Amongst high expectations, the new Modi government presented its maiden Budget last week. With a clear objective to revive growth, the Budget had laid out well defined structural reforms and is certainly promising of an improved macro environment. The overall sentiment in the economy is cautiously optimistic, waiting for on-ground policy implementation to take place.

Molasses prices reached a new lifetime high in the quarter gone by creating profitability pressures on distillers across the nation. Not much changed on the ethanol front in the last quarter, though there were several positive announcements emphasizing the importance of ethanol blending in reducing import dependency. We expect the new government to ‘walk the talk’ and ensure strict implementation in the quarters to come.

Quarter ended 30 Jun saw a total export of 36.1 Mn litres of ENA and 8.2 Mn litres of other alcohol. In the quarter prior to this, these figures stood at 44.4 Mn litres and 7.3 Mn litres respectively. For similar period last year, the ENA volumes were 43.4 Mn litres and other alcohol at 21.6 Mn litres. Lower production levels in Maharashtra combined with increased demand from domestic industry led to dip in export volumes. We expect this trend to continue with prices remaining firm due to demand pressures, weak monsoons and rising input costs.

Shekhar Swarup
Executive Director
ss@globusgroup.in

India News

Highlights - Modi targets growth in maiden budget

Jul 10: Prime Minister Narendra Modi's new government on Thursday unveiled a first budget of structural reforms that seek to revive growth, while spurning the temptation to resort to higher borrowing. Read more

Oil firms fall short of ethanol blending target

Jul 7: The oil marketing companies were able to achieve only 1.37 per cent blending of ethanol (a sugar by-product) with petrol, against the target of 5 per cent. The Oil Minister said there had been a lot of talk but little action on renewable fuel. But now, the new Government would take steps, which, he said, would also help the interests of farmers. Read more

Oil Ministry makes benchmark price for ethanol attractive

Jun 9: In a bid to make it more attractive for sugar millers to tender ethanol for the petrol blending programme, the Government has revised the formula for fixing the benchmark price. As a result, the net realisations from ethanol for sugar millers could increase by a tenth from the next sugar season starting October. Read more

‘Higher ethanol blending won’t hit liquor industry’

Jun 24: The move to double ethanol blending in petrol to 10 per cent will neither affect alcohol supplies to potable liquor makers nor the revenue interests of State Governments, according to M Manickam, Vice-Chairman of Sakthi Sugars Ltd and former President of Indian Sugar Mills Association (ISMA). Read more

Chemical industry raps higher ethanol blending decision

Jun 25: Fearing an input shortage due to the decision to raise the level of compulsory blending of ethanol in petrol, the chemical industry has urged the Union government to roll back the decision without delay. In a letter to the ministries of chemicals, finance, commerce, food and petroleum, the Indian Chemical Council (ICC) said the move would lead to reduced supply of industrial alcohol, a valued raw material for a number of downstream industries. Read more

Oil Ministry may cap ethanol blending in petrol at 10%

Jun 17: The oil ministry could be looking to cap the quantum of ethanol blending in petrol at 10%, a move that could potentially end the tiffs between the supplier sugar industry and oil companies over proportion. Read more

To help sugar sector, talk of mixing ethanol with petrol

Jun 3: The government is once again trying to ride on the back of the auto sector to pull the sugar industry out of the slump, which has been induced by a bumper cane harvest. Revival of sugar industries by pushing ethanol blending in petrol and releasing arrears of cane growers in Uttar Pradesh have become priorities for the Narendra Modi government. Read more

Agricultural residues is the only way to achieve ethanol production targets: G S Krishnan, Novozymes

Mar 29: In an interview, G S Krishnan, Regional President - India, Novozymes South Asia, discusses benefits of enzymes and importance of agri-waste to produce bioethanol in India. He says that the 20% blending target can be fulfilled only by producing ethanol from agricultural residue. Read more

Ethanol-run bus on Nagpur roads in a fortnight

Jul 13: An environment-friendly bus is all set to ply on the roads of the city of Nagpur. Union transport minister Nitin Gadkari announced on Saturday that a bus that ran completely on ethanol would be handed over to Nagpur Municipal Corporation (NMC) within a fortnight.Read more

India will outpace Asia's growth in biodiesel: Lux Research

Jun 4: India is likely to outpace Asia's growth in biodiesel, according to Lux Research’s new report, titled ‘Planning for the long-term in Asia Pacific alternative fuel markets’. Indonesia, China and Malaysia are the three dominant nations in biodiesel, each driven by challenging mandates. Indonesia is targeting 20% adoption by 2025 while Malaysia positions itself to be a dominant exporter with 143 MGY in 2015. India's growth, however, at an impressive 18.5% compounded annual growth rate (CAGR) through 2017, will outpace the rest of the region, which will post a 3.9% CAGR through 2017. Read more

Liquor sales growth declines 2%, no slump for premium segments

Apr 15: Growth in liquor sales in India slowed to 2% in the fiscal ended March, but the premium and semi-premium segments bucked the trend with a robust performance, data show. Read more

India's sugar output to be 24.8 mn tonne: USDA

May 11: The US farm department has estimated India's sugar production at 24.8 million tonne for the ongoing 2013-14 season, higher than the 23.8 million tonne forecast by the domestic industry body ISMA. Read more

Cash-strapped railways had no option but to hike fares and freight tariff

Jun 21: The steep hike in passenger fares and freight tariff was imminent as the state-run transporter is reeling under a severe financial stress. Railways needed Rs 4.5 lakh crore to complete ongoing projects which are stuck due to shortfall in revenue generation through internal resources, failure to attract private investors and Centre's fiscal constraints. Read more

Narendra Modi to focus on boosting the rupee

May 24: The new Prime Minister, Narendra Modi, is likely to assiduously pursue policies for strengthening the rupee. "The rupee reflects the strength of the Indian economy and a declining rupee only showcases the fact that we as a nation are living beyond our means," is what is said to be the new PM's belief. Read more

Globus Watch

In a move to vertically integrate and capitalize on its large alcohol manufacturing facilities, Globus launched Distillers Dried Grains with Solubles (DDGS), a high nutrient animal feed ingredient, in Q1 FY 2014-15. DDGS is a co-product of the alcohol making process and provides excellent animal health, performance, and food product quality making it one of the more popular feed ingredients worldwide. Globus is one of the few manufacturers providing rice based DDGS, which has even higher protein than the conventional maize based DDGS.

The company’s state-of-the-art dryer in Haryana has ~60tpd DDGS manufacturing capacity. In a short period of time, it is seeing strong market traction and in fact, is setting up a second dryer at its Rajasthan plant, which is expected to come on-stream by end of this quarter.

To learn more about DDGS, please email anair@globusgroup.in.

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