Ethanol a Renaissance for Sugar

Industry in India

Ravi Gupta
Chairman Ethanol Committee
AISTA

Mobile: +91-98112 11199

INDIAN SUGAR LANDSCAPE

80% sugar is produced in 3 states – UP,

Maharashtra and Karnataka

East India is deficit fed by UP,

Maharashtra, Karnataka in that order

Sugar prices are higher in North and

South as compared to West
FARM REVOLUTION IN UP – CANE VARIETY co238

90 14.0
12.5
12.0 11.8 11.7
80 11.1 12.0
70
8.8 10.0
60 7.1

PRODUCTION
6.8 8.0
50
YIELD

40 6.0
30
4.0
20
2.0
10
55 53 62 77 71 74 70 74
0 0.0
14/15 15/16 16/17 17/18 18/19 19/20 20/21 21/22 (f)
Yld (MT/HA) Prod (MMT)
Agriculture Yields went up by 40% and recovery by 200 basis points reducing cost of production of sugar
INDIAN SUGAR SURPLUS / DEFICIT TREND
INDIAN SUGAR PROD AND CONS TREND 32.5 33.2
31.0
28.3 Prod (MMT) Con (MM) 28.3 27.4
26.3 26.3
24.4 25.1 24.4 25.2

20.1
22.1 24.6 25.2 25.6 25.3 25.8 Production
19.3 23.8 24.2 24.6
18.1 22.5 22.9 23.3 more then
21.8 21.6
19.1
20.3 18.9 20.3 consumption in
18.5 17.8 18.2
17.3 in deficit year
13.7 14.8
12.6
8.0 7.3 7.6
4.6 4.1 5.2
3.4
1.6 1.9 1.8 2.1
0.8 0.2 0.6 0.5

01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16 16/17 17/18 18/19 19/20 20/21
-4.0 -3.2 -4.3
-5.6 -6.8

-7 MMT 10.4 MMT 17.8 MMT

4.4 MMT

Surplus sucrose and consistency in production

SUGAR COST OF PRODUCTION IN RELATION TO WORLD PRICES

25.0 200
20.0 20.2 20.1 180
18.7 19.5
20.0 18.3 18.6 160
140
15.0 16.6 17.4 120
14.0 100
13.4 12.7
10.0 12.4 12.4 80
60
5.0 40
20
117 38 27 162 173 155 134
0.0 0
14/15 15/16 16/17 17/18 18/19 19/20 20/21
Diff ($/Mt) - RHS Indian Sugar c/lb NY 11 (c/Lb)

India produces sugar at 20 cents / pound , global prices are less. Hence incentives
RESULT OF OVER PRODUCTION OF SUGAR

▪ VOLATILE BALANCE SHEETS OF SUGAR COMPANIES

▪ FARMER INCOME – DELAYED CANE PAYMENTS

▪ ENVIRONMENTAL ISSUE

▪ PRESSURE ON GOVT. EXCHEQUERS (buffer stock, incentives etc)

▪ INVESTORS LIKE CONSISTENT RETURNS

 ETHANOL PROGRAM

A RENAISSANCE FOR THE SUGAR INDUSTRY

VIEW HELD ON ETHANOL PROGRAM

Source: Ravi Gupta’s Presentation, FO LICHT conference,

Year 2014
VIEW HELD ON ETHANOL PROGRAM

Source: Ravi Gupta’s Presentation, FO LICHT conference,

Year: 2014
SITUATION TODAY

▪ B MOLASSES AND SUGARCANE JUICE ETHNAOL IS BEING ENCOURAGED.

▪ A STEP AHEAD SUGAR SYRUP IS ALSO ALLOWED

▪ REMENURATIVE PRICES FORE ETHNAOL HAS BEEN FIXED.

▪ ETHANOL PROGRAM IS ENTIRELY RUNNING FROM DOMESTIC PRODUCTION

▪ PLAN TO SOAK UP THE SURPLUS SUGAR AND USE BALANCE FOR ETHANOL
FUTURE : GOVT ROADMAP FOR ETHANOL PROGRAM EXPANSION

▪ A strong resolve to reduce carbon reduction in accordance with Paris Accord

▪ Total ethanol required 10160 million litres for 20% EBP by 2025

▪ Start higher blend from 2023 and then reach 20% by 2025

▪ Capacity requirements are worked out year wise both for grains and sugar ethanol.

▪ Usage of 6 million tonnes of sugar and 16 million tonnes of damaged grains (mainly from FCI)

▪ Sugarcane takes 3000 litres of Water.

▪ SIAM concern that current engine calibrated up to 5 pct. can take up to 10 pct. of ethanol.

▪ SIAM said make 10 pct available across the country then shift to higher fuels.

▪ Electric cars growth taken into account. 30% addition by 2030

GOVT ROADMAP FOR ETHANOL PROGRAM EXPANSION

SUGAR BASED ETHANOL GRAIN BASED ETHANOL TOTAL ETHANOL

20/2 21/2 22/2
FIG IN MN LTR 19/20 20/21 21/22 22/23 23/24 24/25 25/26 19/20 20/21 21/22 22/23 23/24 24/25 25/26 19/20 23/24 24/25 25/26
1 2 3

DISTILLATION CAPACITY 4250 4500 5190 6250 7250 7300 7800 2580 2600 3000 3500 4500 7000 7400 6830 7100 8190 9750 11750 14300 15200

ETHANOL DEMAND 2570 4000 4400 5350 6000 6600 6840 1660 1920 2670 2930 3840 6280 6880 4230 5920 7070 8280 9840 12880 13720

ETHANOL FOR FUEL 1570 2900 3300 4250 4900 5500 5500 160 420 1070 1230 2080 4380 4660 1730 3320 4370 5480 6980 9880 10160

BLEND % 4.5 7.4 7.6 9.3 10.5 11.1 10.8 0.5 1.1 2.4 2.7 4.5 8.9 9.2 5.0 8.5 10.0 12.0 15.0 20.0 20.0

ETHANOL FOR OTHER USES 1000 1100 1100 1100 1100 1100 1340 1500 1500 1600 1700 1800 1900 2000 2500 2600 2700 2800 2900 3000 3340

Sugar Diversion / Grain Usage

0.8 1.9 3.0 4.0 5.3 6.5 7.0 4.2 4.8 6.7 7.3 9.6 15.7 17.2
for Ethanol (MMT)
TARGETTED SUGAR BASED ETHANOL CAPACITY (MN LTR)

FIG IN MN LTR 20/21 21/22 22/23 23/24 24/25 25/26

ETHANOL CAPACITY 4500 5190 6250 7250 7300 7800

CAPACITY ADDITION 250 690 1060 1000 50 500

NO OF PROJECTS OF 100 KL 9 26 39 37 2 19

CAPITAL INVESTMENT - USD MN 140 385 592 558 28 279

CUM INVESTMENT - USD MN 140 525 1116 1674 1702 1981

USD 2 Billion capital investment shall go for capacity expansion

ETHANOL INVESTMENT - ENCOURAGING POLICY IN PLACE

▪ INTEREST SUBVENITON ON NEW ETHANOL PROJECTS

▪ FASTER ENVIRONMENT CLEARANCE – FASTER NEW PROJECTS

▪ A BIG SUPPORT FROM GOVT. (GOVT WORKING FASTER THEN PRIVATE SECTOR)

▪ ETHANOL PRICES ARE DECLARED KEEPING SUGAR PRICES IN MIND - DIFFERENT PRICES FOR B-MOLASSES
AND FOR SUGAR CANE JUICE ETHANOL AS PER SUGAR SACRIFICED

▪ DIRECTION TO OIL MARKETING COMPANIES TO BUY ALL AVAILABLE ETHANOL – FRAMEWORK FOR
LONG TERM SUPPLY AGREEMENT

▪ FREEER (NOT FREE) MOVEMENT OF MOLASSES AND ETHANOL WITHIN INDIA

▪ NEW NATIONAL BIOFUEL POLICY TO ACHIEVE 20% EBP BY 2025

ETHANOL PRICES IN LAST 3 YEARS

70 7.0%
% Change 60 6.0%
SOURCE 18/19 19/20 20/21 6.2%
from 19/20
50 5.0%
5.3%
40 4.0%
SUGARCANE JUICE 59.19 59.48 62.65 5.3% 4.3%
30 3.0%
B HEAVY MOLASSES 52.43 54.27 57.61 6.2% 20 2.0%

10 1.0%
C MOLASSES 43.46 43.75 45.64 4.3%
0 0.0%
SUGARCANE JUICE B HEAVY MOLASSES C MOLASSES
18/19 19/20 20/21 % INC
SOME UNANSWERED QUESTIONS
SUPPLY CHAIN INNOVATION AND DEMAND ESCALATION

900 847
823
800
700 582
600
457
500
350
400 250
300
200
100
0
20/21 21/22 (F) 22/23 (F) 23/24 (F) 24/25 (F) 25/26 (F)

Per month Lifting of Ethanol (Mn Ltr)

SUPPLY CHAIN SHALL COPE – INVESTMENT IN TANKER CAPACITY , MOVEMENT BY RAIL, PIPELINES
INFRASTRUCTURE REQUIRED AT BLENDING STATIONS
FLEX FUEL AUTOMOBILE PRODUCTION

FLEX FUEL AUTOMOBILE?

COMPETITION FROM OTHER

ENERGY?
TAKE AWAYS

▪ CLEAR ROAD MAP WITH TARGETTED APPROACH ON ETHANOL BLEND PROGRAM

▪ ETHANOL SHALL SOAK UP SUGAR SURPLUS

▪ REAL ACTION IS SEEN ON THE GROUND

▪ 6 STATES HAVE ACHIEVED 10% EBP, PLAN ARE IN PLACE TO COVER THE WHOLE
COUNTRY, E12 FOR SURPLUS STATES

▪ E-10,12,15,20 , 100 EBP SPECS ARE IN PLACE

▪ STRONG PUSH FOR FLEXI FUEL CARS

PERSPECTIVE ON GLOBAL MARKETS
 0.0
500.0
1000.0
1500.0
2000.0
2500.0
3000.0
3500.0
Mar-13 4000.0
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
INDIAN & WORLD SUGAR PRICES TREND

Dec-16
Mar-17
Jun-17
Sep-17
KOLHAPUR S WITH SUBSIDY

Dec-17
Mar-18
Jun-18
Sep-18
NY 11

Dec-18
Mar-19
Jun-19
Sep-19
Dec-19
Mar-20
Jun-20
Sep-20
Dec-20
Mar-21
Jun-21
0.0
5.0
10.0
15.0
20.0
25.0
BRAZIL PRODUCTION UNDER STRESS : BRAZILIAN WEATHER (RAINFALL)

• ABOVE MAPS SHOWING REDUCTION CUMULATIVE IN RAINFALL ACTIVITY FROM MAY – JUN.

• AVG VARIANCE IN RAIN SHOWING REDUCTION FROM -25% TO -50% DURING MAY – JUNE, CAUSING ADVERSE EFFECT OF
HEAT STRESS ON CROP.
GLOBAL SUGAR BALANCE SHEET VS NY PRICE
 10
20
30
40
50
60
70
80
90

0
100
01-09-2014
01-12-2014
01-03-2015
01-06-2015
01-09-2015
01-12-2015
01-03-2016
01-06-2016
01-09-2016
01-12-2016
01-03-2017
01-06-2017
01-09-2017
01-12-2017
01-03-2018
01-06-2018
Higher Crude Prices

01-09-2018
GLOBAL PRICES DRIVING FORCES – CRUDE PRICES

01-12-2018
01-03-2019
01-06-2019
01-09-2019
01-12-2019
01-03-2020
01-06-2020
01-09-2020
01-12-2020
01-03-2021
01-06-2021
WORLD PRICES SHALL FOLLOW INDIA
WHAT TO EXPECT – A MEDIUM TERM PERSPECTIVE

• FAVORABLE INTERANTIONAL SCENARIO

• FAVORIABLE DOMESTIC SCENARIO

• SUGAR SECTOR SHALL BECOME EVEN MORE EFFICIENT. AGRICULTURE YIELDS AND RECOVERY SHALL INCREASE
FURTHER.

• COMPANIES WITH HIGHER ETHANOL CAPACITY SHALL HAVE COMPETITIVE ADVANTAGE OVER OTHERS.

• ETHANOL INVESTMENT SHALL BE REQUIRED FROM COOPERATIVE SECTOR TOO:

• CLUSTER APPROACH – A FEW SUGAR MILLS HAVE ONE DISTILLERY

• MULTIFEED PLANTS – SUGARCANE JUICE DURING CRUSH SEASONS, GRAINS DURING OFF SEASON

• ETHANOL PROGRAM HAS A DEFINITE INSTITUTIOANL FRAMEWORK AND SHALL CONTINUE TO STAY .
IN THE END
INDER WAVE

ALL INDIA PRODUCTION SWINGS (MMT)

40.0

2 3
35.0 1
2 3
1
30.0 4 4

25.0

1
20.0

15.0
2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25
INDER WAVE : RESULTS

2020-21 2021-22 2022-23 2023-24 2024-25 2025-26

SC 2 - REALISTIC PRODUCTION 2019-20
(P) (P) (P) (P) (P) (P)
OPENING STOCKS 14.3 10.6 9.2 9.4 7.2 5.3 3.9
SUCROSE PRODUCTION 28.2 32.8 34.9 32 30 32 33
SUCROSE FOR ETHANOL 0.8 1.9 2.9 4.0 5.3 6.5 7.0
SUCROSE FOR SUGAR 27.4 30.9 32.0 28.0 24.7 25.5 26.0
IMPORTS 0 0 0 0 0 0 0
INTERNAL CONSUMPTION 25.3 25.4 25.8 26.2 26.6 27.0 27.4
EXPORTS 5.8 7.0 6 4 0 0 0
CLOSING STOCKS 10.6 9.2 9.4 7.2 5.3 3.9 2.5
STOCK IN MONTHS 5.0 4.3 4.4 3.3 2.4 1.7 1.1
SUGAR MIX 97.2% 94.2% 91.7% 87.5% 82.3% 79.7% 78.8%

- SURPLUS MAY BE SOAKED UP FASTER THEN THE COMMON BELIEF

WHAT IS SUGAR INDUSTRY TODAY :

▪ AN INDUSTRY WITH LINKAGE OF RAW MATERIAL COST WITH FINISHED GOODS

▪ AN INDUSTRY EXPADNING FROM PRODUCING HUMAN ENERGY TO AUTO ENERGY.

▪ FINANCIALLY:

WORKING CAPITAL REDUCTION (STORING RAW MATERIAL THEN FINISHED GOODS)

HEALTHIER SUGAR PRICES AS SUGAR SUPPLY AND DEMAND SHALL BE BALANCED
LESS COMMODITISED INDUSTRY
CONSISTENT EARNINGS

▪ SUGAR PRODUCERS SHALL BECOME “GREEN ENERGY PRODUCERS”

▪ CASH SHALL BRING MORE OPPORTUNTIES FOR EXPANSION IN RELATED FIELDS

 Thank You for being a patient listener
“WELCOME ONBOARD BUT DON’T GO OVERBOARD”

Ravi Gupta
(91) 98112-11199