Shree Renuka Sugars to nearly double ethanol capacity; to invest Rs 700 cr

The 20% ethanol blending target has seen sugar sector majors betting on expanding the ethanol capacity; the sector could see an investment of about Rs 10,000 crore in the years ahead

Leading sugar firm Shree Renuka Sugars (SRSL) has said it is planning to expand its ethanol manufacturing capacity from 720 kilo litres per day (KLPD) to 1,400 KLPD, which may see an additional investment of around Rs 700 crore.

“We are already in the process of expanding our capacity to 1,400 KLPD and this will be in place by the last quarter of the current calendar year. The thumb rule is that this will see an additional investment of around Rs 700 crore in the segment,” said Atul Chaturvedi, Executive Chairman, SRSL.

With India setting an ambitious target of blending 20 per cent of petrol with ethanol by 2025, sugar sector majors are betting big on expanding the ethanol production capacity in the next three years. The sector is likely to see an investment of about Rs 10,000 crore in the coming years. To achieve 20 per cent blending, a capacity of 12 billion litres of ethanol will have to be installed of which 6.5-7.0 billion litres would be from sugarcane and the rest from corn-based distilleries.

At present, the total ethanol production capacity is just about six billion litres, of which that produced from sugarcane sources is 5.25 billion litres while that from corn-based distilleries is just 0.75 billion litres. Therefore, to achieve the 20 per cent blending target, grain-based distillation must pick up more pace than sugarcane based ethanol.

During the current season, oil marketing companies are targeting a blending of 10 per cent blending, while sugar surplus states like Uttar Pradesh, Karnataka and Maharashtra have already achieved a higher blending ratio than this. “During the next cane year, we expect to achieve a target of around 12 per cent comfortably,” Chaturvedi said. According to government estimates, a 20 per cent blending of ethanol is expected to save around $4 billion in terms of imports by 2025.

India had achieved a 10 per cent ethanol blending target five months ahead of the deadline. While blending of ethanol in petrol started during the early 2000s, it was only after 2014 that it gathered momentum. India’s ethanol blending in petrol has increased to 10.16 per cent in June this year, from barely 1.4 per cent in 2014 Based on government estimates, India substituted over 2 million tonnes (mt) of crude oil due to ethanol blending during the last financial year, as compared to around 0.3 mt in 2013-14.