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How To Start a Sugar Mill Business – Complete Guide

Do you want to start a sugar milling business? Find here a detailed sugar mill project report with investment, and project cost for your ready reference.

The Sugar Industry in India forms the second-largest rural-based agro-industry next only to textiles. Given the steep increase in crude oil prices, the sugar industry has experienced an upswing in the last few years through the realization of better sugar prices. A sugar mill is also eco-friendly and offers a renewable source of energy through the generation of power from its co-product bagasse and alcohol from molasses.

A sugar mill comes under the category of medium to large-scale industrial sector in India. The Indian sugar industry is critical. First of all, it services the domestic market, the largest in the world, and on the other hand, it supports 50 million farmers and their families. In addition, a sugar processing plant is a very lucrative and profitable venture opportunity for entrepreneurs. However, this is a cash-intensive business. It demands substantial capital investment and strategic planning.

Is Sugar Mill Business Profitable?

Sugar has become one of the essential food consumption items globally, especially in urban areas. The future demand for sugar is expected to increase substantially given the present demand for the domestic market.

Additionally, sugar is an essential ingredient in the numerous processed food industries. The product has also a great demand in the export market. Some of the major sugar importing countries are China, Indonesia, the European Union, the United Arab Emirates, the United States, Bangladesh, etc.

In starting this business, you must have a business plan or project report in your hand. It is advisable to start the business with expert help. In addition, try to gather as much information about the sugar industry in your area.

Broadly, you will need to figure out the specific requirements of space, electricity, water, manpower, etc. In addition, you will need to determine the business size as per your investment capacity and risk-taking ability.

Here are the 7 Steps to Start a Sugar Mill Business

1. Market Research and Feasibility Study

Conduct thorough market research to assess the demand for sugar and its by-products in your target region. Evaluate the feasibility of setting up a sugar mill by analyzing factors such as raw material availability (sugarcane), infrastructure, competition, and regulatory environment.

2. Business Plan Development

Develop a comprehensive business plan outlining your objectives, target market, production capacity, financial projections, marketing strategies, and operational plan. Your business plan will serve as a roadmap for the entire project and will be essential for obtaining financing from investors or financial institutions.

3. Site Selection and Land Acquisition

Identify a suitable location for your sugar mill considering factors such as proximity to sugarcane farms, availability of water and utilities, transportation infrastructure, and environmental considerations. Acquire the necessary land and obtain the required permits and approvals from local authorities.

4. Obtaining Regulatory Approvals

Before commencing operations, ensure compliance with all regulatory requirements and obtain necessary licenses and permits from government agencies such as the Food Safety and Standards Authority of India (FSSAI), Pollution Control Board, Ministry of Agriculture, and Ministry of Food Processing Industries.

5. Registration and Licensing

You will need to register the business first. It is advisable to select the right form of the organization according to the investment and management pattern. And go for the registration with ROC in India. After that, you will need to obtain different types of licenses and permissions to run the factory from the Govt. agencies. Nowadays GST registration is a must within a few days of registering your business.

Sugarcane is covered under the Essential Commodities Act due to its perishable nature and the need for regulation on cane supply and pricing. Additionally, if you are looking for export, you need to apply for the certifications. And here also, you must get help from an expert.

6. Sugar Mill Plant Setup

As this is a cash-intensive business, you must make every decision carefully. First of all, you must establish the unit near the sugar-producing areas. So, you can easily procure sugar cane from the farmers or growers.

Additionally, the space requirement of the plant depends on plant capacity. You will need to secure the land according to your business plan. Check the electricity and water supply arrangements. Even a mini sugar mill demands an adequate source of water supply for its operations.

7. Buy Machinery

Sugar milling is an integrated process that includes the operation of several machines at a time. Therefore, you must procure the plant from a reliable machine supplier. Here we put a list of some major required machinery.

  • Boilers
  • Washers
  • Knives
  • Shredders
  • Mills tandem
  • Tanks
  • Decanters
  • Vacuum filters
  • Heat exchangers
  • Vacuum evaporators
  • Vacuum pans
  • Crystallizers
  • Centrifuges
  • Fermentation Tanks
  • Pumps
  • Column still
  • Driers
  • Electricity generators
  • Fork lifters
  • Alcohol tanks
  • Molasses tanks

8. Raw Materials, Products and Byproducts

The main raw materials required for the production of sugar are sugar cane, sulfur, lime, and polyethylene bags. You can procure the sugar cane from the local farmers. However, you will need to ensure the specific quantity of raw materials according to the plant capacity.

Apart from the sugar, you will get two other byproducts that have commercial value. These are molasses and filter cake or press mud. Generally, distilleries and cattle feed producers are the major consumers of molasses.

On the other hand, the press mud is rich in minerals, potash as also phosphate, sulfites & organic matter which means rich manure. Hence, this is most suitable for soils. Therefore, it is a very good quality organic manure for agricultural activity.

9. Cost of Starting a Sugar Mill Business

The project cost typically depends on the expected production output. Broadly, there are two major investment areas in this industry. These are fixed capital investment and working capital investment. Generally, the fixed cost includes land & building, procuring plant & machinery, registration, licensing, permissions, and other preliminary expenses. The working capital includes procuring raw materials, staffing, utilities, transportation, and distribution expenses.

The approximate cost of plant and machinery for a sugar mill for 2500 tonnes processing capacity will be around 40 Cr to 50 Cr in Indian rupees. In addition to this, you need to invest in land, buildings, housing, working capital, etc. The total investment t will be a minimum of 125 Cr for setting up a sugar mill in India.

However, you can also consider starting a mini-sugar mill according to your investment capacity. There are several financing assistance available in India. However, you must have the eligibility to take loans from the banks.

10. Sugar Mill Manufacturing Process

The manufacturing process is not very simple. Therefore, you must hire specific manpower for the smooth operation of the factory.

  • Step 1. The first step is collecting and procuring the sugar cane after harvesting. Generally, each ton of sugarcane produces about 100 kg of sugar. That means you can transform 10% of the total weight of the sugarcane into crystal sugar. An average yield per hectare is 80 tons of sugarcane.
  • Step 2. You will need to slice and shred the sugar cane to facilitate juice extraction in the crushing process. Generally, you can use three or more sets of three-roller mills to press the juice out of the cane.
  • Step 3. The next step is the purification of juice. You will need to remove the largest possible number of impurities at the beginning. You can apply sulphur dioxide and lime for purification. Additionally, adjust the final PH to 8-8.5. Then evaporate the clear juice to a concentration of 55-65% sucrose. In addition, you can generate steam with the help of boilers.
  • Step 4. The next step is crystallization. Evaporate the concentrated juice further until you get saturated sugar. As the syrup becomes saturated, sugar crystals are formed. The final step is centrifuging. Here you get the finished sugar. Now the product is ready for packaging and distribution.

11. Staffing For Sugar Mill

Manpower planning is an important factor in this business. Broadly, you will need to hire employees for three specific divisions. These are the production team, sales team, and accounting personnel. Additionally, you will need to specify the actual manpower requirement for each segment in the sugar mill operation.

12. Marketing and Distribution

Develop a marketing strategy to promote your sugar mill products and establish distribution channels to reach your target market. Explore opportunities for selling sugar and its by-products to wholesalers, retailers, industrial consumers, and export markets.

Frequently Asked Questions

Is it necessary to have prior experience in the sugar industry to start a sugar mill business?

While prior experience in the sugar industry can be beneficial, it is not always necessary to have the specific industry experience to start a sugar mill business. However, having a team with relevant expertise in areas such as agriculture, engineering, operations management, and finance can greatly enhance the chances of success.

How long does it take to set up and start operations of a sugar mill in India?

The timeline for setting up and starting operations of a sugar mill in India can vary depending on factors such as the availability of land, infrastructure development, regulatory approvals, procurement of machinery and equipment, and recruitment of personnel. On average, it may take anywhere from one to three years to establish a sugar mill from inception to full-scale production.

What are the key challenges faced by entrepreneurs in the sugar mill business?

Some common challenges faced by entrepreneurs in the sugar mill business include fluctuating sugarcane prices, labour management issues, regulatory compliance, competition from established players, managing operational costs, and market volatility. Implementing effective risk management strategies and staying updated on industry trends can help mitigate these challenges.

Are there government subsidies or incentives available for setting up a sugar mill business in India?

Yes, the Indian government offers various subsidies, incentives, and support schemes for entrepreneurs in the agro-industry sector, including sugar mill businesses. These subsidies may be available for areas such as capital investment, technology adoption, infrastructure development, and export promotion. Entrepreneurs are advised to research and avail themselves of relevant government schemes to support their sugar mill projects.

What are the potential market opportunities for sugar mill products in India?

India is one of the largest consumers of sugar globally, with a growing demand for both raw and refined sugar. Additionally, by-products of sugar production such as molasses, bagasse, and ethanol have diverse industrial applications, including in food and beverage manufacturing, pharmaceuticals, biofuels, and animal feed. Identifying niche market segments and value-added products can further enhance market opportunities for sugar mill businesses.

Is it possible to export sugar and its by-products from India?

Yes, Indian sugar mill businesses have the opportunity to export sugar and its by-products to international markets, subject to regulatory requirements and quality standards. Exporting sugar and its by-products can be a lucrative avenue for revenue diversification and accessing global markets with high demand for Indian agro-products.

About Next What Business Research Team

The Editorial Staffs at NextWhatBusiness is a team of Business Consultants with years of experience in small and medium-scale manufacturing and service-based businesses.