Which Companies Make Ethanol in India?

The blending of ethanol with motor fuels has gained focus over the last few years.

The government's national policy on biofuels (2018) as well as with its ethanol blending program (EBP) lays out the roadmap and policy for ethanol blending in India.

The target is to reach a blending of 20% of ethanol in petrol (E20) by 2025-26. In May 2024, India achieved a blending ratio of 15.4%. The country now looks set to achieve the 20% target.

Oil marketing companies (OMCs) have ramped up their purchases of the biofuel from producers and are scaling up distribution of E20 to 12,000 stations across the country.

As the government is already taking steps to expand ethanol availability, the biofuel future for India is looking bright. The country is slowly shifting towards sustainable technologies and decarbonisation.

The ethanol blending process holds many other advantages for India too. It helps reduce pollution from auto emissions, conserves foreign exchange as India imports most of its crude oil requirement, and also increases value addition in the sugar industry.

Sugar companies benefit significantly as they can generate an additional revenue stream and can clear cane price arrears to farmers.

Ethanol Production in India

Ethanol is produced in India as a byproduct of the sugar industry and is sourced from sugarcane. Major sugar producers in India have emerged as significant ethanol producers.

In the past, businesses that made sugar would remove the juice from sugarcane, discarding the cane. However, thanks to innovative ideologies, this cane waste, also known as sugarcane molasses, is passed through distilleries to create Ethanol.

The ethanol sector is expanding as a result of the growing need for cleaner energy sources. It's also being aided by the government's drive towards renewable energy.

As it can reduce the nation's need to import oil by billions of dollars while also protecting the environment, ethanol is regarded as the next super fuel.

As per research conducted by the International Energy Agency, India will surpass Brazil and the US to become the third-largest economy for Ethanol by 2026. Consequently, future predictions point toward a substantial upswing in ethanol demand.

Thus, the sugar companies producing ethanol will be the main beneficiaries of this trend.

With that, let's look at the top sugar companies in India.

Please note these are not stock recommendations.

#1 EID Parry

EID Parry is part of the Chennai-based Murugappa Group. It's the largest sugar producer in south India.

Founded in 1788, it has been in operation for over 235 years. The company holds the distinction of setting up India's first sugar plant at Nellikuppam in 1842.

It also became the first sugar manufacturer in India to produce ethanol from B-heavy molasses and sugar syrup at the Nellikuppam plant.

The company manufactures sugar and bio products. The portfolio expands to organic spirulina, sanitiser, natural astaxanthin, pharma-grade sugar, jaggery, and refined sugar.

It also has an R&D centre for sugarcane and tissue culture that focuses on developing new and improved cane varieties of sugar.

The company's 7 sugar plants are spread across south India. These plants have a sugarcane crushing capacity of 40,300 TCD, co-generation capacity of 140 MW, and distillery capacity of 598 KLPD.

As part of its future-forward strategy, the company has augmented its ethanol production capacity across its plants to focus on the high potential green energy space.

Following the government's impetus on Ethanol Blending Program (EBP), the company is doubling its biofuel volumes from 297 KLPD in 2022 to 582 KLPD by April 2024.

In the past few years, co-generation and ethanol have emerged as twin revenue-generating streams for the company, with ethanol slated to be a major growth accelerator for its sugar business.

To know more, check out EID Parry's factsheet and quarterly results.

#2 Dalmia Bharat Sugar

Dalmia Bharat Sugar and Industries is a leading sugar producer in India. It's the biggest sugar producer in the state of Uttar Pradesh (UP).

The company has five integrated plants, three in UP and two in Maharashtra with cane crushing capacity of 35,500 TCD and sugar production capacity of 700,000 MT per annum. It's the only company in India to have manufacturing facilities in two non-contiguous states in India.

By employing world-class sugar production technology, it produces superior quality plantation white cane sugar of various grades which has found wide market acceptance.

It's also a major producer of green power in the sugar industry. Its sugar plants have a capacity to produce 118 MW of bagasse-based power of which around 60 MW is exported to the grid.

It has ethanol production capacity of 250 KLPD (kilo liters per day). This is used in blending with petrol. It's sold under via a tender system to oil marketing companies. The company supplies ethanol to Indian Oil, Bharat Petroleum and Hindustan Petroleum.

In FY24, the company increased its ethanol manufacturing capacity, using grain as feedstock, from 110 to 250 KLPD. This was a strategic move to insulate the company from excess dependence on molasses.

The company has made many investments in its plants over the years to boost ethanol production capacity. These investments are now complete and has positioned the company to be one of the largest ethanol producers in India.

To know more, check out Dalmia Bharat's factsheet and quarterly results.

#3 Balrampur Chini Mills

Balrampur Chini Mills is one of India's largest sugar companies. It manufactures and distributes sugar, alcohol, ethanol, molasses, bagasse, and organic manure. It also generates and sells power.

Currently, the company has operations in 3 segments - sugar, distillery, and others. It has 10 sugar plants in Uttar Pradesh with a crushing capacity of 80,000 tonnes of cane per day, distillery capacity of 1,050 KLPD, and co-generation capacity of 175.7 MW.

The company is powered by its own biogas infrastructure, ensuring a sustainable production cycle.

For ethanol production, the company has commissioned four distilleries in Balrampur, Babhnan, Mankapur and Gularia with a production capacity of 560 KLPD.

The company's distillery capacity is mostly dedicated to the production of ethanol for blending with petrol. This is supplied to oil marketing companies.

Recently, the company has announced the setting up of a 320 KLPD distillery at its Maizapur unit and 170 distillery KLPD at Balramapur unit. These will run on sugarcane juice as raw material during the season and on grains during the off-season.

With this addition, the total distillation capacity of the company increased to 1,050 KLPD.

With expertise in ethanol manufacture, the company is setting up India's first industrial bioplastics plant by investing Rs 20 bn. It is targeted for completion in 2027.

To know more, check out Balrampur Chini Mills' factsheet and quarterly results.

#4 Dhampur Sugar Mills

Dhampur Sugar Mills is an India-based integrated sugarcane processing company. It's engaged in the manufacturing and selling of sugar, green energy, chemicals, and ethanol.

The company has been in business for a little more than 90 years. Over time, it has emerged as one of the major players in India's sugar sector.

It has a sizeable ethanol-producing capacity. At the end of FY24, it possessed a cane-crushing capacity of 24,000 tonnes per day and distillery capacity of 350 KLPD. It added 100 KLPD distillery capacity at the start of FY24.

The company's co-generation capacity is 126.5 MW of which 5.5 MW was commissioned in FY24. It also produces 140 MT of Ethyl Acetate per day and 14,000 cases of potable spirits per day.

Dhampur Sugar Mills significantly ramped up its ethanol production in FY24 by nearly 28% from 931.08 lakh BL to 1,189.78 lakh BL.

The ethanol segment is the highest earning business segment of the company. The share of ethanol in the company's standalone revenue increased from 16.8% in FY23 to 24.7% in FY24. The share of ethanol in the company's standalone operating profit increased from 44.8% in FY23 to 48.2% in FY24.

To know more, check out Dhampur Sugar Mills' factsheet and quarterly results.

#5 Triveni Engineering & Industries

Triveni Engineering & Industries is one of the largest integrated sugar manufacturers in India. It's also a market leader in various engineering businesses, spanning power transmission, water & wastewater treatment solutions, and defence.

To produce ethanol, the company has state-of-the-art distilleries spread across two facilities in Muzaffarnagar, and one each in Sabitgarh, Milak Narayanpur, and Rani Nangal (RNG) in Uttar Pradesh with a combined capacity of 860 KLPD.

These facilities have the capability to produce Ethanol, extra neutral alcohol, rectified spirit, and denatured spirit. It uses a mix of sugarcane-based feedstocks as well as grain to produce ethanol.

The company also produces dried distillers grain with solubles (DDGS), a co-product, which is sold to premium institutions and has been well accepted in market.

As a forward integration measure, the company has set up a bottling facility at its Muzaffarnagar unit for the purpose of bottling Indian Made Indian Liquor (IMFL).

The company claims to be fully behind the government's ethanol blending program (EBP). It achieved a production of 184.4 m litres and sales of 182.7 m litres in FY24, both higher than last year. It supplies ethanol to oil marketing companies and also to major private players, for blending with petrol.

The management has stated that the company's long-term strategy is to grow the ethanol business by being an active partner in India's EBP programme and self-reliance journey.

To this end, it recently commissioned a 200 KLPD multi-feed distillery at Rani Nangal. This has resulted in an aggregate distillation capacity to 860 KLPD for the company.

To know more, check out Triveni Engineering & Industries' factsheet and quarterly results.

Conclusion

The government is actively focusing on using ethanol as an alternative fuel, presenting an interesting investment opportunity in ethanol-producing companies.

Given the government's financial incentives and the general increase in ethanol consumption, Indian sugar companies could do well in the years to come.

All things considered, it is evident that the Indian sugar industry will enjoy high ethanol demand due to its high sustainability and growth potential.

However, sometimes growth comes at a cost. Many companies are eager to leverage the growth opportunities which may lead to strong competition.

An investor should carefully analyse the fundamentals, competition, and growth prospects before making any investment decision.

Happy Investing!

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