Nghe an Tate & Lyle Sugar Company

Arguments FOR Supporting The Project

Group 8: Aaqib Noor Pallab Das Pradeep Tiwari Shruti Baliga Shobhit Saxena Tanvi Chugh

Arguments FOR Supporting The Project

An integrated sugar mill and refinery with an ultimate capacity of 900000 tons of cane per year. An outreach program to help local farmers convert to cane production. New transportation infrastructure including improved roads and bridges.

NATL Development Plan Consisted Of 3 Parts:

Arguments FOR Supporting The Project

Bridge the gap between production (360,000 tons) and consumption (700,000 tons) of sugar in Vietnam.

Future consumption is expected to grow, hence it is better to increase domestic sugar production. Impact: Save valuable foreign exchange Works on MAFIs objective to make the country more self sufficient.

Reduce dependency on import of sugar.

Eliminate inefficiency in Vietnam sugar industry and bring in efficiency.

Impact: Sugar farmers will get better price on their production

Arguments FOR Supporting The Project

Arguments FOR Supporting The Project

Workers
Provide in-house training for the workers and send some workers abroad to acquire operating and managerial skills.

Transport
NATL had to give preference to local population for trucking contracts.

Competitors
Competitors might benefit by learning how to operate more efficiently.

NATL workers would be paid roughly double what they earned at alternative jobs.

Arguments FOR Supporting The Project

Environment
NATL re-used the solid by-products bagasse and filter mud.

Taxes
NATL would pay 25% profit taxes after a 5 year tax holiday from its first operating profit.

Technology
Vietnam would get access to Tate & Lyles expertise and technology in sugar production.

While its a cost to the company, its revenue for the government

Arguments against the Project

Governments decision to support the project would be primarily based on projects social returns.

Stakeholders
Customers
Customers might be attracted to superior quality of domestically produced sugar, but in absence of price differential and metrics for quality difference, the benefit would be very small and difficult to assess.

Complementary product

It will not increase the demand of complementary products hence producers of related products will be unaffected

Other suppliers

As most of the supplies would come from competitive markets or imports, hence the new mill would not benefit these suppliers.

Farmers
On analysis of risk and return of shifting to Farmers growing other cash crops, cane, it is observed that crop lifecycle of such as rubber , will be difficult to sugarcane is 4 years compared to 1 year convinced to grow sugarcane. for subsistence crops. Subsistence crops do not yield negative returns at initial years, whereas negative Net returns from sugarcane are observed in initial years. The farmers can use combination of crops which reduces the dependence on single commodity.

Farmers might prefer selling their canes to local handicraft mills due to

-complex payment systems

-Tax evasion

Competitors

For residents who had their money invested in handicraft mills would lose their investment if they chose to sell their cane to NATL and they would sell only if it was more attractive financially. This would overall be a small impact.

Transportation infrastructure

The government needs to spend $ 800,000 to upgrade the roads and build bridges. These funds could go to other social uses. The benefit of this upgraded infrastructure has already been figured in the private returns
Profit taxes-They are ignored as the effects of benefits of tax revenues is difficult to quantify. VAT: The Vat received by the govt. from NATL would offset the VAT lost as a result of the decrease in imports. Tariffs on imports : The amount received by the government by Tariffs on import will decline to the tune of USD 10.7 million per year.

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