homebusiness Newscompanies NewsDwarikesh Sugar to cut down production by 30% as business shifts to ethanol
Dwarikesh Sugar to cut down production by 30% as business shifts to ethanol
Dwarikesh Sugar Industries' decision to reduce sugar production and focus on ethanol production is a strategic move that is in line with the changing global trends. It is a step towards sustainability and profitability, and one that could pave the way for other players in the industry to follow suit.
The sugar industry in India is undergoing a transformation as more players pivot towards ethanol production. The Indian government has also been promoting the use of ethanol as a fuel, offering various incentives to encourage its production.
One such player is Dwarikesh Sugar Industries, whose Managing Director, Vijay Banka, recently revealed that they will be cutting down their sugar production by 30 percent in order to focus on producing ethanol.
“We will be able to cut down our sugar production by almost 30 percent. We have touched a historical high of sugar production of about 45 lakh quintals, we should be down to about 32-33 lakh quintals in the coming year,” he said.
Banka explained that this shift towards ethanol production is driven by the attractive pricing for ethanol in comparison to sugar, which has been struggling with low prices in recent years.
The Indian government is planning to create a carry-over stock of ethanol for the next year in anticipation of a rise in demand for E20 fuel. The government aims to achieve the 20 percent ethanol blending target by 2025.
Dwarikesh Sugar stock movement in the past three months.The shift towards ethanol production is not just a trend in India but is being seen globally as well. With the increasing demand for cleaner fuels and the need to reduce greenhouse gas emissions, ethanol is being viewed as a more sustainable alternative to fossil fuels. This presents an opportunity for the sugar industry to diversify and tap into this growing market.
Dwarikesh Sugar Industries is not only reducing sugar production but is also exploring opportunities to increase its ethanol exports. Banka shared that there is a possibility of increasing exports by 1 million tonnes, which could bring significant revenue for the company.
“There is a clear possibility of them allowing 1 million tonne of exports,” he said.
Also Read | Dwarikesh Sugar plans to focus on ethanol business as their mainstay after reporting weak set
Dwarikesh Sugar Industries has been operating both its distillery plants at full capacity.
Sanjay Manyal, Research Analyst at ICICI Securities, believes that domestic prices in India have remained insulated from international prices. This statement comes amidst a global surge in commodity prices, including those of essential commodities such as crude oil and food items.
He has a buy call on a whole host of sugar stocks such as Balrampur Chini, Dalmia Bharat, Triveni Engineering, Dwarikesh Sugar, Dhampur Sugar and Avadh Sugar.
The shares of Dwarikesh Sugar were up around 11 percent in the last week and over 3 percent in the past month.
For more details, watch the accompanying video
(Edited by : Abhishek Jha)
First Published: Mar 9, 2023 1:40 PM IST
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