The Indian government has taken a decisive step to ensure adequate sugar supply and price stability. On December 5th, they issued a directive prohibiting all sugar mills and distilleries from using sugarcane juice to produce ethanol. This action is in response to concerns about the diversion of sugarcane from sugar production to the more lucrative ethanol market.
On Friday the Praj Industries share price declined 14 percent to its intraday low of Rs 522.60 from its previous close of Rs 607.5 after the government ban on ethanol production.
This decision is expected to have a significant impact on India’s ethanol production landscape. Currently, B-heavy molasses accounts for 65 percent of ethanol production, sugarcane syrup accounts for 25 percent, and C-heavy molasses accounts for 10 percent.
With the ban on sugarcane juice and syrup, ethanol production will likely decline, particularly for companies like Praj Industries, which generates a significant portion of its revenue from this sector.
The long-term impact on sugar prices remains to be seen. While increased sugar production is expected, profitability for the Praj industry may decrease due to the loss of ethanol revenue.
Praj Industries has a strong market share of 60-65 percent in the manufacturing of domestic ethanol plants for over 15 years. Their experience includes 1G and 2G ethanol technologies, as well as sustainable solutions for various sugar streams and lignocellulosic biomass.
Praj’s “Ethanol Blending Program” assisted governments in implementing blending initiatives. Their “Enfinity” 2G ethanol technology and collaboration on the Indian Oil Corporation Limited (IOCL) biofuels refinery project demonstrated their commitment to innovation, cementing their position as a leader in the bioenergy revolution.
The bio-energy segment generated 75 percent of the company’s revenue in the fiscal year 2023-24’s third quarter.
Praj also specializes in B-heavy molasses-based ethanol production, which accounts for 65 percent of total production. However, the requirement to only purchase ethanol from C-heavy molasses forces them to refocus on production.
Praj Industries Ltd, founded in 1985 and headquartered in Pune, has a global presence with over 750 references in over 75 countries. It began as an ethanol plant supplier and has since expanded to become a global company offering a wide range of solutions with a focus on the environment, energy, and agri-process industries.
Written by Sriram KV
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