In the sugar industry the firms which are operationally more efficient are able to earn more than compared to other, was one of the major findings of a research article published in the latest issue of Finance India, the quarterly Journal of Indian Institute of Finance.

In view of the massive growth of sugar industry in India since independence [ an investment of the order of Rs. 5000 crores in the past four decades, made by 394 manufacturing units ], the researcher Mr. A. Vijay Kumar, in his article , " Determinants of profitability-A Fram-Level Study of the Sugar Industry of Tamil Nadu" tried to examine the various factors which are detrimental to the profitqability of a firm. He has indentified six independent variables, namely, 'Growth rate of sales'. Vertical integration, leverage, current ratio, inventory turnover ratio and operating expenses to sales ratio' as important determinats of the profitability [ i.e accountable for over 98% of the Tamil Nadu during the period 1982-1997. The researcher by using regression technique establised that

Explaining these research findings regarding the positive relationship between vertical integration and profitability, the reseacher supports his analysis in the context of price control, i.e given price ceiling , firm will have to internalize production to improve their profit of sales. Thus, the more integrated firms would be more profitables. Similarly the operating expense ratio with a negative coefficient also supports this view.