Triveni has maintained steady growth in this business, on account of the increasing focus on ethanol production. The proposed increase in capacity would be a further boost to the ethanol business of the Company. A judicious production plan based on B-heavy molasses as well as C-heavy molasses has helped the business to maximise the revenues. In view of ZLD ensured by the Company, higher 350 days operation has been permitted to both the distilleries, which has helped to increase the production.
The production and despatches are significantly higher in view of full year impact of the new distillery commissioned in the previous year whereas in the previous year, the operations of the new distillery were stabilised only by Q2 FY 20. During the current financial year, the Company produced 56% Ethanol from B-heavy molasses as compared to 34% last year. The profitability of the distillery in FY 21 is lower due to increased cost of molasses, higher fuel cost, especially during initial stabilisation period of incineration boiler at old distillery at Muzaffarnagar, and non-recurring expenses in relation to discarding of certain fixed assets consequent to installation of new incineration boiler. The distillery received contracts of 10.09 crore litres from OMCs during the ethanol supply year 2020-21.
Ethanol, also known as fuel alcohol, is blended with petrol as a green fuel. Apart from augmenting the country’s fuel self-sufficiency with cost advantage, it helps in reducing the carbon footprint and results in savings of precious foreign exchange on import of crude oil. As per the biofuel policy of the Central Government, ethanol blending was initially targeted at 20% by 2030, creating continued demand from indigenous suppliers. The target has been advanced by 5 years and now the Government is targeting 20% blending by 2025. Continued Government push and incentivisation has helped the industry to set up new facilities and increase the ethanol supplies. The Government has been helping the Industry through remunerative pricing of ethanol derived from various feedstock as well through significant interest subvention on loans availed to fund new capacities. This has helped the industry to significantly enhance the ethanol supplies to OMCs.
Further, loss of sugar in B-heavy molasses and sugarcane juice will also help sugar industry to rectify mismatch between production and consumption of sugar as presently, production being substantially more than the consumption.
The ethanol blending programme will provide alternate revenue stream to the sugar industry, stable earnings, mitigation of cyclicality of sugar sector and improvement in its risk profile.
Despite some glitches like slower lifting of ethanol by the OMCs and lockdown on account of pandemic, the supplies have been steady to OMCs. Going forward, it should help in earning more revenues from the existing distilleries as well as from the upcoming new distilleries.
2021 Triveni Engineering, All Rights Reserved