New Delhi: The Birla group will invest Rs800 crore to expand sugar and biofuel ethanol output and produce electricity and to generate more revenue from its sugar business.
The group, one of India’s top conglomerates, controls three sugar firms—Oudh Sugar Mills Ltd, Upper Ganges Sugar and Industries Ltd and unlisted Gobind Sugar Mills Ltd.
“Sugar is a cyclical business with ups and downs,” Oudh Sugar’s chairman and managing director Chandra Shekhar Nopany said in an interview on 9 April. “We want to de-risk the business by putting up capacity for ethanol and power co-generation,” he said, adding that the investment that includes expanding sugar output would be done by November.
Sugar mills are trying to soften the blow from falling prices when output jumps, by stepping up investment to produce ethanol.
The three Birla firms will raise ethanol output to 330,000 litres by November from 200,000 litres now, while sugar production would reach 57,000 tonnes crushed per day from 44,000, Nopany said.
“From zero power co-generation capacity, we expect to come to almost 80MW by end of November,” he said.
India is expected to produce a record 25 million tonnes (mt) of sugar in the current season that ends in September, according to sugar industry estimates.
This is sharply above last year’s output of 19.3mt, and annual domestic consumption of about 18mt.
Nopany said output this year could be closer to 26mt and is likely to rise to 27mt next year on higher cane planting and additional capacities built by mills.
The Union government has forwarded incentives for sugar exports to the Election Commission, which is yet to give its approval to avoid these influencing local polls in Uttar Pradesh, a major sugar-producing state. Analysts estimate the subsidies might be worth $30-$35 (Rs1,290-1,505) per tonne.
India had banned sugar exports in July last year to rein in domestic prices, and lifted the restriction in January by when world prices had fallen. Nopany said India would have to export at least 3mt to avoid a glut at home.