LOLC announces record-breaking production at Hingurana Sugar Factory

The revitalised Hingurana Sugar Factory managed under Gal Oya Plantations Ltd., a subsidiary of the LOLC Group, has recorded the highest-ever sugar production of 19,960 metric tons for the year 2014/15 through successful sugar cane cultivation spanning 3,440 ha of land.

This record-breaking production has been achieved after 38 years and is by far the largest sugar production output compared with other local producers in 2014. This is a significant achievement for the factory considering its tumultuous past.

“The Giant of Asia”
The Hingurana sugar manufacturing factory located in the Galoya valley was first built and opened in the 1960s. Gifted by the Czechoslovakian Government, the factory was fondly known as “The Giant of Asia” and was one of the largest sugar factories to be built using modern machinery in the region.

During the intervening years, it functioned as a government and semi government body providing direct employment to over 1,000 employees and livelihoods to over 4,000 cane farmers, whilst generating direct and indirect employment and revenue streams to over 20,000 people in general, until it was privatised in the 1980s.

During this time, other sugar producing factories located in Sevanagala, Pelwatte and Kantale also had successful operations, steering Sri Lanka towards becoming a self-sufficient nation in sugar production and sugar cane cultivation.

Re-establishing operations
The Hingurana factory functioned well into 1993, until it was forced to cease operations due to poor management, labour and union issues. The Sri Lankan Government at the time took over the property under its wings until an investor was found to re-establish operations. 

As a result, in 2009, restructuring of the once abandoned Hingurana Sugar Factory was begun subsequent to a joint venture between the Government of Sri Lanka and a private sector consortium led by Brown & Company PLC and LOLC.

This venture marked a milestone in history as the first public-private partnership in the country. According to this partnership, 51% of the ownership of the property was retained by the Government while 49% owned by the Browns Group together with LOLC.

The revitalised sugar factory commenced operations under the Management and Board of Directors of the new managing company, Gal Oya Plantations Ltd., which was formed in 2009. The factory, after initial renovations, commenced operations on 16 July 2012, for the first time after 15 years.

At present, the operations of the Hingurana factory are overseen by Gal Oya Plantations Chief Executive Officer Gamini Ratnayake and Chief Operating Officer Danesh Abeyrathne. Under this new management, steps have been taken towards restoring the operations of the factory from the bottom up. They reappointed skilled workers who were previously employed by the factory as they possessed vast experience and seasoned knowledge about cultivation, existing machinery, etc.

Uphill battle
Ratnayake said: “Once the Gal Oya Plantations was formed, it was an uphill battle to reinstate the Hingurana Sugar Factory to its former glory. By the time we restored operations, many of the employees and farmers who had previously engaged in sugar cultivation and production had abandoned hope due to various issues they had experienced in the past. 

Therefore, initially, great efforts and investments were made towards creating awareness among them by way of door-to-door campaigns, group discussions, meetings etc to restore their faith and confidence once more.”

Research division
In addition, the company set up a separate research division, the Agronomy Department, in 2010 to oversee and improve the production of sugar cane seeds and to conduct research on various aspects of sugar cane cultivation.

This division has been successful in multiplying eight SRI bred varieties including the popular commercial varieties in Hingurana, and maintains over 134 SRI sugarcane clones as future planting material sources as well as for trial programs.

In addition, the Agronomy Department conducts extension programs and provides regular awareness on sustainable agronomy practices to farmers to yield high, disease-free crops.

Major achievements
Illustrating major achievements to date, Ratnayake said: “By 2013/14, we have been extremely successful in cultivating more than 3,800 ha of land which is 85% of the total cultivable extent. We hope to cultivate the remaining extent of land by next year.”

According to him, new sugar cane cultivation has increased by 10 folds since 2010/11 which had only occupied 1,562 ha of land. By 2013/14, the total cultivated area had been increased by 13-fold spanning 3,440 ha of land. As a direct result of this revitalisation program, 3,718 farmers are currently engaged in sugar cane cultivation which is 82% of the total number of farmers required. The company hopes to increase this number up to 100% by next year.

Ratnayaka added: “Our objective is to uplift the income and socioeconomic standard of the farmers and the community as a whole. We have also aimed at developing domestic production of sugar and contribute towards uplifting the national economy by helping to retain outflow of foreign currency for sugar imports.”

Sugar production and demand
According to statistics made available in the Agriculture Symposium 2014, the annual sugar requirement of Sri Lanka is 600,000MT. However, the country produces only 9% of this total requirement whilst the rest is imported. In 2012 alone Sri Lanka has spent Rs. 45 b on sugar imports.

With the Government planning to increase domestic production by 40% by 2020, and with four existing sugar factories identified to be upgraded to meet this demand, the Management and Board of Directors of Gal Oya Plantations are confident of the future output of the Hingurana sugar factory, which has already demonstrated notable progress.

Third successful year
Abeyrathne said: “We are celebrating the third successful year of sugar production after commencing operations in 2012. 

Within a short period, we were able to record the highest production of sugar, the highest sugar recovery percentage from sugarcane cultivation and the highest percentage of cane crushing in Hingurana since its launch in 1960. In addition, we became the highest sugar producer in Sri Lanka for the year 2014. We expect higher output records in the near future. We have also been able to elevate our sugar cane cultivation and sugar production standards to reach global industry levels.”

As at 30 September, Gal Oya Plantations has invested Rs. 3.2 b towards the resuscitation of the Hingurana Sugar Factory. The year’s turnover has risen to Rs. 1.8 b from the previous Rs. 938 m in 2013/14. The company further hopes to invest Rs. 2.6 b towards the completion of the distillery and power generation projects currently in the pipeline.

An agreement has been already drawn for a new 21.5 KLPD distillery which is expected to commence operations in October 2015 and a power generation project to commence in May 2015.

In addition, the company already possesses capacity to produce 2MW of electricity for the factory’s usage and has a separate water treatment plant with capacity to generate up to 250,000 litres per hour. The water generated is used for factory operations while the excess purified water sold to the national water supply and drainage board.

Creating employment
Abeyrathne said that Gal Oya Plantations had been able to successfully create more than 20,000 direct and indirect employments, whilst extending employment opportunities to areas such as Ampara and Siyambalanduwa.

He added: “In addition to employment generation, the re-opening of the Hingurana Sugar Factory has uplifted livelihoods in surrounding communities and generated new revenue streams. We have witnessed development seeping into the surrounding areas during the past few years, especially in infrastructure development. Development efforts of roadways and canals have helped the communities immensely. Inner roadways have been upgraded for easy access and transportation, while canals have been renovated with the assistance of the Department of Irrigation and Drainage for irrigational purposes.”

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