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Alcohol Business Performance
The Company's Alcohol business comprises two distilleries with aggregate capacity of 320 Kilo Litre per Day (KLPD). These state-of-the-art molasses-based distilleries in Muzaffarnagar district and Sabitgarh Sugar unit, Bulandshahar district in U.P., are among the largest single stream molasses-based distilleries in India. These distilleries have assured access to consistent supply of captive raw material (molasses) - C-heavy as well as B-heavy molasses. The distillery at Muzaffarnagar has a flexible manufacturing process, allowing it to produce high quality Extra Neutral Alcohol (ENA), Rectified Spirit (RS), Specially Denatured Spirit (SDS) and Ethanol, based on the market dynamics and requirements, whereas the distillery at Sabitgarh is designed to produce only ethanol. Over the last few years, bulk of the Muzaffarnagar distillery's production has been ethanol, for supplying to OMCs for blending in petrol. The ethanol produced from the distillery is also supplied to other major players in the Oil and Gas sector. The distillery at Sabitgarh started production during Q1 FY 20.
In line with the new directives and guidelines of the Government of India regarding effluent treatment, and to ensure Zero Liquid Discharge, the Company has set up concentrated spent wash (termed as SLOP) fired incineration boilers at both the distilleries. Both the distilleries are in compliance of all pollution norms. Permission has been received in respect of the distillery at Sabitgarh to operate for 350 days in a year, and permission for Muzaffarnagar distillery to operate for 350 days is expected shortly.
More than 97% sales of the alcohol business was of ethanol during the year, with the balance around 3% being ENA. The total production of the distilleries for FY 20 was 93.83 million litres, while sales stood at 84.57 million litres.
Triveni has maintained steady growth in this business, on account of the increasing focus on ethanol production. Ethanol, also known as fuel alcohol, is blended with petrol as a green fuel. Apart from augmenting the country's fuel self-sufficiency with cost advantage, it helps in reducing the carbon footprint and results in savings of precious foreign exchange on import of crude oil. As per the bio-fuel policy of the Central Government, ethanol blending is targeted at 20% by 2030, creating continued demand from indigenous suppliers. The offtake by OMCs has been steadily improving, and Triveni has aggressively participated in all tenders issued by the OMCs for procurement of ethanol, securing sizeable quantities. Encouraged by the Government policies, both the Company's distilleries have operated with B-heavy molasses successfully.
The distillery units continued to operate efficiently and achieved high levels of the fermentation and distillation efficiencies during the year. More than 97% sales of the alcohol business was of ethanol during the year, with the balance around 3% being ENA. The total production of the distilleries for FY 20 was 93.83 million litres, while sales stood at 84.57 million litres.
Impact of COVID-19
The operations of the distillery remained normal during the lockdown period, and it continues to operate normally in view of ethanol being an essential commodity. However, during the lockdown period, the offtake of ethanol to contractual depots was severely affected due to the much reduced petrol consumption. But it was possible, even during this period, for the Company to work out arrangements with OMCs to deliver ethanol to some distant depots, so that the distillery production was not affected. It is expected that with increase in economic activities, fuel consumption will gradually increase, which in turn will lead to restoration of normal offtake of ethanol.
It will take some time before normalcy is achieved in ethanol offtake, but the Company will continue to produce B-heavy and C-heavy molasses to produce ethanol.
In view of the spread of COVID-19 pandemic in the country and the growing requirement for hand sanitizers, the Company has set up a hand sanitizer production facility at its Muzaffarnagar distillery, with production having already commenced. The Company plans to enhance the production, and also foray into manufacturing of premium hand sanitizers in the months ahead. These activities, while aimed at supporting India's fight against the pandemic, would be a source of additional revenue streams from the distillery business in FY 21.
The Company has also decided to set up a Carbon Dioxide capturing unit at Sabitgarh distillery on BOO basis, as well as an Ash granulation plant at Sabitgarh distillery, since ash from the incineration boiler is rich in potash content. These projects are aimed at deriving value from possible new avenues.
The ethanol blending programme is a key factor for the Indian Sugar industry to balance its demand-supply scenario, as, in lean sugar years, revenue from the distillery business helps sustain operations. In SS 2020-21, a healthy ethanol blending programme will help balance the higher sugar stocks. Due to the lockdown, demand from OMCs reduced and ethanol tanks at mills are full, which is putting operations at integrated sugar plants at risk. However, the production of hand sanitizers by restructuring the production lines has helped to some extent, and going forward, it should help in earning more revenues from the distilleries.
