U.P. SUGAR MILLS ASSOCIATION Cane Development & Sugar Industry - - PowerPoint PPT Presentation

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U.P. SUGAR MILLS ASSOCIATION Cane Development & Sugar Industry - - PowerPoint PPT Presentation

Dec 06, 2022 135 likes •405 views

U.P. SUGAR MILLS ASSOCIATION Cane Development & Sugar Industry : Contemporary Challenges and Alternatives 30-APRIL-2015 Average Milling capacity at different countries Avg. milling capacity(tcd) 14500 11000 9500 9000 7500 6000

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U.P. SUGAR MILLS ASSOCIATION

Cane Development & Sugar Industry : Contemporary Challenges and Alternatives

30-APRIL-2015

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Average Milling capacity at different countries…

14500 11000 9500 9000 7500 6000 4000 4000 3900 3400 US cane Australia EU Brazil (C/S) South Africa Colombia India China cane Russia Indonesia

  • Avg. milling capacity(tcd)

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Sugarcane Value Chain ……….

Sugarcane 1000 kg Sugar 100kg Bagasse 300kg Steam 660kg Power 130 kwH Exportable Surplus 100 kwH Molasses 45 kg Alcohol 10.5 lit Press Mud 30kg Bio-fertilizer 30kg

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Ethanol : tool to balance sugar production

  • Adequate alcohol availability to meet consumption requirement of all 3
  • sectors. Therefore, present annual alcohol requirement is just about 2.3

billion litres against production of 2.6 billion litres

  • Energy content of upto 10% ethanol blended petrol equivalent to pure

petrol, and benefits of ethanol justify a premium

  • Buyer of ethanol enjoys monopoly position
  • At 5% blending, USD 900 million of foreign exchange saved annually

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Bagasse based cogeneration of power

 At current installed crushing capacity, potential to generate power is said to be 7500 MW  Only 210mills generating exportable power  Currently, 3200 MW of power is exported by sugar mills to the grid  Rates offered by State Government agencies in the range of INR 3.12 - INR 5.14 per unit  Some units are trading power at INR 4.5 per unit too

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SMP/FRP for sugarcane has been increased by Central Govt.

833 839 848 857 857 1,298 1,391 1,450 1,700 2,100 2,200

  • 500

1,000 1,500 2,000

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Cane Price SMP/FRP (Rs./ton cane)

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SAP fixed by 5 States

139.12 145 170 210 220 205 240 280 280 280 210 250 285 285 280 190 225 240 280 295 210 226 271 295 305 190 200 235 265 265

120 150 180 210 240 270 300 330 2010-11 2011-12 2012-13 2013-14 2014-15 FRP U.P. Uttarakhand Punjab Haryana Tamil Nadu

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Indian Production and Consumption

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Carry forward sugar stocks increasing every year

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Average domestic sugar prices have been falling

14,195 15,769 12,051 12,462 20,215 29510 27,270 29,510 31,480 29,170 26,000 22,000

  • 5,000

10,000 15,000 20,000 25,000 30,000 35,000

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Current

Sugar Price (Rs./ton sugar)

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Average global sugar prices in last few months

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Cane price arrears as on 31st March ……

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What is the way forward?

  • Cane pricing policy
  • Revenue realisation of sugar mills
  • Encourage ethanol production
  • Improve revenue from by-products

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Encourage ethanol production

  • Several major benefits:

– Fuel ethanol reduces pollution – It gives higher revenue realisation to sugar mills – Better remuneration to farmers – Substitutes petrol, which can then be exported, earning foreign exchange for the country

  • Central Government has initiated steps to encourage ethanol:

– Fixed pricing policy – Price linked to cane FRP, even when crude price falling

  • State Governments need to encourage ethanol too:

– Remove Taxes/duties on fuel ethanol – Allow freer movement of ethanol – Give annual excise permits, both for intra and inter-State

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Ethanol production

State-wise production capacities:

Additionally, there are 24 stand-alone distilleries with capacity

  • f 23.73 crore litres per annum

Total ethanol production capacity in India is 223.87 crore litres p.a.

State

  • No. of

mills

Capacity

(in crore litres per annum)

State

  • No. of

mills Capacity

(in crore litres per annum

Uttar Pradesh

28 65.76

Maharashtra 50 60.60 Karnataka

17 31.20

Tamil Nadu

8 9.60

Andhra/ Telengana 14 14.85 Gujarat 8 7.86 Bihar 5 7.42 Punjab 1 1.2 Haryana/

Uttarakahnd

2 1.65 TOTAL 133 200.14

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Cogeneration of power

  • Indian sugar industry has potential to export 7500 MW power

– Current installed capacity of 4200 MW – 255 mills have cogeneration facilities

  • State-wise installed capacity is as follows

State

  • No. of

mills

Capacity (in MWh)

State

  • No. of

mills

Capacity (in MWh) Uttar Pradesh

60 1050

Maharashtra 66 1000 Karnataka

54 1000

Tamil Nadu

30 563

Andhra /Telengana 21 259 Gujarat

  • Bihar

7 89 Punjab 8 154 Others 10 108 TOTAL 255 4223

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Still some challenges to overcome…

  • Cost of transporting ethanol over longer

distances

  • Excise permits for inter-State movement
  • Taxes & duties on ethanol

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Taxes & duties on by States

State Govt. Export duty Import duty VAT Others U.P. 1.00

  • 0.95

Maharashtra 1.50 1.50 5% Municipal & octroi Karnataka 5.5% Delhi 2.00 Gujarat 3.00 Kerala 0.56 M.P. 1.00 Punjab 2.00 Rajasthan 1.00 Uttarakhand 1.10 Tamil Nadu 8% Admn Ch 0.50 A.P. 5.5%

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Supplementing ethanol availability

  • At 10% blending, requirement is 230 crore litres of ethanol

– Current contracts for only 81 crore litres – Supply-demand gap of 150 crore litres

  • B-heavy molasses can give 580 crore litres of alcohol, instead
  • f 270 crore litres currently made out of C-heavy molasses

– Addl availability of 310 crore litres, sufficient for even 15% blending

  • But mills will need around Rs.7 per litre of compensation to

divert the B-heavy molasses into ethanol

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  • Govt. incentives required
  • Either Government gives subsidy of Rs.7 per litre of ethanol

– Or remove central excise duty of 12.5%, giving Rs.5 per litre benefit – Cenvat allowed on molasses, so excise on molasses for ethanol will need to be removed

  • For 150 crore litres, subsidy will be Rs.1000 crore
  • Benefit to the country much larger

– Earn foreign exchange of Rs.7000 crore through (saved) petrol exports – Green, renewable fuel: pollution control – Farmers & domestic industry benefit: Make in India

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Graphical presentation of sugar production of top 4 States

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Cost of production vs. Average ex-mill prices

Rs./quintal 21

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Cost of Prodeuction vs. ex-mill price of sugar

3300 3200 3100 3000 2900 2800 2700 2600 2500 2400 2300 2200 2100 2000

Private Coop.

Cost of Production Rs. 3270/qtl.

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Low rates for exported power to grid

 Karnataka:

Rs.4.83 per unit

 Maharashtra:

Rs.6.07 to 6.27 per unit*

 U.P

.: Rs.4.68 to 5.67 per unit*

 Tamil Nadu:

Rs.3.67 to 4.15 per unit*

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Competitiveness of Sugar Industry

 Main reason for an uncompetitive sugar industry is  High cost of production of sugar  Which is in turn only because of an unrealistically high cane price  Sugar mills in India pay the highest cane price in the world  Urgent need to rationalise the cane pricing policy  Link the cane price to revenue realisation  Adopted in Maharastra & Karnataka  Followed world over  Use ethanol blending programme to balance surplus 24

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THANK YOU !

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