Sugarcane companies that have invested in new sugar mills in recent years are beginning to see a growth in capacity utilisation as availability improves. But they are far from reaching full potential.

A total of eight new mills have gone on stream in Tamil Nadu since 2007-08 including Madras Sugars of the Bannari Amman Group, the most recent to commence operations in 2010-11. Four went on stream in 2009-10, two in 2008-09 and one in the previous year. Sugar companies have invested a total of over Rs 1,500-2,000 crore in these mills.

In addition, two sugar mills – SV Sugars in the private sector and Madurantakam Sugars in the cooperative sector, have recommenced operations after a few seasons' break. The private sector sugar mill is under a new management while the cooperative mill was revived by the State Government in April. SV Sugars has crushed about 1.5 lakh tonnes of sugarcane and the cooperative mill, a token 18,000 tonnes.

As compared with the peak sugarcane production in 2006-07 when a mill with a daily crushing capacity of about 5,000 tonnes crushed 14 lakh tonnes of cane, industry data shows that new mills are yet to realise their full potential.

Some of the largest capacity expansions in the sugar industry happened in Tamil Nadu in these years which unfortunately coincided with a steep drop in sugarcane availability due to various reasons – weather conditions, sugarcane pricing issues and labour shortage.

Some of the early expansions in capacity were hit by low capacities with Sakthi Sugars' unit remaining unutilised for sugarcane crushing in the first two years of commissioning and only processed imported raw sugar.

Empee Sugars' mill which has come up in South Tamil Nadu faces an added challenge. The region is not a traditional sugarcane belt and the company faces the job of popularising a new crop. Capacity utilisation is the lowest in this factory.

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