Raising revenues. Balrampur Chini Mills chalks out plans to raise sugar, ethanol revenues

Balrampur Chini Mills is looking to revive its cane throughput to enhance sugar, ethanol and cogeneration revenues, and expand its distillery operations to enhance the share of ethanol in the overall revenue mix. A shift in the cane variety mix is also on the cards.

According to Vivek Saraogi, Chairman and Managing Director, Balrampur Chini, the company’s crushed cane volume increased marginally during the October 2021-September 2022 sugar season, but recovery declined by 37 basis points on account of a decline in crop, and a substantial increase in precipitation across two mills. Cane disease in two other mills, on the other hand, impacted recovery. However, the under-performance in cane crushing was made up by the distillery division. The company reported less than a one per cent growth in revenues and close to a 10 per cent rise in net profit.

Lower capital cost per litre

The company intends to revive its cane throughput from a low of 87.5 lakh tonnes to 110 lakh tonnes, which would help enhance sugar, ethanol and cogeneration revenues, lifting the overall scale of operations. It intends to commission a distillery expansion from the present 560 KLPD (kilo litre per day) to 1050 KLPD during the current financial year.

“The expansion is being commissioned at a capital cost per litre lower than the prevailing greenfield average, indicating that we are not only likely to become larger, but also more profitable. This is likely to increase the proportion of ethanol within our overall revenue mix, from 19 per cent in FY 2021-22, to close to 35 per cent when the ethanol expansion is completely utilised,” Saraogi said in the company’s latest annual report (2021-22).

The company also intends to go in for an “aggressive alteration” in its cane variety mix and is working closely with advanced cane research institutes to introduce superior cane varieties that can help moderate its excessive dependence on a single cane variety - C0 238 - which saw a growing incidence of red rot disease last fiscal.

Capacity expansion

The two ethanol projects - the expansion of the 170KLPD distillery in Balrampur, the new 320KLPD greenfield project in Maizapur - are expected to increase the installed capacity to 1,050 KLPD by November 2022, making it the largest ethanol producer in Uttar Pradesh.

The 1,050 KLPD of distillery capacity will be completely allocated for ethanol production, except for the mandatory production of around seven per cent ENA (Extra Neutral Alcohol) to service country liquor requirements. It possesses a mix of capacity across ethanol manufactured through the B-heavy route and juice. This fungible capacity and flexibility will help the company respond to changes in the market dynamics to maximise profitability, it said.

Balrampur Chini’s production mix will be influenced by prevailing sugar and ethanol realisations.

“The company intends to maximise the production of ethanol through the molasses route (sacrificing sugar partly) and syrup route (sacrificing sugar entirely). As the strategy stands, it will produce only as much sugar as it can market within India and without creating inventory overlaps (between sugar of the previous season and current season),” it said.

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