD RICH REWARDS The assessment identified the following opportunities in harvesting and supply that would result in increasing the recovery, yield and availability of cane: 1. Inefficient harvesting scheduling led to poor yield: Nearly 60% of the cane at the plant was cut either premature or post mature. This had an impact of reducing the yield per acre of plantation as well as reducing the recovery (see figure 1). Post-cutting delay in the yard led to recovery losses: The mill used mixed modes of transportation – bullock carts for short distance, and trucks and trailers tippers for distances beyond 10 km. The individual unloading capacity for each type of transport was limited and hence the effective capacity was limited by the mix of transport mediums. Transport vehicles of same type arrived at almost the same time creating temporary congestion at the yard. Corresponding delay in cane unloading and crushing resulted in between 0.25% and 1% loss of sugar recovery (see figure 2). Figure 1: Yield lost due to improper maturity at harvesting 40 35 30 Percent yield lost 31% 25 20 15 10 5 0 < 290 days 290-320 days 20% 16% 5% 0% 320-350 350-380 380-410 days days days 19% 9% 410-440 > 440 days days Figure 2: Sugar recovery losses of 0.6% for first 24 hours accelerate over time 3.5 3.0 Estimated recovery loss % 2.8% 2.5 2.0 1.5 1.0 0.5 0.0 0.0% 0 24 48 72 96 2.1% 2. 1% 0.6%
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