Chairman & Managing Directors' Interview

Interview with the Chairman & Managing Director Mr. G R Morarka.

Q1: How would you rate the Government policies on sugar industry?
A: 7 on a scale of 10. The present policies must be viewed in the backdrop of polices which existed a year or two ago. The sugar industry was in the shackles of plethora of rules, regulations and controls. The gamut of efficient management was restricted to inside the factory. External factors were beyond the control of sugar industry. The Government is slowly and gradually moving towards total deregulation. However the process should be irreversible. May be at an opportune time the Government can totally do away with monthly release mechanism also. The increase in duty on import of sugar was also a welcome step. One thing the Government should immediately act upon is to bring about a fiat on the arbitrary and unrealistic increase in price of sugarcane year after year and relate the price of sugarcane with that of sugar.

Q2: What is your opinion of futures trading?
A: A properly developed and mature futures market for sugar augurs very well for the sugar industry and the sugar consumer. The wild aberrations in the price of sugar will cease to exist. A six monthly futures market is what the country needs. However a word of caution, the modalities of the future market and the rules of the market should be painstakingly and cautiously evolved so that confidence is infused in all concerned. The industry, the traders would be in a position to plan their finances accurately and thus benefit largely.

Q3: Will sugar be traded on the net?
A: A number of enthusiastic technologists have set up business to business portals for trading of sugar on the net. With the information technology awareness spreading very rapidly the day is not far when a sizable portion of sugar will be traded on the net by the sugar industry. Sugar is generally sold against cash. Efficient payment mechanism therefore has to be built for the payments to reach the sugar mills in the quickest possible time. Beside the sugar industry is generally located in rural area. The Internet connectivity should therefore penetrate in the rural India. Futures trading and the trading on net are inter dependent and the success of one depends on the success of the other.
Though the physical volume of sugar traded will grow the way it has grown in the past the total volume of sugar traded will grow by leaps and bounds.

Q4: What would you rate as the ideal capacity for a sugar unit?
A: Not less than 5,000 TCD. Any plant of lesser capacity will certainly not be viable and will be gobbled by a bigger plant. The process of consolidation in sugar Industry will have to start in India. In a few years from now you will typically have large sugar conglomerates with three or more sugar units and a total combined capacity in excess of 25,000 TCD. In developed countries such as Australia 10,000 TCD is considered to be an optimum capacity. In order to reap the economies of scale it is imperative that India also has larger capacity plants and a commensurate command area for sourcing its requirement of raw material.

Q5: What are the reasons for the success of your company?
A: Ideal capacity plant
Prompt payment to farmers.
Constant technological upgradation
Crushing the sugar cane in quickest possible time
Highly motivated work force
Judicious financial management
Harmonious relationship with the farmers

Q6: What according to you is the future of sugar industry in the country?
A: Great.

The Government has realized its folly of keeping the industry under warps with restrictive controls. The process of deregulation of decontrol being initiated should now place the industry on par with its peers in the other countries.

The process of consolidation of sugar industry is like a bitter pill, which though will cause dis-comfort in the beginning, as smaller and inefficient plants will be weeded out, is nevertheless good for the health of the industry and country. The efficiency levels of Indian sugar industry will be on par with best standards benchmarked worldwide. However the Government should increase the peripheral distance between two sugar units to at least 25 kms radius so that the industry is encouraged to set up large-scale plants.

The day is again not far-off when there will be large sugar complexes with facilities for manufacture of gasohol and power. In fact manufacture of gasohol and power generation will occupy center stage and sugar manufacturing will be relegated to being one of the activities for churning out a product from the complex, its status of being the backbone of the complex notwithstanding. However a prerequisite for this to happen is the clearance of bureaucratic muddle that has hitherto dampened the enthusiasm of sugar industry.
However the industry will have to remain vigilant to the changing technology and adopt them loosing time. There should be constant effort to look for opportunity in adversity. The future appears very promising for the sugar industry and the sugar consumer.

Q7: Do you recommend any path breaking measures for the benefit of sugar industry?
A: Yes of course.

The land ceiling acts of the country should be totally revamped so as to allow the sugar mills to hold large farms from where the sugar mills will be able to source a major portion of its sugarcane requirement. Small and fragmented land holding is the root cause of inefficient farming and a major deterrent to innovative farming. With large land holdings at its disposal sugar mills will be able to improvise up on the most modern methods of sugarcane cultivation and increase the yield substantially thus contributing significantly for increase in sugarcane production in the country. New and improved varieties of sugar cane will be grown thus improving the recovery of sugar from sugarcane.

The Government should also do away with the populist measure of arbitrarily increasing the sugarcane price year after year and evolve a modus operandi for linking the sugar cane price to the price of sugar.

The sugarcane price should also be linked to the recovery. This would provide impetus to the farmers to grow early and better variety of sugarcane. The correlation of recovery and sugarcane price would mean convergence in the interests of farmers and sugar mills.

The research and development effort that goes into the development of new varieties of sugarcane should be more focused. It has been our past experience that some varieties are released without thorough research and development and it is subsequently discovered that the varieties are fraught with innumerable complications. To withdraw the variety thereafter or ban its usage is a mammoth task and it also cannot undo the damage already done. It is therefore imperative that the release of a particular variety is conscious decision backed by meticulous research and development.

Comprehensive revamp of labor laws in the country so as to enable the sugar industry to carry out modernization and technological up gradation without fear or trepidation.