Pending cane dues no bar, sugar mills increase crushing capacity

The state’s cane area is a sinusoidal curve with sharp dips in drought years and sharp tips in years of excess rain. Thus, while cane area dipped to 8.22 lakh hectares for 2019-20 season, it rebounded to 11.42 lakh hectares for the 2020-21 season, which has just ended. As expected, cane availability and sugar production figures have also oscillated accordingly. For the 2019-20 season, mills in the state crushed 545.26 lakh tonnes of cane and produced 61.62 lakh tonnes of sugar, while for 2020-21 season, Maharashtra crushed 1012.08 lakh tonnes of cane and produced 106.21 lakh tonnes of sugar.

Despite the availability of raw material being influenced by seasonal rain, the sugar industry in the state has taken up massive expansion projects. For the next season, 27 mills have reportedly expanded their crushing operation that has increased the state’s capacity by 76,000 tonnes. The 190 mills operational in the state increased daily crushing capacity from the existing 7.28 lakh TCD (tonnes of cane per day) to 8.05 lakh TCD. A rough calculation says for every 1 TCD increase in capacity, an investment of around Rs 2 lakh is necessary. The total investment for this expansion would then be an estimated Rs 1,520 crore.

Other than crushing capacity, 145 mills have increased their ethanol producing capacity. Maharashtra has now installed capacity to produce 202.71 crore litres of fuel additive, which is an addition of 38.68 crore litres from as compared to the previous capacity of 164.11 crore litres.

Ahmednagar witnessed the highest increase in capacity with six mills increasing their capacity, followed by Pune (five), Kolhapur and Satara (three each). Osmanabad and In Jalna, two mills have gone in for expansion, while in Nandurbar, Nashik, Beed and Solapur, it is only a single mill. Out of 27 mills, 14 are from the cooperative sector while the rest are private units.

Ayan Multitrade LLP, a sugar mill in Nandurbar district, has witnessed the highest increase in capacity to 7,500 TCD. This mill, which at present, has a capacity of 2,500 TCD has a co-generation plant of 32 MW and, also in the pipeline, is the construction of a distillery plant for ethanol production of 2.5 lakh litres per day capacity.

Ravindra Badgujar, managing director of the mill, said the easy availability of cane was due to the improved irrigation facilities created in the district. “Our cane comes from Nandurbar, Dhule and some from Gujarat,” he said.

Badgujar said cane was not a new crop as the district had three mills and some khandsari units. Cane availability will not be a problem with the district reporting around 10 lakh tonnes of crushing, he added.

A direct effect of this increased capacity would be cornering of cane by mills with increased capacity. Crushing under capacity causes loss and, to avoid that, mills would try to attract as much cane as possible. Mills with deep purses will command better cane availability, especially in areas where mills are geographically close by. All three mills in Satara are relatively close by and, thus, farmers there can expect a price war among millers in the next season.

In the long run, mills not financially strong enough to match the competition will face closure. Increased capacity will see a shorter season with more mills being available for crushing the same amount of cane.