Sugar prices to drop by at least 5% over govt's curb on ethanol production, says Balrampur Chini MD

Balrampur Chini Mills, one of the country's leading sugar manufacturers, reported a net profit of Rs 73.5 crore in the first quarter of FY24. The company's shares were valued at Rs 393.20 at the closing bell on December 8, down 3.72 percent from the previous day's close.

According to Saraogi, the company was going to use 1.2 crore quintals of its sugarcanes, around 10 percent of the overall stock, for ethanol production. "This sugarcane stock, however, is not going to be wasted. It will be used to make a different product, that is the grain of sugar," he said.

Notably, out of the total ethanol production, around 28 percent is from sugarcane juice, which also fetches the maximum price for the sugar mills, at Rs 65.61 per litre.

Over 50 percent of the ethanol comes from the sugar by-product B-heavy molasses, which the government has not banned. Its current rate is Rs 60.73 per litre. Little over one percent is produced from C-heavy molasses, which carries the lowest price of Rs 49.41 per litre.

The government’s move was perhaps to check a drop in sugar output following reports of a possible shortfall.

Sugar industry experts reckon that a lower sugar production this year would reduce the ethanol output, and this decision could further aggravate the situation and prevent the Centre from attaining the ethanol fuel blending target.

In 2022-23, the country achieved 12 percent fuel-blending, and in the current year, the government is looking at raising it to 15 percent. The Centre has targeted 20 percent ethanol blending in petrol by 2030.