Revenue of Chinese companies expected to grow by 5-7 percent
The revenues of sugar companies are expected to grow by 5-7 per cent in FY 2021-22 due to expected increase in both sugar exports and ethanol volumes following firming domestic and global prices. This information has been given in a report. ICRA said in a report that due to favorable pricing environment both domestically and globally, as well as increase in the share of ethanol in the fuel mix, the revenues of Chinese companies on a year-on-year basis in FY 2021-22 will be 5 percent. -7 percent is expected to grow.
Sabyasachi Majumdar, Senior Vice President and Group Head, ICRA, said, “In light of the government’s policies, shifting of sucrose to ethanol production is likely to accelerate the supply of ethanol, limiting sugar production. This coupled with better prospects for sugar exports in the current financial year will help in reducing the stock of sugar and thus help in bringing down the level of borrowings.
Sugar prices rise during festive season
The report further said that domestic sugar prices rose to Rs 34,000-36,000 per tonne in August-September 2021 after three years due to sharp rise in global prices as well as the onset of the festive season.
ICRA said that in August-September 2021, international raw sugar prices reached US $ 420-440 per tonne, while in August-September 2020 it was $ 270-280 per tonne.
Sugar stocks to be transferred for ethanol production
Road Transport and Highways Minister Nitin Gadkari stressed on the need for transfer of additional sugar stock for ethanol production. The reason for this is that under the arrangement of the World Trade Organization (WTO), there will be no provision for subsidy on the export of sugar after December 2023.
He said that the government is promoting ethanol manufacturing in a big way. He assured that it will procure all the ethanol produced in the country. With the increase in ethanol supply, Gadkari said the government is planning to introduce flex-fuel engine vehicles in the country.
Ethanol demand will increase 4 to 5 times
He said that with the introduction of flex-fuel vehicles on 100 per cent bio-ethanol, the demand for ethanol will increase 4 to 5 times immediately. The minister also asked sugar mills to set up their own ethanol pumps, which are being permitted by the government.
Government giving export subsidy to sugar mills
Gadkari said that the government is providing export subsidy of Rs 3,000 to 6,000 crore to sugar mills to clear the surplus sugar stock. “Due to our commitments to international organizations like WTO, these subsidies will not be acceptable after December 2023,” he said.
As a solution to this problem, Gadkari suggested that excess sugar stock could be diverted towards ethanol production by adding 15-20 per cent sugar in B-heavy molasses.
Proposal to mix 20% ethanol in oil
The country would need about 10 billion liters of ethanol by 2025 to achieve the level of 20 percent ethanol blending with petroleum fuels. At present, the sugar industry contributes to meet 90 per cent of the demand for ethanol as a blending fuel in the country.
To increase ethanol production with available resources, Gadkari suggested adding 15-20 per cent sugar in B-heavy molasses.
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