INTRODUCTION:

The Indian sugar industry has been treated as one of the largest sugar industry in the world after Brazil. It has noteworthy contribution in agro industrial development of the country. During the course of time it became a large scale industry which has enormous magnitude. It has been trying to change the facets of millions of farmer community in the country. It is not merely working as an industry but also it is functioning as a centre of overall development of rural India. Especially farmer’s cooperative sugar factories are outstanding example of self and societal development through common efforts.(Darda Rajendra, and Others, 1996) It has prominent place in Indian economy and contributes 7.5% of total agro product. The total investment in the industry is over and above 5000 billion rupees and annual turnover is over 700 billion rupees.

The domestic sugar industry is now influenced by cooperative sector because out of 626 sugar factories in the country 317 factories are in cooperative sector (National Federation of Cooperative Sugar Factories. Marct, 2010). The industry provides direct and indirect employment of 2 million people and 5 million cane growers are directly concerned to this industry.

Maharashtra is largest sugar producing state in the country. It contributes 35 to 40% of National sugar production. The state industry is highly dominated by cooperative sector. At present out of 198 installed factories in the state, 165 factories in cooperative sector. (Director General,VSI, Pune 2008-09) The state has installed capacity of 72.69 lakh tonne. It crushes over and above 800 lakh M.T. sugar cane and produces 90 lakh M.T. of sugar. It has annual turnover of 1200 billion rupees and contributes 270 billion rupees to state and central exchequer.

Significance of the Study -

The one time champion industry in the state is now striving hard for its very existence. In the year 2008-09 out of 165 Cooperative Sugar Factories (CSF) in the state merely 110 were in operation. In the winds of globalization especially after de licensing the industry in August 1998 the number of CSF’s has becoming sick. At present in the state 71 CSF’s are declared as sick, 13 are already liquidated and 35 are in the process of liquidation.(Pawar, S. ,2011, April 24). Meanwhile the number of private factories in the state has risen from 4 to 39 and doing well in the changing economic environment. For the survival of the sick CSF and ultimately to protect the vested interest of small and marginal farmers’, government took decision to lease out such sick and unviable CSFs to private managements for certain period. In this regard, the first and pioneer experiment made through Ajara Taluka Shetakari Sahakari Sakhar Karakhana Ltd. Gavase Tal- Ajara Dist-Kolhapur. The Factory which was trapped in the vicious circle of unavailability of cane, delayed cane payments and workers salary, was handed over to Renuka Sugars Ltd. Belgaum for 5 years i.e.2004/05 to 2008/09. At present 27 CSFs in the state are leased out to either private management or reputed and well managed cooperative management.

Statement of the problem: –

Leasing out CSF is one of the remedy to survive the CSF. After leasing out, the performance of the CSF is better than that of pre leasing period. It means that private management is better result oriented than cooperative management. The CSF, which was striving hard for its survival, after leasing it was dramatically revived with the same paraphernalia.

Objectives of the study:-

The research paper has following objectives.

1. To evaluate experiment of leasing out CSF.

2. To compare pre and post leasing out performance of selected CSF.

3. To identify significant difference in pre and post leasing performance.

Methodology:-

The researcher has selected the first leased CSF in Maharashtra i.e. Ajara Taluka Shetakari Sahakari Sakhar Karakhana Ltd. Gavase Tal- Ajara Dist-Kolhapur. In this paper researcher intends to study the performance of the selected CSF for ten years. i.e five years before leasing out and five years after leasing out (1998/99 to 2003/04 and 2004/05 to 2008/09). The Pre leasing period is also known as cooperative management and Post leasing period is known as private Management.

The research paper is purely based on secondary data collected through RT8(C) report and annual reports of concern sugar factory, State Sugar Factory Federations Report, Books, Journals, and Internet etc. To study the performance, seven key parameters of sugar factory as mentioned by Vasantdada Sugar Institute, Pune (VSI) are used.(Director General,VSI Pune,2008-09).

Hypothesis:-

H0 - There is no significant difference in Pre leasing and Post leasing performance.

(µ1 = µ2)

H1 - Post leasing performance is better than pre leasing performance.

(µ1< µ2)

Statistical Tools used: -

While testing hypothesis we used Students-t test at 10% level of significance have been used. Also we have used percentage. For t-test, test statistic is calculated as under

Where, = Mean of Pre leasing Period

= Mean of Post leasing Period

= Variance of Pre leasing Period

= Variance of Post leasing Period

= 5 years

Test procedure – Reject H₀ if tab T < Cal t

At 10% level of significance tab T = 1.397

i.e We reject H₀ if Cal t < 1.397

Analysis and Comparison of Pre and Post Leasing Performance:-

Performance of the selected sugar industry can be measured through following seven key parameters.

A. Sugar cane crushing:-

Table I shows that the cane crushing for both pre and post leasing period. According to the table the mean of pre leasing period is 309613.65 tonnes and post leasing period is 391790 M.T. A 2500 TCD factory requires 4 lakh M.T. of sugarcane for a crushing season. During Pre leasing period cooperative management of the factory never attain the expected amount of crushing whereas after post leasing period maximum crushing was 523610 M.T.

Table I- Sugarcane crushing

Pre-Acquisition Period		Post Acquisition Period
Year	Metric Tons	Year	Metric Tons
1999-2000	362579.845	2004-05	251100.00
2000-01	374755.922	2005-06	521090.00
2001-02	295898.086	2006-07	523610.00
2002-03	320127.085	2007-08	426030.00
2003-04	194707.328	2008-09	237120.00
Mean	309613.6532	Mean	391790.00
Variance	5137761315	Variance	19745966250
	Cal t=		1.164861023
At 10% level of significance
Tabulated ‘t’=		1.397
Here T > Cal t . i.e Accept H₀

(Sourced-Annual reports and RT8(C) Form of select leased out factory)

Though crushing is quiet high in the post leasing period, there is no significant difference in cane crushing during both pre and post leasing period. Performance in both periods is similar therefore H₀is accepted.

B. Sugar Produced-

Sugar produced is final product of the factory. This is the major way of revenue of the factory. Table II shows that mean of pre leasing period was 454229 sugar bags and post leasing period it was 793179 bags.

Table II- Sugar Produced (in Bags of 100kgs)

Pre-Acquisition Period		Post Acquisition Period
Year	Bags of 100kgs	Year	Bags of 100kgs
1999-2000	444014	2004-05	286715
2000-01	448936	2005-06	887012
2001-02	366260	2006-07	1155800
2002-03	536575	2007-08	1088450
2003-04	475360	2008-09	547920
Mean	454229	Mean	793179.4
Variance	3774572478	Variance	1.36035
	Cal t=		2.026992663
At 10% level of significance
Tabulated ‘t’=		1.397
Here T < Cal t . i.e Reject H₀

(Source-Annual reports and RT8(C) Form of select leased out factory)

It shows that 74% more sugar produced during post leasing period which is quiet significant. Here H₀ is rejected it means the performance of pre and post leasing is not similar.

C. Gross Season:-

This 2500 TCD factory was expected to run 160 days for a season. Table III shows that neither cooperative nor private management could run this factory as expected. Mean of Pre leasing period is 127 days and post leasing period is 140 days.

Table- III - Gross Season (in Days)

Pre-Acquisition Period		Post Acquisition Period
Year	Days	Year	Days
1999-2000	159	2004-05	106
2000-01	154	2005-06	174
2001-02	110	2006-07	180
2002-03	129	2007-08	154
2003-04	87	2008-09	90
Mean	127.8	Mean	140.8
Variance	910.7	Variance	1651.2
	Cal t=		0.574311176
At 10% level of significance
Tabulated ‘t’=		1.397
Here T > t . i.e Accept H₀

(Source-Annual reports and RT8(C) Form of select leased out factory)

During post leasing period this factory took around 10% more gross season. But there is no significant difference henceforth H₀is accepted.

D. Sugar Recovery-

Recovery denotes quality of raw material which finally affects profitability. It means more recovery indicates more profitability. It depends upon % of sugar available in sugarcane. Table IV shows that mean of pre leasing period is 11.38% and post leasing period is 12.04%.

Table-IV- Sugar Recovery

Pre-Acquisition Period		Post Acquisition Period
Year	%	Year	%
1999-2000	11.62	2004-05	11.41
2000-01	11.66	2005-06	11.72
2001-02	11.36	2006-07	12.01
2002-03	11.98	2007-08	12.77
2003-04	10.32	2008-09	12.11
Mean	11.388	Mean	12.004
Variance	0.40492	Variance	0.25788
	Cal t=		1.69189912
At 10% level of significance
Tabulated ‘t’=		1.397
Here T < Cal t . i.e Reject H₀

(Source-Annual reports and RT8(C) Form of select leased out factory)

Here Calculated ‘t’ value is more than tabulated ‘T’ value. It means there is significant difference in recovery. Therefore H₀ is rejected.

E. Capacity Utilisation:-

According to standard norms capacity utilization should be over 100%. The factory should not be underutilized. Table V shows that Post leasing mean of capacity utilization is more than 100% .

Table-V- Capacity Utilisation

Pre-Acquisition Period		Post Acquisition Period
Year	%	Year	%
1999-2000	91.21	2004-05	86.86
2000-01	97.34	2005-06	110.31
2001-02	99.46	2006-07	106.91
2002-03	91.73	2007-08	102.42
2003-04	83.05	2008-09	96.61
Mean	92.558	Mean	100.622
Variance	40.85247	Variance	85.52947
	Cal t=		1.603958076
At 10% level of significance
Tabulated ‘t’=		1.397
Here T < t . i.e Reject H₀

(Source-Annual reports and RT8(C) Form of select leased out factory)

The difference in capacity utilization is significant therefore H₀ is rejected.

F. Reduced Mill Extraction ( Mittal) - RME

Reduced mill extraction (Mittal) should be minimum 95%. It shows the milling performance of the factory. Table VI shows that the RME of post leasing period is more than 95%.

Table VI- Reduced Mill Extraction –RME

Pre-Acquisition Period		Post Acquisition Period
Year	%	Year	%
1999-2000	94.73	2004-05	95.6
2000-01	95.01	2005-06	95.57
2001-02	95.3	2006-07	95.79
2002-03	95.37	2007-08	96.00
2003-04	94.83	2008-09	95.73
Mean	95.048	Mean	95.74
Variance	0.07932	Variance	0.02967
	Cal t=		4.673484069
At 10% level of significance
Tabulated ‘t’=		1.397
Here T < Cal t . i.e Reject H₀

(Source-Annual reports and RT8(C) Form of select leased out factory)

Milling performance in post leasing period is significantly more than pre leasing period. Therefore H₀is rejected.

G. Cane Price Paid:-

Payment of cane price to the cane growers is most important parameter of performance. Availability of cane and ultimately duration of gross season is mostly depends upon cane price given to cane growers. The cane price is normally determined by financial performance of the factory and market rates of sugar as final product.

Table VII – Cane Price Paid

Pre-Acquisition Period		Post Acquisition Period
Year	Rupees	Year	Rupees
1999-2000	824.00	2004-05	1200.00
2000-01	767.62	2005-06	1300.00
2001-02	742.99	2006-07	900.00
2002-03	765.00	2007-08	1300.00
2003-04	823.00	2008-09	1700.00
Mean	784.522	Mean	1280.00
Variance	1357.69052	Variance	82000.00
	Cal t=		3.837395317
At 10% level of significance
Tabulated ‘t’=		1.397
Here T < Cal t . i.e Reject H₀

(Source-Annual reports and RT8(C) Form of select leased out factory)

The mean of pre leasing period is Rs. 784.52 whereas of post leasing period is Rs.1280. The cane price given to cane growers is significantly differs. Therefore H₀Rejected.

CONCLUSION:-

Leasing out cooperative sugar factory is one of the remedy to make survival of sick CSF. In this regard this was the pioneer experiment done in the state of Maharashtra. The factory which was sick and could not operated since its inception, was successfully run by the private management during post leasing period with the same paraphernalia i.e. same plant, same employees, same cane growers etc. Out of seven parameters checked by the researcher, it is found that in case of only two parameters i.e. Sugar cane crushing and Gross Season taken the performance of pre leasing and post leasing period was similar whereas according to other five parameters i.e. Sugar Bagged, Recovery, Capacity Utilisation, Reduced Mill Extraction and Cane price paid, the performance of private management during post leasing period is better. In case of cane crushing, during the first year of post leasing period the factory has crushed less amount of sugarcane because there was cooperative management when the cane cultivation had taken place in operating area. Due to delayed payment made by cooperative management during pre leasing period cane cultivation was not adequate. It means during the first year of post leasing period the influence of cooperative management was there. And in case of gross season, though the difference is not significant the private management during the post leasing period has crushed more sugarcane in less number of days.

Finally the study reveals the following conclusions in particular-

1. Private management has paid comparatively higher cane price to the cane growers therefore during post leasing period factory has made more cane available for crushing.

2. Earning or profitability of factory is depends upon the final product i.e.sugar. During post leasing period the private management produced more sugar which has given them more earning and profit.

3. Production of sugar is depends upon recovery of sugar from sugarcane. Recovery as well as RME during post leasing period was better.

4. Capacity utilization was more than 100% achieved by private management, which proved profitable.

5. Leasing out sick CSFs to private management is better result oriented. And helps in survival of the sick CSF.

6. Though the difference between sugar cane crushing and gross season taken was not significant, but at operating and financial level post leasing performance of private management is better.

At the end we should remember that the motive of private and cooperative management are contradictory i.e. one is solely profit oriented and another is service oriented. Leasing out CSF should be used as temporary remedy to revive and resurgence of cooperative movement.

REFERENCES:-

1. Darda Rajendra, and Others. (1996). Sahakari Udyogachi char dashake. Aurangabad: Jaydatta Prakashan.

2. Director General. (2008-09). Technical Performance of Sugar Fatories in Maharashtra. Pune: Director General, Vasantdada Sugar Institute,Manjari(bk).

3. Managing Director,. (1999 to 2009). Annual Reports of Ajara Taluka Shetakari Sahakari Sakhar Karkhana Ltd. Gavase. Gavase Tal-Ajara: Managing Director,Ajara Taluka Shetakari Sahakari Sakhar Karkhana Ltd. Gavase.

4. Managing Director, A. T. (1999-2000 to 2008-09). RT8(C). Gavase Tal- Ajara Dist- Kolhapur: Managing Director, Ajara Taluka Shetakari Sahakari Sakhar Kharkhana, Ltd. Gavase Taluka Ajara.

5. National Federation of Cooperative Sugar Factories. (2010, March). Cooperative Sugar. Sugar Statistics . Delhi, India: Vinay Kumar, Editor, NFCSF.

6. Pawar, S. (2011, April 24). Sahakar Vikane Aahe. Daily Sakal , Saptrang . Kolhapur, Maharashtra, India: Editor, Daily Sakal pp 4-5.

7. www.indiancooperative.com/sugar/indian-sugar-industry-stands-second-in-the-world

Received on 15.08.2011 Accepted on 28.10.2011

Asian J. Management 2(4): Oct.-Dec., 2011 page 178-181