Sugar mills in Tamil Nadu are expanding capacity despite a fall in cane acreage. But a slide in output is proving to be a dampener for some of the new mills.

Following a bumper harvest of 258 lakh tonnes of sugarcane in 2006-07, when the private sector crushed about 186 lakh tonnes, there was a rapid expansion in the private sector sugar mills. In the last four years, seven sugar mills have come up and four of these commenced operations in 2009-10.

But following the peak, sugarcane output in the State has dropped steadily due to various reasons including climatic conditions, sugarcane pricing and competitive crops and lately high labour costs. In 2009-10, the private sector mills crushed 108 lakh tonnes, according to the Southern India Sugar Mills Association's statistics. Among the worst hit are the new mills with some units even in traditional sugarcane areas finding cane availability a constraint.

As a reference, during the peak year, a 5,000-tonne a day sugar mill crushed about 14 lakh tonnes of cane while a 2,500-tonne mill processed about eight lakh tonnes, show SISMA figures.

Among the early ones to start operations were the units belonging to Kothari Sugars and Sakthi Sugars; both came up in their existing command areas with the objective of speeding up cane crushing and protecting their cane areas. Sakthi Sugars' new mill in Modakurichi has primarily processed only imported raw sugar. Kothari Sugars' unit at Sathamangalam has shared the raw material with its older mill at Kattur. At the peak of production in 2006-07, Kothari's Kattur unit crushed 8.41 lakh tonnes and the new unit 4.8 lakh tonnes, in 2009-10 both mills crushed a total of about seven lakh tonnes.

Two of the units belonging to Rajshree Sugars and Dharani Sugars which have come up in areas with strong cane availability expect to have adequate sugarcane during the current season.

A new entrant to the field, Dhanalakshmi Srinivasan Mills is operating at about 50 per cent capacity, according to sources in the know.

Empee Sugars, which has set up its mill in Tirunelveli District of Tamil Nadu, has the task of first popularising sugarcane cultivation in the area.

Company officials are confident that the factory will achieve full capacity utilisation by 2012-13. In the current season company expects to crush about three lakh tonnes of sugarcane which is about 35-40 per cent in terms of capacity utilisation.

Bannari Amman's unit at Chengam, Tiruvannamalai District, has achieved about 70 per cent capacity utilisation, according to sources in the know. The company's next unit coming up at Thirukovilur, is expected to manage about 50 per cent capacity utilisation in 2011-12 season when it starts operations later this year.

Now there are 25 private sector sugar mills in Tamil Nadu with a daily sugarcane crushing capacity of more than a 1,00,000 tonnes.

There are 17 units in the cooperative sector and public sector with a total daily crushing capacity of about 44,000 tonnes a number that has not changed in the last 10 years.

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