Case Study | CaneSetu – Breaking Fraud Chains in Sugar Factories

Industry Reality

In sugar factories, fraud rarely starts at the factory level. It begins at the labour level and silently moves upward — becoming a chain reaction involving labour contractors and transporters.

🔗 The Typical Chain Fraud

Labour takes advance from Labour Contractor (LC–1)
Labour leaves mid-season and joins LC–2 or another transporter
LC–1 suffers losses and attempts recovery
Labour data is inflated with transporter support
Factory unknowingly bears the final loss

👉 Everyone commits fraud to protect themselves.

Core Fraud Scenarios Seen in Factories

1️⃣ Labour Advance Jumping (Root Cause Fraud)

200 labourers × ₹15,000 advance

30% labour jumps mid-season → 60 labourers

Loss: ₹9,00,000

2️⃣ LC–Transporter Collusion

25 fake labour × 5 transporters × ₹20,000

Recovered indirectly from factory: ₹25,00,000

3️⃣ Fake Labour Advance & Runaway LC

Advance per LC: ₹40 lakh

2 such cases

Direct loss: ₹80 lakh (₹0.8 Cr)

4️⃣ Transporter Advance Manipulation

₹2.0 Cr transporter advance

10% hidden mismatch

Leakage: ₹20 lakh

Total Seasonal Leakage (Medium Factory)

Source	Approx Loss
Labour jumping advances	₹0.10 Cr
LC–Transporter inflation	₹0.25 Cr
Fake LC advances	₹0.80 Cr
Transporter mismatch	₹0.20 Cr
Total	₹1.35 Crore / Season

How CaneSetu Breaks the Chain

Centralized registration of Labour, LC & Transporters
Factory-controlled, geo-tagged labour verification
Visibility of labour movement across contractors
Advance release only against verified labour
Complete digital history for future seasons

Result:
Seasonal leakage reduced by 70–85%
Fraud becomes visible before money is released.

📊 CaneSetu – Case Study