The Hindu Business Line : Sugar mills begin importing rectified spirit, molasses

DRIVEN by the shortage of sugarcane and molasses, sugar mills in Andhra Pradesh, Maharashtra and Uttar Pradesh are importing rectified spirit and molasses to meet the raw material requirement for their distilleries.

The sugar mills are hoping to use the imported raw material to make ethanol for industrial purposes and to supply to the oil companies for the ethanol-blended fuel programme.

According to industry sources, these companies are importing rectified spirit from Brazil. This could become a trend if the mills are able to wangle a higher price for ethanol from the oil companies. Previously, the oil companies were paying a base price of about Rs 17.50 a litre, and the sugar mills are now bargaining for around Rs 23 a litre or more. The landed cost of imported rectified spirit is around Rs 18 a litre. The sugar mills are optimistic about settling on a viable price, according to sources.

However, with the prices of molasses shooting up, rectified spirit now commands about Rs 27-28 a litre in the domestic market. But, the prices of rectified spirit are subject to ups and downs. So, supply on a long term contract to oil companies, though not as lucrative for now, is a steady source of income and the sugar mills hope to meet the demand by importing the raw material, sources said.

Mills in Andhra Pradesh and Maharashtra have taken the lead in importing rectified spirit, which is coming through Kakinada and Kandla ports. Molasses is coming through Kochi. In Tamil Nadu, where the movement of spirits and molasses is heavily regulated, the import is not yet viable, according to industry sources.

The drought over the last two years has hit sugarcane production, which has resulted in the prices of molasses, a by-product in sugar mills and a raw material for distilleries, quadrupling in the last two years.

A tonne of molasses now costs between Rs 4,000 and Rs 5,000 in the south, and in Tamil Nadu, where movement of molasses out of State is not allowed, it costs around Rs 3,500.

The main users of alcohol are the manufacturers of Indian Made Foreign Liquor and chemical industries. More recently, the oil companies have started purchasing anhydrous ethanol to blend with automobile fuel. However, a bulk of the revenue to the State Governments is from the sale of rectified spirit for liquor manufacture, a heavily taxed activity. The Governments have, therefore, ensured sufficient supply to this segment from domestic production by asking the sugar mills to ensure sufficient supplies, sources said.

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