The government's ethanol push will bring about predictability for sugar suppliers as a glut has forced them to keep prices low, according to Vivek Saraogi, managing director of Balrampur Chini Mills Ltd.—one of the nation's biggest suppliers of the sweetener.
“I see a lot of stability coming in,” Saraogi told BloombergQuint in an interview, adding that realisations for sugar players will be much higher if sugar is diverted to make ethanol. “All in all, a very well-handled policy initiative by the Government of India.”
On Monday, Balrampur Chini Mills said that it has commissioned a new distillery at its Gularia unit in Uttar Pradesh with a capacity of 160 kilolitres per day. This addition will increase the total distillation capacity of the company to 520 kilolitres per day, it said.
The focus, according to Saraogi, is now on pushing mills to divert cane into making of ethanol—a biofuel that limits carbon discharge when blended with petrol.
The government is supporting sugar companies by either paying them to export sugar —thereby controlling oversupply—or by directing them to divert ethanol to fuel manufacturers for the production of things like ethanol-blended petrol, he said.
Also Read: India's Sugar Stockpile Threatens to Drag Down Global Prices
“It's a very practical policy. You have predictability of not just earnings but also MSP (minimum support price),” he said. “You have buffer stock, export losses reimbursed to you. It is immaculate, in my thinking.”
Also Read: Why Indian Sugar Stocks Are In A Sweet Spot
WATCH | MD Vivek Saraogi on Balrampur Chini's new distillery in Uttar Pradesh
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