chapter v operational performance of co-operative...

CHAPTER V

OPERATIONAL PERFORMANCE OF CO-OPERATIVE SUGAR

MILLS IN TAMILNADU

5.1 Introduction

Operational performance of a business is vital for growth and development. In

this context, this chapter is devoted to operational performance of sugar mills of Co-

operative sector in Tamilnadu. The present study focuses on operational performance

of Co-operative sugar mills production, yield, cane crushed, recovery, and capacity

utilization. These operational performance factors are measured and analyzed with

the help of statistical tools such as simple regression, t-test and growth rate. In

addition the operational performances of Co-operative sugar mills are studied with

the help of hypothesis testing to conclude the study and the same are narrated in

upcoming paragraphs.

Operational efficiency is the relationship between quality and quantity of

goods produced and the resources used to produce them. So the analysis in this

chapter is mainly based on the quantitative aspect of sugarcane yield and sugar

production.

Labour efficiency is not mainly taken up as the increase in operational

efficiency. This is due to the influence of the technological factors or revolution in

the new methods of production or other external factors. The financial aspects of the

sugar mills are to be analyzed in the next chapter.

To mention briefly, in spite of surplus production, sugar mills are incurring

losses because of the Statutory Minimum Price (SMP) and State Advised Prices

74

(SAP), which they are compelled to pay mandatorily. Each mill has arrears of

sugarcane prices payable to the farmers. Levy price and open market prices are fixed

by the government. In addition, the quotas for public distribution system and open

market are regulated by the government. Since the market forces are not in free play,

various financial aspects are also to be analyzed. Further, subsidies are offered by the

Government, Quantitative analysis is undertaken for recovery and capacity

utilization.

5.2 Co-operative Sugarcane Production

Operational efficiency is measured through the production of sugarcane, for

production the area for cultivation of sugarcane is phenomenal. Table 5.1 shows the

area under sugarcane against each year during the study period.

Table 5.1

Area under sugarcane in Tamilnadu

Year Area ( in 000’ hectare)

2002-03 261

2003-04 192

2004-05 232

2005-06 336

2006-07 391

2007-08 354

2008-09 309

2009-10 293

2010-11 336

2011-12 286Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.70

The area under sugarcane cultivation has shown an increasing trend except for

2003-04 and 2004-05. During these two years it has come down sharply. The increase

in the area of cultivation of sugarcane has been quite steep during 2006-07 and

2007-08. The cultivation of sugarcane has come down to 286 thousand hectares at the

end of study period.

75

5.3 Yield of sugarcane

The yield of sugarcane cultivation per hectare gives an idea of the efficiency of

production. A comparative data on state-wise production of sugarcane per hectare is

given in the table 5.2.

Table 5.2

Yield of sugarcane (tonnes/hectare)

Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.72

Table 5.2 shows the sugarcane yield of states which shows good progress in

production of sugar. When compared to other states, Tamilnadu has achieved the

highest yield in almost all the years and the quantum of yield is far ahead of other

states. It is also very much higher than All India figures. As compared to All India

yield Tamilnadu boosts to 145%, 155%, 156%, 157%, 153%, 156%, 164%, 145%,

155% and 146% respectively.

The sugarcane yield / hectare in Tamilnadu viewed as percentage of All India

yield is shown in table 5.3. The sugarcane per hectare in almost during the study

period is quite high. But looking at the trend in yield the performance is not very

high. The trend declined during the year 2009-10 and 2011-12.

Sta

te/Y

ear

AP

Gu

jara

t

Ka

rna

tak

a

Ma

ha

rast

ra

TN

UP

All

Ind

ia

2002-03 66.20 69.40 84.90 74.40 92.40 56.30 63.60

2003-04 72.10 71.80 65.80 57.90 91.90 55.50 59.40

2004-05 74.90 74.10 80.20 63.20 100.80 60.70 64.80

2005-06 76.80 74.00 83.40 77.60 104.70 58.20 66.90

2006-07 82.20 73.00 87.90 74.90 105.60 59.60 69.00

2007-08 82.20 72.00 85.80 80.90 107.50 57.20 68.90

2008-09 78.50 70.20 83.00 79.00 106.20 52.30 64.60

2009-10 74.10 80.50 90.30 84.90 101.50 59.30 70.00

2010-11 77.90 72.40 93.80 84.90 108.40 56.70 70.10

2011-12 82.00 70.20 90.30 80.10 102.80 59.60 70.30

76

Table 5.3

Yield of sugarcane in Tamilnadu (per hectare)

Year Yield/Hectare Growth %

2002-03 92.40 -

2003-04 91.90 99.46

2004-05 100.80 109.68

2005-06 104.70 103.87

2006-07 105.10 100.38

2007-08 107.50 102.28

2008-09 106.20 98.79

2009-10 101.50 95.57

2010-11 108.40 106.80

2011-12 102.80 94.83 Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.72

5.4 Production of sugar

The state wise production of sugar and the comparisons of sugar production

among states that are good in sugar production are displayed in table 5.4

Table 5.4

State wise sugar production (in 000’ tonnes)


Sugar production has been fluctuating in all the states. This indicates the

common problems besetting the industry and the market conditions.

Especially the problems were high during the year 2003-04 and 2004-05 in all the

Sta

te/Y

ear

AP

Gu

jara

t

Ka

rna

tak

a

Ma

ha

rash

tra

TN

UP

2002-03 1210 1252 1868 6279 1644 5651

2003-04 886 1066 1116 3175 921 4552

2004-05 982 797 1040 2217 1108 5037

2005-06 1236 1168 1943 5197 2142 5784

2006-07 1680 1425 2662 9100 2539 8475

2007-08 1335 1366 2900 9075 2141 7319

2008-09 593 1012 1651 4578 1597 4064

2009-10 575 1189 2558 7067 1280 5179

2010-11 1006 1235 3683 9054 1846 5887

2011-12 1135 1000 3872 8977 2379 6974

77

states. The sugar production has gone down in all the states during these two years.

Sugar production in Tamilnadu had a severe setback during 2003-04, but made a

slow recovery in the next five years. Again there was a decline during 2009-10 but

started picking up from 2010-11. For further evaluation, sugar production is studied

against All India figures and the same is shown in table 5.5.

Table 5.5

Sugar production in Tamilnadu as percentage of All India production

YearProduction in

Tamilnadu

Production in All

India

TN as % of

All India

2002-03 1644 20145 8.16

2003-04 921 13546 6.80

2004-05 1108 12690 8.73

2005-06 2142 19267 11.12

2006-07 2539 28367 8.95

2007-08 2141 26357 8.12

2008-09 1597 14539 10.98

2009-10 1280 18912 6.77

2010-11 1846 24394 7.57

2011-12 2379 26343 9.03Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.85

As from percentage of All India figures, production of sugar in Tamilnadu

showed in the table 5.5 indicates declining performance during 2003-04 and recovered

slightly in 2004-05 onwards. Yet the recovery was not anywhere near 2005-06, which

was in peak of the performance indicated by 11.12 percent of All India figures. To

observe the operational trend in sugar production, year to year percentage is

calculated and the same is displayed in the table 5.6.

78

Table 5.6

Yield of Sugarcane (per hectare)

Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.85.

Year to year percentage in table 5.6 reveals the increase in production from

2002-03 to 2005-06 with the highest production in the year 2005-06. Thereafter it

was a case of steep decline in the next three years. But 2010-2011 production has

registered an increase with a mild recovery.

Another importance of operational efficiency is the production of sugar per

hectare. Table 5.7 explores state-wise sugar production per hectare of sugar

cultivation. Though all the cane produced may not be utilized for sugar production,

dividing the sugar produced by a common denominator of area under sugarcane

provides an objective measures.

Year Yield/Hectare Production (in %)

2002-03 1644 -

2003-04 921 56.02

2004-05 1108 120.30

2005-06 2142 193.32

2006-07 2539 118.53

2007-08 2141 84.32

2008-09 1597 74.59

2009-10 1280 80.15

2010-11 1846 144.22

2011-12 2379 128.87

79

Table 5.7

Sugar production per hectare (in tonnes)

Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.85 & Indian Sugar

Dec,12.P.102

It is observed from the table 5.7 that the sugar production per hectare in

Maharastra is the maximum of 10 to 11 tonnes/hectare due to soil condition and

irrigation facilities. Also there is efficiency of performance with backup services. But

the performance of Utter Pradesh is very poor when compared to the other states.

Production of sugar in Tamilnadu is at an average level hovering between 4 and 8

tonnes per hectare. Production of sugar per hectare may be compared to All India

performance. The details are presented in the following table 5.8.

Table 5.8

Sugar production per hectare in Tamilnadu and All India (in tonnes)

Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.70 &Indian Sugar LX11, No.9

Dec,12. P.102

Yea

r

AP

Gu

jara

t

Ka

rna

tak

a

Ma

ha

rast

ra

TN

UP

2002-03 5.22 6.17 4.88 10.85 6.30 2.63

2003-04 4.24 5.99 4.77 7.17 4.80 2.24

2004-05 4.68 4.05 5.84 6.84 4.78 2.58

2005-06 5.37 5.93 8.87 10.37 6.38 2.68

2006-07 6.36 6.66 8.17 8.67 6.49 3.77

2007-08 5.40 6.47 9.51 8.30 6.05 3.36

2008-09 3.03 4.58 5.86 5.96 5.17 1.95

2009-10 3.26 7.72 7.59 9.35 4.37 2.62

2010-11 5.24 6.56 8.71 9.38 5.49 2.77

2011-12 5.56 4.95 9.00 8.78 8.32 3.23

Year Co-operative Sector in TN All India

2002-03 6.30 4.46

2003-04 4.80 3.44

2004-05 4.78 3.47

2005-06 6.38 4.59

2006-07 6.49 5.51

2007-08 6.05 5.21

2008-09 5.17 3.29

2009-10 4.37 4.53

2010-11 5.49 4.99

2011-12 8.32 5.18

80

Even though Tamilnadu had fared poorly in sugar production per hectare when

compared to Maharashtra, its performance is much better when viewed in relation to

All India performance. Tamilnadu has done better when compared to Utter Pradesh

during the study period.

For reviewing sugar production in Tamilnadu, year to year ratios was

calculated. The table 5.9 furnishes year to year ratio of sugar production in

Tamilnadu.

Table 5.9

Co-operative sugar production in Tamilnadu year to year ratio

Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.70 & Indian Sugar LX11,

No.9 Dec 12, P.102

From the table 5.9, it is found that there is an increasing trend in 2002-03

and then there is a decline during the next two years. The highest ratio of nearly 1.5

was recorded in the year 2011-12. Another perspective is viewing, sugar production

per hectare as a percentage of All India performance. Table 5.10 provides the

Tamilnadu figures as a percentage of All India sugar production.

YearProduction/ Hectare

(in tonnes) Year to Year Ratio

2002-03 6.30 1.14

2003-04 4.80 0.76

2004-05 4.78 1.00

2005-06 6.38 1.33

2006-07 6.49 1.02

2007-08 6.05 0.93

2008-09 5.17 0.85

2009-10 4.37 0.85

2010-11 5.49 1.26

2011-12 8.32 1.52

81

Table 5.10

Sugar Production / hectare as percentage of All India

Year Tamilnadu (in tonnes) All India (in %)

2002-03 6.30 141

2003-04 4.80 140

2004-05 4.78 138

2005-06 6.38 139

2006-07 6.49 118

2007-08 6.05 116

2008-09 5.17 157

2009-10 4.37 96

2010-11 5.49 110

2011-12 8.32 161

Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.70 &

Indian Sugar LX11., No.9 Dec,12, P.102

As percentage of All India per hectare sugar production Tamilnadu's

production is significant except in the year 2007-08. In the years 2002-03 and 2005-

06 the percentage figure stood nearly at 140 and then there is a decline during next

four years. However, it picked up in 2008-09 but again fell down in the year 2009-10.

The ratio was in the peak of 161 percent at the end of the study period.

5.5 Sugar recovery in Co-operative sugar mills

Qualitative performance may be looked into as another measure of operation.

In this regard, the sugar recovery percentage is analyzed. At the outset, sugar

recovery percentage is studied in the following table 5.11.

82

Table 5.11

Average sugar recovery in Tamilnadu

Year Co-operative Recovery (in %)

2002-03 9.88

2003-04 9.92

2004-05 9.64

2005-06 9.24

2006-07 9.25

2007-08 9.32

2008-09 9.62

2009-10 8.94

2010-11 9.09

2011-12 9.35 Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.67

Table 5.11 depicts year wise average sugar recovery in Tamilnadu. After a

slight increase in 2003-04 there is a regular fall in sugar recovery but still the rate of

decline is slow. However, it picked up in 2008-09 but again it fell down in the next

year. Comparison of average sugar recovery is undertaken by a study of

corresponding figures in other states. This will give an idea of qualitative

performance of Tamilnadu objectively. Table 5.12 provides information on average

sugar recovery in other states.

Table 5.12

State wise average sugar recovery (in percentage)

Year AP Gujarat Karnataka Maharastra TN UP

2002-03 10.10 10.58 10.79 11.64 9.88 9.53

2003-04 10.31 10.93 10.19 10.92 9.92 9.82

2004-05 10.65 10.76 10.11 11.39 9.64 9.79

2005-06 10.05 10.82 10.82 11.68 9.24 9.51

2006-07 9.70 10.64 10.57 11.39 9.25 9.47

2007-08 10.12 10.67 10.87 11.92 9.32 9.79

2008-09 9.89 10.72 10.28 11.44 9.62 8.94

2009-10 9.28 10.53 10.67 11.51 8.94 9.13

2010-11 9.75 9.99 10.91 11.29 9.09 9.14

2011-12 9.79 10.61 11.14 11.65 9.35 9.07

Source: Co-operative Sugar, Oct.2011, Vol.43, No.2, P.67& Dec.2012, Vol.44.No.4, P.83

83

Maharashtra has achieved the highest average sugar recovery percentage.

Tamilnadu's figure in this respect oscillates between 9 and 10. But the percentage of

Maharashtra is between 10.92 and 11.92. Andhra Pradesh and Uttar Pradesh have

registered a high recovery of 9 to 10 percent and Karnataka also recovers 9 to 10

percent. Gujarat and Karnataka also recovers 10 to 11 percent. Average sugar

recovery may be compared to corresponding All India sugar recovery. The relevant

information is explored in the table 5.13.

Table 5.13

Average sugar recovery in Tamilnadu and All India (in percentage)


Average sugar recovery of Tamilnadu is less than that of corresponding All

India figure. The Tamilnadu rate as percentage of All India level is around 90

percent. The average sugar recovery of Tamilnadu may be examined for trends by

calculating the year to year ratio in the table 5.14.

YearCo-operative

Recovery in TN All India

All India

(in %)

2002-03 9.88 10.36 95.37

2003-04 9.92 10.22 97.06

2004-05 9.64 10.17 94.79

2005-06 9.24 10.21 90.50

2006-07 9.25 10.16 91.04

2007-08 9.32 10.55 88.34

2008-09 9.62 10.03 95.91

2009-10 8.94 10.19 87.73

2010-11 9.09 10.17 89.38

2011-12 9.35 10.25 91.22

84

Table 5.14

Average sugar recovery in Tamilnadu


Year to year ratio indicates an increasing trend from 2006-07 to 2008-09 and

next year slightly declines and for subsequent three years it shows steady increasing

trend over the years from 2006-07.

5.6 Capacity Utilization

Another angle from which operational efficiency can be gauged is capacity

utilization. It provides a basis for assessing the potential capacity and how far that

capacity has been utilized. Under-utilization reveals a condition where enough

quantum of work is not turned out. The quantitative deficiency may be a measure of

poor operational performance if other collateral evidence is available. Table 5.15

gives the information on capacity utilization in Tamilnadu.

YearAverage sugar

Recovery (in %)

Year to Year

Ratio

2002-03 9.88 1.03

2003-04 9.92 1.00

2004-05 9.64 0.97

2005-06 9.24 0.96

2006-07 9.25 1.00

2007-08 9.32 1.01

2008-09 9.62 1.03

2009-10 8.94 0.93

2010-11 9.09 1.02

2011-12 9.35 1.03

85

Table 5.15

Capacity utilization of sugar production in Co-operative sugar mills, Tamilnadu

Year Capacity (in lakh tonnes) Capacity Utilization (in %)

2002-03 16.65 81

2003-04 9.28 43

2004-05 11.49 49

2005-06 23.19 91

2006-07 27.45 129

2007-08 22.97 97

2008-09 16.61 78

2009-10 14.33 54

2010-11 20.31 66

2011-12 25.46 60 Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.84

Capacity utilization attained a peak in the year 2006-07 at about 129% and

thereafter it tended to decline in the subsequent years. It reached to a decline of 60

percent at the end of the study period.

Table 5.16

Capacity utilization - Comparison of Tamilnadu with other States

Year AP Gujarat Karnataka Maharastra TN UP

2002-03 N.A N.A N.A N.A 81 N.A

2003-04 N.A N.A N.A N.A 43 N.A

2004-05 N.A N.A N.A N.A 49 N.A

2005-06 92 101 102 72 91 82

2006-07 138 132 146 125 129 117

2007-08 102 127 118 122 97 86

2008-09 48 94 59 62 78 44

2009-10 43 111 97 93 54 40

2010-11 70 115 117 114 66 62

2011-12 77 85 83 99 60 80 Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.72

Table 5.16 provides the information of capacity utilization comparison of

Tamilnadu with other states. In all the states capacity utilization has been fluctuating.

Peak performance was during the year 2006-07 in all the states indicating a surplus

sugarcane production. Capacity utilization of Tamilnadu compared at All India level

is given in the table 5.17.

86

Table 5.17

Comparison of capacity utilization in Tamilnadu and All India level

YearCapacity Utilization (in %) Capacity utilization of

Tamilnadu as % of All India Tamilnadu All India

2002-03 81 91.01 89

2003-04 43 53.09 81

2004-05 49 113.95 43

2005-06 91 185.71 49

2006-07 129 141.76 91

2007-08 97 75.19 129

2008-09 78 80.41 97

2009-10 54 69.23 78

2010-11 66 122.22 54

2011-12 60 90.91 66 Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.84

Table 5.17 shows the capacity utilization of Tamilnadu, it recorded a highest

percentage of 129 during 2006-07 and lowest percentage of 43 during 2003-04 in the

study period. As far as All India is concerned, high percentage of 185.71 is recorded

during 2005-06 and lowest percentage of 53.09 is recorded during 2003-04. There

was a setback in 2006-07 at All India level and declines in the subsequent years. To

trace the trend in capacity utilization values, ratios were calculated in the table 5.18.

Table 5.18

Year to year ratio of Capacity utilization in Tamilnadu

YearCo-operative Sector

capacity utilization

Year to Year

Percentage

2002-03 91.01 -

2003-04 53.09 58.33

2004-05 113.95 214.66

2005-06 185.71 162.97

2006-07 141.76 76.33

2007-08 75.19 53.04

2008-09 80.41 106.94

2009-10 69.23 86.09

2010-11 122.22 176.54

2011-12 90.91 74.38Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.84

87

Year to year percentage shows a sudden downward trend in 2003-04, but has

come up in the years 2004-05, 2005-06 and thereafter the trend declines for the

subsequent two years. It improved in 2008-09 and 2010-11. In 2009-10 and 2011-12

it again came down.

5.7 Operational performance of Co-operative sugar mills

Comparison of performance of Co-operative sector is another angle of

measuring physical efficiency. Average recovery of sugar in Co-operative sugar mills

in Tamilnadu expressed in percentages are displayed in table 5.19.

Table 5.19

Performance of Co-operative Sugar Mills, Tamilnadu

YearSugar Production of

Co-operative sector

Average Sugar

Recovery (in %)

2002-03 4.51 9.96

2003-04 2.32 9.88

2004-05 2.54 9.79

2005-06 4.99 9.38

2006-07 7.03 9.25

2007-08 5.30 9.35

2008-09 4.27 10.00

2009-10 2.92 9.13

2010-11 3.60 9.15

2011-12 3.99 9.10 Source: Co-operative Sugar,Oct.2011,Vol.43,No.2 P.69 & Dec.2012,Vol.44.No.4, .85

It is evident from the table 5.19 that production of sugar in Co-operative sugar

mills is fluctuating. As for sugar recovery percentage, it exhibits a similar trend in

these sectors maintaining the same level of 9 to 10 percent. This is again indicative of

market conditions and not individual sector aberrations.

88

5.8 Statistical Analysis and interpretation

This section is explicitly devoted to analyze and review the operational

performance of Co-operative sugar mills, these analyses have provided a general

review as such. In order to measure the operational performance with the help of few

hypotheses, suitable statistical techniques and tools have been employed and explored

as follows.

5.8.1 Study on area under sugarcane, cane production, yield, number of

sugar mills and cane crushed

Table 5.20

Area under sugarcane, cane production, yield, number of mills and cane crushed


Table 5.20 illustrates the area under sugarcane and production of sugarcane.

The area under sugarcane during the study period have covered an average of around

45,08,000 hectares wherein it has moved between 45,20,000 hectares to 50,85,000

hectares during the study period. The growth rate is around 2.07 on an average and the

Year

Area

un

der

Su

ga

rca

ne

(0

00

’to

nn

es)

Gro

wth

Ra

te

Pro

du

ctio

no

f

Su

ga

rca

ne

Gro

wth

rate

Yie

ldo

f

sug

ar

ca

ne

(per

hecta

re)

Gro

wth

rate

Nu

mb

er

of

Mil

ls

ino

per

ati

on

Gro

wth

rate

To

tal

ca

ne

cru

shed

Gro

wth

rate

2002-03 4520 - 287383 - 63.60 - 453 - 194365 -

2003-04 3938 -12.88 233862 -18.62 59.40 -6.60 422 -6.84 132511 -31.82

2004-05 3662 -7.01 237088 1.38 64.80 9.09 400 -5.21 124772 -5.84

2005-06 4201 14.72 281172 18.59 66.90 3.24 455 13.75 188672 51.21

2006-07 5151 22.61 355520 26.44 69.00 3.14 504 10.77 279295 48.03

2007-08 5055 -1.86 348188 -2.06 68.90 -0.14 516 2.38 249906 -10.52

2008-09 4415 -12.66 285029 -18.14 64.60 -6.24 489 -5.23 144983 -41.98

2009-10 4175 -5.44 292302 2.55 70.00 8.36 490 0.20 185548 27.98

2010-11 4886 17.03 342382 17.13 70.10 0.14 527 7.55 239807 29.24

2011-12 5085 4.07 357667 4.46 70.30 0.29 529 0.38 256975 7.16

Average 4508.8 2.07 302059 3.53 66.76 1.25 478.50 1.97 199683 8.16

Correlation 0.971** 0.643*

89

movement of this growth is fluctuated. But overall growth is positive. The production

of sugarcane has also moved in the same direction with an average of 30,20,59,000

tonnes. The movements ranges between 28,73,83,000 tonnes to 35,76,67,000 tonnes

during the study period there are up and down movement with the average growth of

3.53, which again illustrates a positive movement of operational performance. The

correlation between area under sugarcane and production of sugarcane generated the

relationship of 0.971(97.1%) which pictures that the operational performance between

sugarcane cultivation and sugarcane production resulted in positive.

Table 5.20 highlights the operational performance of yield of sugarcane per

hectare and number of mills in operation and as well as total cane crushed during the

study period. The average yield of sugarcane per hectare is 66.76 tonnes. The

correlation analysis between area of sugarcane and yield is 0.64 which shows (64%)

relationship between them. The correlation illustrates a reasonable operational

performance between them wherein, the 0.64 correlation indicated the good

association between area under cultivation and yield. The average growth of

sugarcane per hectare during the study period is around 1.25 which is positive in

nature.

The number of mills during the study period increased from 453 to 529 with

an average of 478, where in it has achieved the growth rate of 1.97 which is indicative

of reasonable operational growth rate performance. The total cane crushed during the

study period moved between 19,43,65,000 tonnes to 25,69,75,000 tonnes with an

average of 19,96,83,000 tonnes and a growth rate of 8.16. This growth rate indicates a

very favorable operative performance. The study of sugar yield, number of mills and

cane crushed has achieved positive favorable growth rate performance along with a

90

positive correlation of 0.97 between area under sugarcane and production of

sugarcane.

5.8.2 Study on total sugar production and recovery of sugar in Co-operative

sugar mills

Table 5.21 illustrates the total sugar produced and recovery of sugar. Growth

rates of sugar produced and sugar recovery are also displayed.

Table 5.21

Sugar produced and sugar recovery in co-operative sugar mills

YearSugar Produced

( lakh tonnes)

Growth

Rate

Sugar

recovery

Growth

rate

2002-03 20145 - 10.36 -

2003-04 13546 -32.76 10.22 -1.35

2004-05 12690 -6.32 10.17 -0.49

2005-06 19267 51.83 10.21 0.39

2006-07 28367 47.23 10.16 -0.49

2007-08 26357 -7.09 10.55 3.84

2008-09 14539 -44.84 10.03 -4.93

2009-10 18912 30.08 10.19 1.60

2010-11 24394 28.99 10.17 -0.20

2011-12 26343 7.99 10.25 0.79

Average 20456 8.35 10.23 -0.09

Correlation 0.416 Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.68

The total sugar produced during the study period is in the range of 20,145 lakh

tones to 26,343 lakh tones with an average of 20,456 lakh tones. The growth rate of

sugar is around 8.35 which indicates a favorable operational performance of sugar

production during the study period. The sugar recovery during the study period is

10.36 to 10.25 with an average of 10.23 which indicates minimal positive movements.

This has been verified with average growth rate of sugar recovery which shows a

decline of -9 per cent during the study period. Sugar production has yielded a

favorable operational performance, but the sugar recovery performance growth rate is

91

very minimal. The relationship between sugar production and sugar recovery is 0.416,

which is not significant at 5% level.

5.8.3 Performance review of area under sugar cane in Tamilnadu and All India

In this study, the Tamilnadu sugarcane growth rate along with All India growth

rate has been appraised. Table 5.22 illustrates the area under sugarcane and production

of sugarcane in Tamilnadu and All India.

Table 5.22

Area under sugarcane in Tamilnadu and All India

Year

Area under

Sugarcane in TN

(000’ hectares)

Growth

Rate

Area under sugarcane

in All India

(000’ hectares)

Growth

rate

2002-03 262 - 4520 -

2003-04 192 -26.72 3938 -12.88

2004-05 232 20.83 3662 -7.01

2005-06 335 44.40 4201 14.72

2006-07 391 16.72 5151 22.61

2007-08 352 -9.97 5055 -1.86

2008-09 309 -12.22 4415 -12.66

2009-10 293 -5.18 4175 -5.44

2010-11 316 7.85 4886 17.03

2011-12 382 20.89 5085 4.07

Average 306.40 6.29 4,508.80 2.07

Correlation 0.834** 0.631Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.68-70

** significant at 1% level

The Tamilnadu, sugarcane cultivation takes place in around 3,06,400 hectares

as an average with a range bound or 2,62,000 hectares, 3,82,000 hectares. The growth

rate is around an average of 6.29 which reveals a favourable performance of sugarcane

area under cultivation while comparing Tamilnadu's performance with All India. The

average All India sugarcane cultivation is 45,08,000 hectares with a movement from

45,20,000 hectares to 50,85,000 hectares, the average growth rate is 207 per cent, the

growth rate comparison between Tamilnadu and All India under sugarcane area under

92

cultivation. Tamilnadu shows better operational performance in terms of growth. The

correlation between Tamilnadu and All India has yielded a performance of 83.4 per

cent in terms of sugarcane cultivation, which is significant at 1% level and in the same

manner the growth rate performance between these two has achieved a correlation of

63.1 per cent, but it is not significant. It can be observed that the comparative study of

area under sugarcane between Tamilnadu and All India has identified that Tamilnadu

has better sugarcane area than All India sugarcane performance.

5.8.4 Study of sugarcane between Tamilnadu and All India

This table 5.23 illustrates the comparative performance between Tamilnadu

and All India performance.

Table 5.23

Production of Sugarcane in Tamilnadu and All India (in 000’ tonnes)

Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.68-71

**significant at 1% level

The average production of sugarcane is around 3,15,60,000 tonnes which has

moved between 2,41,65,000 tonnes and 3,92,84,000 tonnes. Tamilnadu has achieved

better growth rate of 8.00 which reveals a favourable operational performance. The

average All India production of sugarcane is around 30,20,59,000 tonnes which has

Yearproduction in

Tamilnadu

Growth

Rate

Production in

All India

Growth

rate

2002-03 24165 - 287383 -

2003-04 17656 -26.94 233862 -18.62

2004-05 23396 32.51 237088 1.38

2005-06 35107 50.06 281172 18.59

2006-07 41124 17.14 355520 26.44

2007-08 38071 -7.42 348188 -2.06

2008-09 32804 -13.83 285029 -18.14

2009-10 29746 -9.32 292302 2.55

2010-11 34252 15.15 342382 17.13

2011-12 39284 14.69 357667 4.46

Average 31560.5 8.00 302059.3 3.53

Correlation 0.884** 0.738**

93

moved between 28,73,83,000 and 35,76,67,000 tonnes. The growth rate is around

3.53. In this study also the growth performance is better for Tamilnadu when

compared with All India. The study of correlation between Tamilnadu and All India

has achieved 88.4 per cent and correlation between them in terms of growth

performance is 73.8 per cent which highlights positive movements between them. The

comparative study analysis between Tamilnadu and All India reveals that Tamilnadu

has better operational performance and the correlation analysis identifies the positive

correlation between Tamilnadu and All India in terms of sugarcane production.

5.8.5 Yield of sugarcane in Tamilnadu and All India

Table 5.24 illustrates the comparative performance of sugarcane yield between

Tamilnadu and All India.

Table 5.24

Yield of Sugarcane in Tamilnadu and All India (in 000’ tonnes)

Source: Co-operative Sugar, Dec.2012, Vol.lx11.No.4, P.104

**significant at 1% level

The sugarcane yield in Tamilnadu with an average 1,01,000 tonnes moves

between 92 lakhs to 103 lakhs. It has achieved a growth of 132 per cent which is

Year

Sugarcane

Yield in

TN

Growth

Rate

Sugarcane

Yield in

All India

Growth

rate

2002-03 92.40 - 63.60 -

2003-04 91.90 -0.54 59.40 -6.60

2004-05 100.80 9.68 64.80 9.09

2005-06 104.70 3.87 66.90 3.24

2006-07 105.10 0.38 69.00 3.14

2007-08 107.60 2.38 68.90 -0.14

2008-09 99.70 -7.34 64.50 -6.39

2009-10 101.40 1.71 70.00 8.53

2010-11 108.40 6.90 70.10 0.14

2011-12 102.80 -5.17 70.30 0.29

Average 101.48 1.32 66.75 1.25

Correlation 0.837** 0.637*

94

reasonably the All India performance of 67 lakh tonnes with a movement in between

63,60,000 to 70,30,000 tonnes. The growth is with an average of 125 per cent. The

comparative performance reveals that Tamilnadu has better yield of sugarcane when

compared to All India yield of sugarcane. The correlation between yield of sugarcane

between Tamilnadu and All India is 83.7 per cent, the growth rate operational

performance of sugarcane yield between Tamilnadu and All India is 63.7 per cent

which is positive and favourable of operational performance between them.

5.8.6 Comparison of sugar recovery between Co-operative sugar mills in

Tamilnadu and All India

The study on sugar recovery and performance between Co-operative sugar

mills in Tamilnadu and its total sectorial performance is presented in the table 5.25

and along with this All India performance is presented for comparative review.

Table 5.25

Average sugar recovery in Co-operative sugar mills of Tamilnadu and All India

TAMILNADU ( in %) ALL INDIA (in %)

Yea

r

Co

-

op

era

tiv

e

Sec

tor

Gro

wth

Ra

te

To

tal

Gro

wth

rate

Co

-

op

era

tiv

e

Sec

tor

Gro

wth

rate

To

tal

Gro

wth

rate

2002-03 9.96 - 9.88 - 10.86 - 10.36 -

2003-04 9.88 -0.80 9.92 0.40 10.53 -3.04 10.22 -1.35

2004-05 9.79 -0.91 9.64 -2.82 10.58 0.47 10.17 -0.49

2005-06 9.38 -4.19 9.24 -4.15 10.88 2.84 10.21 0.39

2006-07 9.25 -1.39 9.25 0.11 10.70 -1.65 10.16 -0.49

2007-08 9.35 1.08 9.32 0.76 11.20 4.67 10.55 3.84

2008-09 10.00 6.95 9.62 3.22 10.85 -3.13 10.03 -4.93

2009-10 9.13 -8.70 8.94 -7.07 10.98 1.20 10.19 1.60

2010-11 9.15 0.22 9.09 1.68 10.72 -2.37 10.17 -0.20

2011-12 9.10 -0.55 9.35 2.86 10.94 2.05 10.25 0.79

Average 9.50 -0.92 9.43 -0.56 10.82 0.12 10.23 -0.09

Correlation -0.433 -0.385 Source: Co-operative Sugar, Dec.2012, Vol.44.No.4, P.83

Table 5.25 shows the average recovery of sugar percent in Co-operative sugar

mills in Tamilnadu and All India. The sugar recovery of Co-operative sector during

95

the study period is 9.50 and its growth is 0.92 per cent wherein the negative growth is

due to variation of growth performance during the study period. The Tamilnadu's total

sectoral performance in terms of sugar recovery amounts to 9.43 and the growth

performance of 0.56 per cent indicates that the sugar recovery performance between

Co-operative sector and other sectors are subject to fluctuations. On the other hand

Co-operative All India performance is 10.82 with an average growth of 0.12 per cent.

In the same manner, the All India total sectoral performance is around 10.23 with a

growth negative performance of 0.09 per cent. The comparative recovery performance

between Tamilnadu and All India performance is much better than Tamilnadu. The

correlation analysis between Tamilnadu Co-operative sugar mills and All India Co-

operative sugar mills achieved the point of 38.5 per cent and in the same manner total

sectoral performance between Tamilnadu and All India in terms of sugar recovery is

43.3 per cent which indicates a positive movement between them but the movement is

not significant.

It can be observed that the sugar recovery performance between Tamilnadu

and All India in terms of Co-operative sector performance along with total sectoral

performance indicates that All India sugar recovery performance is much better than

Tamilnadu sugar recovery performance. The correlation analysis between Tamilnadu

and All India has yielded a positive correlation between them.

5.8.7 Association between sugarcane production and cane crushed

Testing the significant association between sugarcane production and cane

crushed during the study period, simple regression analysis has been performed. The

following hypothesis is framed.

96

Null Hypothesis H01: There is no significant association between sugarcane

production and cane crushed during the study period.

Simple Regression analysis is performed by taking sugar production as

dependent variable and Cane crushed as independent variable. The simple regression

is of the form Y = a + bx is fit to ensure the relationship between the dependent

variable and independent variable.

Table 5.26

Relationship between sugar production and Cane crushed

R2

Adjusted R2 F-value p-value Beta t-value

Constant

0.449 0.380 6.517* .034

17661.37 3.060*

Cane

Crushed0.289 2.553*

* significant at 5% level

It is observed from the table 5.26, the model fit “F” value is 6.517 is

significant, the null hypothesis is rejected at 5% level. The Coefficient of

determination R2 is 0.449, which shows 44.9% of the variability in sugar production is

caused by the cane crushed.

The regression equation stating the relationship between sugar production and

cane crushed is

Sugar production = 17661.37 + 0.289(Cane crushed)

The regression equation shows that cane crushed serves as a significant

predictor for sugar production and one unit increase in the cane crushed increases the

sugar production by 0.289 units during the study period. Further this shows that the

Operational performance of the sugar industry in terms of cane crushed and sugar

produced have been associated in a strong way during the study period in Tamilnadu

Co-operative sugar mills.

97

5.8.8 Comparison of Co-operative sugar mills with All India sugar mills

To test whether there is significant difference in terms of growth rate of

operational performance between Tamilnadu Co-operative sugar mills and All India

sugar mills, independent samples t- test is applied to test the difference in growth

rates, following null hypothesis is framed.

Null Hypothesis H02: There is no significant difference in operational

performance of growth rate between Tamilnadu Co-operative sugar mills and

All India sugar mills with regard to area under sugar cane.

Table 5.27

t-test for comparison of growth rate between Tamilnadu Co-operative

sugar mills and All India mills

Mean S.D t -value p - value

Tamilnadu Co-

operative sugar mills 6.28 21.84

0.496 0.627

All India sugar mills 2.06 13.24

Table 5.27, indicates that there is no significant difference in operational

performance of growth rate between Tamilnadu sugar mills and All India sugar mills

with regard to area under sugar cane, the null hypothesis H0 2 is accepted at 5% level.

It is concluded that there is an insignificant relationship of operational performance of

growth rate of area under sugarcane in Tamilnadu Co-operative sugar mills and All

India sugar mills during the study period.

98

5.8.9 Association of Sugar Production in Tamilnadu and All India

Operational performance of sugar production of Tamilnadu Co-operative

sugar mills is compared with All India sugar mills. To test the significant relationship

between sugar productions in Tamilnadu Co-operative sugar mills and All India sugar

mills, Bi-variate correlation is used and the following hypothesis is framed.

Null Hypothesis H03: There is no significant relationship between Tamilnadu Co-

operative sugar mills and All India sugar mills with regard to sugar production.

Table 5.28

Relationship between Tamilnadu Co-operative sugar mills and All India sugar

mills with regard to sugar production

All India sugar mills

Tamilnadu Co-operative

sugar mills

r = .884**

p=.001


The correlation analysis in table 5.28 reveals that there is 88.4 per cent

relationship between Tamilnadu Co-operative sugar mills and All India sugar mills in

terms of sugar production, the null hypothesis is rejected at 1% level of significance.

Relationship for Production of sugarcane between Tamilnadu Co-operative sugar

mills and All India sugar mills shows that the contribution of sugar production in

Tamilnadu Co-operative mills is a significant at All India sugar production during the

study period.

99

5.8.10 Comparison of Co-operative sugar mills with All India sugar mills in

terms of sugar recovery

To test whether there is significant difference between Tamilnadu Co-

operative sugar mills and All India sugar mills with regard to operational performance

of sugar recovery, independent samples t- test is applied to test the difference in sugar

recovery. The following null hypothesis is framed.

Null Hypothesis H04: There is no significant difference between Tamilnadu Co-

operative sugar mills and All India sugar mills with regard to sugar recovery

Table 5.29

t-test for comparison of sugar recovery between Tamilnadu Co-operative sugar

mills and All India mills

Mean S.D t- value p – value

Tamilnadu Co-operative mills 9.42 0.327

7.164** <.001

All India sugar mills 10.23 0.139


The results of t-test in table 5.29, reveals that there is significant difference in

the operational performance of sugar recovery between Tamilnadu Co-operative sugar

mills and All India sugar mills, the null hypothesis H04 is rejected at 1% level.

Further it is observed from the mean values of the sugar recovery rate, All India sugar

mills are performing better than the Tamilnadu Co-operative sugar mills in terms of

sugar recovery.

5.8.11 Comparison of Co-operative sugar mills with public sector sugar mills

To test whether there is significant difference between Tamilnadu Co-

operative sugar mills and Public sector sugar mills with regard to operational

100

performance of sugar recovery, independent samples t- test is applied to test the

difference in sugar recovery. The following null hypothesis is framed.

Null Hypothesis H05: There is no significant difference between Tamilnadu Co-

operative sugar mills and Public sector sugar mills with regard to sugar recovery

Table 5.30

t-test for comparison of sugar recovery between Tamilnadu Co-operative sugar

mills and Public sugar mills

Mean S.D t- value p – value

Tamilnadu Co-operative sugar

mills9.42 0.327

0.510 0.616

Public sector sugar mills 9.32 0.556

The results of t-test in table 5.30, reveals that there is no significant difference

in the operational performance of sugar recovery between Tamilnadu Co-operative

sugar mills and Public sector sugar mills, the null hypothesis H0 5 is accepted at 5%

level. This shows that the operational performance in terms of sugar recovery is

almost same in Tamilnadu Co-operative sugar mills and Public sector sugar mills.

5.9 Summary

The study of Co-operative sugar mills in terms of operational performance

reveals that the sugarcane production along with crushing and yield indicates a

positive and favorable aspect of operational performance of average sugar recovery

declines marginally coupled with capacity utilization. The performance of Co-

operative and public sector mills shows fluctuation in nature of performance wherein

the Co-operative mills has a slight edge in performance. The next chapter of this study

is devoted to identify and analyze the financial performance of Co-operative sector

sugar mills in Tamilnadu.

chapter v operational performance of co-operative...

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