Its call for “Ethanol”
Ethanol is a renewable fuel made from various plant materials collectively known as "biomass." More than 98% of U.S. gasoline contains ethanol, typically E10 (10% ethanol, 90% gasoline), to oxygenate the fuel, which reduces air pollution. In U.S. Ethanol is also available as E85 (or flex fuel), which can be used in flexible fuel vehicles, designed to operate on any blend of gasoline and ethanol up to 83%.
Food grains, grass, trees, sawdust, agricultural and forestry residues etc. are used to produce ethanol fuel. The easiest way to create ethanol fuel is by using crops with high sugar content like sugarcane, corn, sorghum, barley, sugar beets etc.
Figure 1 Ethanol Production Process
The cane which was earlier sent into waste once the juice is extracted from sugarcane is now passed through distilleries to create ethanol so it can be said that sugar, sugar companies and ethanol blending machine manufacturing companies are critical to the production of ethanol.
Figure 2 Sugarcane Production In India
India has surpassed Brazil in the sugar production in the current sugar season. With the increase in the production of sugar in past 8 years, India apart from meeting its requirement for domestic consumption has also consistently exporting sugar. About 100 LMT of sugar has been exported till 01.08.2022 in the current sugar season 2021-22 & exports likely to touch 112 LMT.
Till year 2014, ethanol distillation capacity of molasses-based distilleries was only about 215 cr litres. The overall capacity of ethanol production has doubled in past 8 years from 421 cr ltrs in 2014 to 893 cr ltrs in July’ 2022. About 41,000 cr investment is also being made in ethanol sector which will create employment opportunities in rural areas. More than 400 cr. ltrs of ethanol likely to be supplied by sugar mills/ distilleries for blending with petrol in the current ESY 2021-22 which will be 10 times in comparison to supplies in year 2013-14. Government has fixed target of 10% blending of fuel grade ethanol with petrol by 2022 & 20% blending by 2025.
The companies related to Ethanol blending are as follows:
- Ethanol manufacturing sugar companies:
- Balrapur Chini Mills
The company invested close to ₹200 crore in January last year to scale up its distillery business. It is set to invest another ₹400 crore during the current fiscal to enhance its distillery capacity from 520 KLPD (kilo litre per day) to 840 KLPD by adding another 320 KLPD at Maizapur in Uttar Pradesh. By ramping up its ethanol production, Balrampur Chini Mills Ltd expects close to 30 % of its revenues to come from the distillery business over the next three years.
- Triveni Engineering
Triveni Engineering & Industries, country’s second biggest sugar producer will commission its two ethanol plants next month taking the company’s total capacity to 540 kilo litre per day (KLPD) from current 320 KLPD while targetting to further increase to 660 KLPD with an investment of Rs 350 crore.
- Shree Renuka Sugars Ltd.
Shree Renuka Sugars Lts. , one of the largest sugar manufacturer is expanding ethanol production capacity by 430-kilo litre per day to 1,400-kilo litre.
- Dalmia Bharat Sugar and Industries ltd.
Dalmia Bharat Sugar and Industries plans to increase its ethanol manufacturing capacity to 15 crore litres/ annum by next January from 8 crore litres currently. To achieve this, company will divert about 1.50 lakh tonne of sugar for ethanol production compared to 60,000 tonne now. The expansion will happen at the company’s Jawaharpur, Nigohi and Kolhapur plants and a new distillery will be set up at Ramgarh.
- Dhampur Sugar Mills
Dhampur Sugar Mills to expand its distillery capacities by 100,000 LPD (litre per day) at Asmoli unit will take total distillery capacity to 500,000 LPD from earlier 400,000 LPD. Asmoli unit capacities will rise from 150,000 LPD to 250,000 LPD.
- Dhwarikesh Sugar Industries
Dhwarikesh Sugar Industries have ethanol-producing capabilities of 162.5 kilolitres per day (KLPD) and the company are picking up another plant of 175 KLPD. With the setting up of this plant, company’s ethanol capacity will go up to more than 330 KLPD per day, and, the model they have thought of is to run both the distilleries on juice during the season and run them on the B heavy molasses during the off-season.
- Avadh Sugar and Energy Ltd.
Avadh Sugar has 31800 TCD sugarcane crushing capacity, 325 KLD distillery capacity & 74 MW saleable power capacity. The company produces 6.0 lakh tonnes (lt) of sugar, 8 crore litre of ethanol & 15 crore units of saleable power. The company has increased its distillery capacity from 240 KLD to 325 KLD with a capex of Rs 135 crore. This would help it increase its annual ethanol production to 11 crore litre.
- Bajaj Hindustan Sugar ltd.
BHL is India’s largest ethanol producer. It is currently producing 38 million litres of ethanol in a year. The Company has increased its ethanol manufacturing capacity to nearly 218 million litres per year. BHL has now embarked upon the expansion of its power generation capacity by 450 MW through the setting up of new coal-based power plants of 90 MW each in the vicinity of 5 of its existing sugar units.
- EID Parry (India) Ltd.
EID-Parry (India) has a capacity of 297 kilo litres per day (KLPD) at its Sankili unit in Andhra Pradesh, which function at a capacity utilisation of 90%-95%. The proposed capacity addition of 120 KLPD at Sankili will require an investment of Rs 92.50 crore and is expected to be added by November 2022.
- Bannari Amman Sugars ltd.
BASL has incured capex of Rs.150 crore spread across FY20 - FY22 for expanding its distillery capacity in Karnataka from 60 KLPD to 150 KLPD and addition of capacity to manufacture ethanol from B-heavy molasses and sugarcane juice. BASL also plans to modernize its distillery in Tamil Nadu for a total expenditure of Rs.50 crore beginning February 2021. The same is expected to be completed by end of Q4FY22 and aid the company in increasing the alcohol yield.
- Ethanol machinery manufacturing companies
- Praj Industries Ltd.
Praj Industries has bagged an order to set up India's largest capacity syrup-based ethanol plant from Godavari Biorefineries (GBL) in Karnataka. As a part of this project, Praj Industries will expand the existing ethanol manufacturing capacity to 600 kilo litre per day (KLPD), using sugarcane syrup.
- ISGEC Heavy Engineering Ltd.
Isgec Heavy Engineering Limited’s wholly owned subsidiary Saraswati Sugar Mills Limited (SSML) has commenced commercial production at its 100 KLPD Ethanol plant, set up at Yamuna Nagar with an investment of Rs. 178 crores in the construction of the plant and presently it is operational.
Key points:
In sugar seasons 2018-19, 2019-20 & 2020-21, about 3.37 LMT, 9.26 LMT & 22 LMT of sugar has been diverted to ethanol. In current sugar season 2021-22, about 35 LMT of sugar is estimated to be diverted & by 2025-26 more than 60 LMT of sugar is targeted to be diverted to ethanol.
India’s 85% requirement of crude oil is met through imports. But with a view to reduce import bill on crude oil, to reduce pollution & to make India Atmanirbhar in petroleum sector, Government is pro-actively moving ahead to increase production & blending of ethanol with petrol under the Ethanol Blended with Petrol programme. Considering this, it can be said that the stocks related to Ethanol blending and its manufacturing machineries will surely gain momentum can be good to have in portfolio for mid-term to long term period.
- HET ZAVERI
(Disclosures: At the time of writing this article, author, his clients & dependent family members may have positions in the stocks mentioned above. The author, his firm, his clients or any of his dependent family members may make purchases or sale of the securities mentioned in website. Author may have positions in above stocks so have vested interest obviously in their going up or down as the case may be.
Disclaimer: Investing in any equity is risky. Our recommendations are based on reliable & authenticated sources believed to be true & correct, and also is technical analysis based on & conceived from charts. Investors should take their own decisions. We assume no responsibility for any transactions undertaken by them. The author won't be liable or responsible for any legal or financial losses made by anybody. Investors must take advice from their financial advisors before investing in any stocks.)