Our Case Study

A sugar mill has at least 40 super contractors

The super contractor contracts for 100 vehicles and sends 60 percent of the vehicles to the sugar factory.

The following are the terms of contract between the sugar factory and the super contractor:

• Rupees Six Lakh in advance on one sugarcane transport rate.
• Four lakhs in advance for one vehicle of the method. Two lakh rupees per vehicle in advance.

In this method (1) a sugar factory requires one thousand vehicles.

Contract Price: 25,000 cr
Asset loss: 10%
Loss Rs: 250 cr

For that, the super contractor takes vehicle documents from them and after giving documents of 100 vehicles to the factory, sends 50 to 60 vehicles and sends less vehicles to increase the amount in the contract, out of which 10 vehicles are defrauded by the factory.

The terms of the contract between them are as follows:

• Six lakh rupees advance per sugarcane transportation rate.
• The sugar factory needs 1000 vehicles by method.
• Rs 4 lakh advance per vehicle.
• Rs 2 lakh advance per vehicle.

Contract Price: 24,750 cr
Asset loss: 20 %
Loss Rs: 1300 cr

30 percent are labor contractors who show the same worker to three to four transporters, collect their money, and abscond.

Rules of a contract between the transport and labor contractor:
Take an advance of Rs.2 lakhs per labor pair and send eight pairs in this manner

Contract Price: 17,500cr. x 2 = 35,000 cr
Asset loss: 10 %
Loss Rs. : 3325 cr

These workers take money in advance from two to three labor contractors and abscond with the fourth.

According to the contract given by the transport rate, payment of two lakh rupees per pair to the workers is being distributed from the month of June. According to the demand of the workers, the labor contractors provide the money to the workers in advance.

Contract Price: 29,925 cr.
Asset loss: 10 %
Loss Rs. : 3000 cr

In one farmer’s sugarcane area, two-three sugar mills are paid in the form of shares so the sugar mills do not know the time of the farmer’s sugarcane.

The sugarcane of the farmers is not going to the sugar mills on time, so the sugarcane is weighing less and the price is not meeting properly, the farmers told the sugar commissioner through agitation.

The reason for not getting the proper price of sugarcane to the farmers is the cheating of the sugar mills by the members of many factories and the labor system.

Sugar Commissioner’s Labor Welfare Officer is always asked for updates regarding labor. According to Labor Welfare Officer, sugar factories do not respond. Labor contractors play the biggest role in cheating.

All these processes start in the month of June and last till December.

The Sugar Association is of the opinion that no software or product has yet come out that will transform the way the sugar industry works in any way.

As per 2020, the government has appealed to spend Rs 300 crores every year for the welfare of the labor system but as of yet there is no real data coming from the labour, this entire fund is deposited with the government.

Major losses are occurring in a few states like Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Maharashtra, and Gujarat, where the transformation of the sugar industry is a major solution.

Our intention is to wait for such a solution as transformation is the biggest solution in the sugar industry which has invested three lakh crores and is not getting the desired income.