Shree Renuka Sugars is betting on ethanol going forward because it is green, carbon-neutral and it helps improve the company's cash flows, said its executive chairman Atul Chaturvedi.
The company is all set to scale up its ethanol production to 1,250 kilolitres per day by December this year, compared to the current 720 kilolitres per day. It also has a second leg of expansion of 150 kilolitres per day, but Chaturvedi said the company would be reviewing it some time after the season is over and then look at expanding, which will be after this financial year.
"As of today, the sky is the limit," Chaturvedi said, when asked about the demand for ethanol.
He said the Indian government wants around 10.16 billion litres of ethanol by 2025 and right now they have around 4 billion. "The sky is the limit, more so because the ramping up of the grain ethanol capacity in the country has probably not kept pace as far as the expansion of the sugar sector is concerned. As far as the grain is concerned, the ethanol being supplied by the grain sector is only about 30 percent of the targeted quantity. But sugar is doing all right," he said.
Chaturvedi said that once the company's expanded capacity comes into play by around December, it could mean that their diversion of sucrose could also go up and they would be producing that much less sugar. "Last year, we diverted around 200,000 tonnes and this year, I think we should be in a position to divert more than 2.5 lakh tonnes of sucrose. I think these are steps in the right direction and it should work well for Renuka going forward," he said.
Chaturvedi said that the present price for cane juice ethanol is around Rs 63.45 for the government. "As an industry, we have been asking the government to ramp it up to Rs 69 or Rs 69.50 as the government has increased the FRP for sugar. So in line with that I think they need to increase the price of ethanol. That would go a long way in ramping up the capacity in the country much faster," he said, adding that with inflation in play, this is still a work in progress.
"We are telling the government that there is no subsidy involved. We are buying ethanol at Rs 63, but as a consumer we are paying Rs 105 to Rs 110 for petrol. So there is no subsidy involved. And as a matter of fact, the government might actually be making some money. So there is no reason why the government should part with a part of that money for the industry, which will make the health of the industry that much better. And I am sure the government is seriously looking at this," he said,
Chaturvedi expects an answer from the government by the start of the crushing season, which is around the middle of October.