Diversion of Indian sugar output to ethanol may not exceed 3.5 mt, says TEIL 

About 3-3.5 million tonnes (mt) of India’s sugarcane production will likely be diverted for ethanol production this season (October 2023-September 2024) against over four mt last season, Triveni Engineering & Industries Ltd (TEIL) Vice-Chairman and Managing Director Tarun Sawhney has said.

“I think that at a gross value of 33.5 mt, the country can perhaps only afford about 3.5 mt of sugar to be diverted (for ethanol). If we evaluate the tender that has just happened (floated by oil marketing companies), there are still good quantities of juice going into ethanol manufacturing. They have been offered as capacities exist. So, the worst thing that can happen is the capacity to idle,” Sawhney told businessline in an online interaction.

Tarun Sawhney, Triveni Engineering & Industries Ltd (TEIL) Vice-Chairman and Managing Director

Ethanol capacity is being utilised and there is a “healthy” diversion of B-heavy molasses as well towards the Centre’s ethanol blending programme. “From the sugar side, I see no problem if about 3-3.5 mt of sugar is diverted. It will still leave the country’s sugar balance sheet in a very reasonable position,” he said.

Last season, India achieved nearly 12 per cent ethanol blending. “For this year in the tender that just lapsed, it’s a mixed bag. At this particular point in time, I think the oil marketing companies themselves are acutely aware that they will keep coming up with these tenders and you will keep seeing more and more ethanol offered in the coming days,” said the Vice-Chairman and MD of Triveni Engineering,  a diversified integrated business conglomerate and a large sugar manufacturer in India.

No clarity on maize

The oil marketing companies did not get a good response from the grain sector as the harvest had not happened. “We don’t have damaged foodgrains, which are used for ethanol production, available. We also have no clarity on maize (corn) availability. Maize season will begin in a couple of months. We will get a better idea at that point of time of what quantum of surplus maize or damaged foodgrain will make up ethanol production,” Sawhney said.   

The feedstock for ethanol is not just sugarcane derivatives, but also grain. “You have damaged foodgrain and maize that contribute to the manufacture of ethanol. I believe the dynamics of the raw material are going to change this season,” he said.

On sugar production this season, the TEIL top official said if the net production is 30 mt and consumption 29 mt, there is some leeway to face any supply side shock such as lower production Maharashtra or Karnataka.

“We have a million tonnes (as a cushion). That is a lot of sugar,” he said. The closing stocks will not be lower. It would be a good scenario if the country could maintain a 2 or 2-1/2 months stock at the end of the season.

Higher crushing in UP

For the loss of production in Karnataka and Maharashtra, which is feared to be high, Uttar Pradesh can make up but not fully.

“I can only share our own internal estimates, which point to a higher crushing in Uttar Pradesh and a higher sugar production based on high recovery. This year’s recovery versus recovery last year across Uttar Pradesh is high,” he said.

Sawhney said based on the sugarcane supplies so far from Uttar Pradesh, crushing would be higher than last year.  “Our internal data suggests that our crushing is going to be higher than last year. Our recovery at this point in time is better and higher than last year. But you know this is just the start of the season. We hope that there will be no inclement weather (which will affect sugarcane yield),” he said. 

Company to gain from current situation

Currently, the temperature is suitable to promote creation of more sugar in the cane. If the situation continues, Uttar Pradesh will produce more sugar than last year

TEIL, which has all its mills in Uttar Pradesh, will stand to gain from such a development as it will be able to get higher sales quota allocated by the Government every month. 

“On a relative basis, you will see more sugar from Uttar Pradesh making its way to other parts of the country where its produce was not sold last season. Eastern parts of the country and Kolkata will be the first port of call,” he said. 

The East has begun to get an “enormous quantity” of sugar from central and southern India. Over the past couple of decades, northern States such as Uttar Pradesh, Punjab, Haryana and Uttarakhand have been supplying to the eastern parts, he said.

Higher recovery from cane

Uttar Pradesh had a good monsoon this year and sugarcane crushing by mills began early by at least 10 days as the sugar recovery was good. TEIL, too, began crushing at least 10 days earlier than normal and it will make a big difference for two reasons, Sawhney said.   

“Recoveries (sugar from cane) are higher despite more disease than last year. Yield is also better and the improvement has come as millers and farmers combined to go in for aggressive cane development,” he said. 

The “aggressive development” over the years has helped growers reap the benefits. It is having a huge impact on farm income because of the higher yield. “The farming community will be taking home much more this year compared to last year without factoring any rise in sugar price (due to higher yield),” the TEIL official said.  

Awaiting SAP decision

With the Centre increasing the fair and remunerative price (FPR) for sugarcane by three per cent, mills in Uttar Pradesh are waiting to see if the Yogi Adityanath government will raise the State advised price. 

Though eastern Uttar Pradesh has received deficient rainfall during the monsoon, Triveni’s sugar unit at Rampur (pola), is substantially better than last year. “It’s because we’ve been able to drastically mitigate the impact of the red rot disease. Compared to that, my neighbours’ recovery is a little bit lower,” Sawhney said.

 On the impact of climate change on the sugar industry, he said though sugarcane is criticised as a water guzzler, it was not the right way of looking at it actually.

Chaning ecosystem

“Sugarcane is grass.  If you have precision irrigation, there can be no better return to a farmer. Others depend on  flood irrigation, which is what is commonly used across the country, and it is probably the wrong way to go about.My particular view is if you have smart irrigation, there is no better crop for the nation than sugarcane,” the TEIL Vice-Chairman and MD said.

 In modern agriculture, there is gravitating towards all forms - be it mechanisation, harvesting, seed or other technologies. “The entire ecosystem of agriculture is changing and for the better,” he said, adding that these could help combat climate change.

Unfortunately, India being a big country there would be changes in each State.

“That is something we need to plan. I don’t think we need to face any big changes in yields and availability, but you may see changes in different zones of the country,” he said. Even in the case of pests that attack sugarcane, different forms were emerging as a result.

But in any industry, especially agriculture the industry can partner with the farming community to overcome such challenges. “Sugarcane is the best example in the country of a large industry partnering with a large farmer base of over 50 million growers,” Sawhney said, adding that these measures will help find solutions to combat such changes in weather and global warming.

Triveni app

TEIL has come up with its own app connecting 97 cent of the three lakh farmers who supply cane to it. Through the app, the company monitors the farmers’ agricultural cycle and provides “360 degrees feedback”. The feedback ranges from preparing the field, testing the oil, growth of the crop, pesticide and insecticide dosage to harvest. 

On the company’s development, the board of TELI, founded in 1932, had approved ₹735 crore capital expenditure. All the projects are underway.

As regards sugar, ₹170 crore was spent during the off-season and the company was witnessing direct benefits through higher crushing.

The company is setting up two ethanol plants with a capacity of 450 kilo litres per day  (KLPD) each. The first one would be commissioned in the fourth quarter of the fiscal and the second one would come up a few quarters after that. “The second plant is fractionally delayed but I don’t see that as a problem. We are very bullish on the ethanol sector,” Sawhney said.  

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