The dead sugar sector bounced back in trade today. The sugar ministry earlier had said that it is looking at ethanol blending and a saving of nearly USD 300 million.
Stocks have reacted positively but the realty on the ground is really different. It is important to understand that the ethanol blending is already taking place in the market right now. Government has allowed 5 percent ethanol blending in the petrol. In January 2013, the tender was issued, which was finalised in June 2013. Out of that 5 percent, it is only 1.5 percent what the industry has been able to provide. More specific it was 54 crore liters, which was asked by the ministry, but the industry was only able to give away 25 crore liter. Also Read: Will have tighter domestic markets this year: Sakthi Sugars
It has not even met the current 5 percent limit of ethanol blending—10 percent seems a tall order. It is important to understand that it is not only the percentage of ethanol blending, but the most of these sugar companies attract higher prices if they gave ethanol to liquor companies rather than giving to the oil and marketing companies. So, the bounce back of course may have come out on a technical trigger or the positive whiff coming from the ministry side. Surely the implementation on the ground remains a real difficult task for most of these companies.
In terms of quantum of ethanol, Bajaj Hindusthan is the biggest ethanol producer in India, followed by Renuka and Balrampur Chini.
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