A simple yet insightful observation shared by Mr. Anil Goel in a recent interview (CFA Society) is that for sugar companies involved in ethanol production, both raw materials and fuel come at no extra cost (molasses), unlike in the case of pure-play ethanol production who are subject to market forces on both raw materials (grains) as well as fuel cost. Given ethanol cost is fixed for a period, this seemingly straightforward yet crucial point underscores the distinct economic advantage enjoyed by sugar companies in this context.
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