homebusiness Newscompanies NewsBalrampur Chini looks to increase ethanol capacity as distillery biz share grows
Balrampur Chini looks to increase ethanol capacity as distillery biz share grows
Balrampur Chini Mills is taking steps to increase its ethanol production capacity to meet the government's blending targets. The company is also looking to optimize its distillery business and increase its revenue share from it. With the progress made by the Indian ethanol industry, achieving the 20 percent blending target seems like a realistic goal for the near future.
Balrampur Chini Mills — a manufacturer of sugar, industrial chemicals and fertilisers — is betting big on its ethanol capacity as it plans to increase it further. While speaking to CNBC-TV18, Pramod Patwari, CFO of the company, shared the company's ethanol production and revenue expectations.
According to Patwari, the company's ethanol capacity for the upcoming financial year (FY24) stands at 35 crore litres. However, to achieve the desired 20 percent blending, there is a need for a larger capacity to produce ethanol out of juice root.
“In order to achieve 20 percent blending by 2025-2026, we need larger capacities which can produce ethanol out of juice root. For that, government needs to incentivize the setting up of distillation capacity by giving slightly a higher price for juice-based ethanol,” he said.
For FY23, Balrampur Chini Mills expects ethanol production to be around 21 crore litres. With the current ethanol blending rate of 10 percent, this translates to approximately 2.1 crore litres of ethanol consumption. However, the company is looking to increase its ethanol production capacity to meet the government's 20 percent blending target.
The sugar industry is on the cusp of a mega transformation. The government's initiative to tie this sector with the need for clean energy is driving a structural change in this industry. The Food Ministry of India on Friday, January 27, 2023, gave in-principle approval to 11 more ethanol projects under new Ethanol Interest Subvention Schemes. The schemes, notified on April 22, 2022, are expected to add an additional capacity of 47 crore litres of ethanol.
The Indian ethanol industry has made significant progress in recent months, achieving a 10 percent ethanol blending rate five months ahead of schedule. However, to reach the 20 percent blending rate set by the government, there is a need for more extensive ethanol production capacity.
Company's distillery profitability came under pressure due to delays in sugar crushing and the ongoing expansion of their plant. Distillery sales volume also declined due to lower feedstock but average sugar realisations were higher on a year-on-year (YoY) basis.
Patwari also emphasised the need for higher ethanol realizations for juice-based ethanol, which is an essential component of the company's distillery business. He expects 35 percent of the company's revenue to come from the distillery business in FY24.
The stock was up 0.28 percent in the last week and was down 7.58 percent in the past month.
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