Market is nervous in spite of the fact that the sugar industry is not very much perturbed. My take from the latest news flow and the ministry are as follows :
(1) Due to erratic rain this season, the Govt forecasts less production of sugar
(2) Election is not too far and increased sugar price due to less production could be an issue.
(3) India’s 50-65% Ethanol is produced from B heavy molasses which will continue. no stoppage here.
Moreover,there is no restriction on production of ethanol from C-heavy molasses, a sugar processing byproduct with very low sugar content, and that the government will encourage sugar mills to increase ethanol production from this feedstock- C molasses
.
(4) The ethanol direct from sugarcane juice / sugar syrup is stopped temporarily and it would be reviewed every month…
(5) in the meantime , the govt has clarified that there is no change in ethanol blending program.
The shortfall could be met by ethanol production from B/ C molasses , Maize and other 2G sources.
So Praj performance may not get impacted anyway as long as the OMC’s continue their off take of ethanol if made from b/ c molasses and 2G sources, Praj also makes 2G ethanol plants.
Discl: Invested for long term. trying to add more at this correction.
This is not a buy and sell recommendation. please do your own assesment before investing.
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