Industry Overview
The size of the global ethanol market was estimated at USD 99.06 billion in 2022 and is expected to reach approximately USD 162.12 billion by 2032, expanding at a compound annual growth rate (CAGR) of 5.1% between 2023 and 2032.
The projected value of the ethanol market in India in 2022 was USD 2.27 billion. India’s ethanol market is expected to grow at a compound annual growth rate (CAGR) of 9.16% between 2023 and 2029, with a projected value of USD 4.15 billion by that year.
Globally, India is the fourth-largest producer of agrochemicals after the United States, Japan and China. India accounts for 16-18% of the world production of dyestuffs and dye intermediates.
The size of the India agrochemicals market is anticipated to increase at a compound annual growth rate (CAGR) of 9.75% from USD 7.90 billion in 2023 to USD 12.58 billion by 2028.
The Indian chemicals industry stood at US$ 178 billion in 2019 and is expected to reach US$ 304 billion by 2025 registering a CAGR of 9.3%. The demand for chemicals is expected to expand by 9% per annum by 2025.
Company Profile
Founded in 1981, GPL is a multi-site, multi-product manufacturing company that operates in Grain processing, ethanol (biofuel)/distillery, and mineral processing make up its three primary business segments with global presence in 35+ countries, across 3 continents
Gulshan’s product portfolio comprises of starch sugars and native starches, calcium carbonate; agro based animal feed, alcohol business & on-site PCC plants. Gulshan is providing solution to diverse range of Industries & niche markets in core sector i.e., from toothpaste to alcohol, from sweeteners to paints, from paper to medicines, from plastics to personal care.
Gulshan has an impressive clientele comprising of the nation’s Top FMCG’s, Leading paint manufactures and many reputed brands.
Why We Are Studying?
- 20% Ethanol Blending by FY25 i.e 1000 Cr Lit may leads to save Rs 30,000cr
- Expanding its ethanol capacity to 810 KLPD from current 60 KLPD
- Company received an order worth Rs 572 crore to supply ethanol to OMC
- Mean Reversion likely To Happen
Business Model
Gulshan Polyols Ltd. (GPL) is an Indian company specializing in grain processing, biofuel (ethanol) production, and mineral processing. Here’s a breakdown of their business model
Manufacturing Units & Business Segment
- Grain Processing Unit
- Gujarat – (Sorbitol 70% Solution and Liquid Glucose)- This unit is largest production Center of Gulshan for export of Starch Derivatives using Corn as raw material and has attained the Star Export House certificate. Captive Power Plant Capacity:7 MW (Two turbines of 3+4 MW
- Uttar Pradesh – (Native Starch, MDP, DMH and Liquid Glucose)- company process NON-GMO Rice to make Dextrose Monohydrate, Malto Dextrin Powder, Glucose Powder, Rice Gluten for food and pharmaceutical applications.
- Company has facilities with a combined capacity of 1,81,800 MTPA for producing starch sugars and for Sorbitol with capacity of 72,000 MTPA with leading market share.
- Mineral Processing Unit
- Uttar Pradesh – (Calcium Carbonate (WGCC)) Captive power plant capacity: 8 MW .
- Himachal Pradesh – (GNCC and CCPG) This Unit is engaged in manufacturing of Ground Natural Calcium Carbonate (GNCC) in powder form and Calcium Carbonate Pigment Grade (CCPG) in slurry form by using limestone as raw materia.
- Rajasthan – (GCC – Coated and Uncoated) Unit of Gulshan manufactures different grades of Ground Calcium Carbonate (GCC) – Coated and Uncoated. It caters the demand of Polymer Industry and mainly supply in Central and southern part of India.
- Ethanol & Distillery Units
- Madhya Pradesh – (Ethanol/Extra Neutral Alcohol) Company had an existing set up of producing 60 KLPD ethanol at Chhindwara (Madhya Pradesh) since May 2020. Company is constantly suppling ethanol to OMC’s.
- The Company has successfully achieved another milestone by running commercial operations of its 500 KLPD Grain based Ethanol Plant at Boregaon, Distt. Chhindwara, Madhya Pradesh at 25% capacity utilization to begin with.
- Key Clients : Britannia,Yahoo Foods,Asian Paint,Colgate ,Wipro,Paragon,Dabour etc
- Company generates major chunk of its revenue from Domestic Market which is 90% & remaining from export.
Competitive Strength
- Softening of Key Input Costs Will Aid our Margins Going Forward
- Grain-based ethanol has a distinct cost advantage over sugarcane-based ethanol & there is Possibility of higher production capacity for native starch.
- For its new ethanol plants in Madhya Pradesh and Assam, the company will be eligible for Production-Linked Fiscal Assistance from multiple state governments.
- The decision of advancing 20% blending target by 2030 has created huge opportunities in the ethanol sector. Ethanol plants based on Starchy feedstock are going to drive the new capacities.
- The company has 3 decades of the Experience with experience Management Team.
Future Outlook
- By FY25 the Company plans to expand its ethanol capacity to 810 KLPD from current 60 KLPD.
- The company received an order worth Rs 572 crore to supply ethanol to OMC. The company will supply 89,404 KL of ethanol to BPCL, IOCL, and HPCL.
- The revenue mix will shift as a result of the ethanol segment’s capacity addition. The grain processing segment currently accounts for about 75% of revenue, followed by the ethanol processing segment at 17% and the mineral processing segment at 8%.
- After commissioning new facilities, management anticipates that the ethanol segment will generate about 50% of revenue, with the grain processing segment accounting for the remaining 50%. The segment responsible for processing minerals will eventually contribute less.
- The management expects EBITDA margin to improve in Q4 FY23 due to softening of basic raw material prices and declining coal prices which will lower our power and fuel cost.
- Assam – (Ethanol/Extra Neutral Alcohol). Assam for setting up of a 250 KLPD grain-based ethanol (distillery) unit expected to commission by the end of H2 FY24.
- Out of the INR 600 crore total CAPEX, the company has spent INR 250 crore, with INR 350 crore still outstanding. By the fourth quarter of this fiscal year, the ethanol plant should be operating at maximum capacity.
- The Company has entered into long term Contract with Western Coalfields Limited for procurement of Coal for its plant at Madhya Pradesh for 84000 metric ton p.a to get stability in coal price procurement.
- Companies 500 KLPD Grain Based Ethanol manufacturing unit has started commercial operations and now successfully running at 25 % capacity utilization, which should go upto 50% capacity utilization in coming quarter
Risk
- Over the last two quarters, the grain processing segment’s margins have been impacted by the increase in grain and coal prices.
- lacking a reliable raw material source. Broken rice was recently discontinued by FCI, even for the 60KLPD old plant. They recently capitalized a 500 KLPD plant, so if this issue is not resolved quickly, profitability will be worse.
- Due to rice supply halted by the Food Corporation of India (FCI) for ethanol production, the ethanol segment witnessed a marginal disruption in its operations.
- Delay in Contract /over capacity of Ethanol
Dis: Educational Purpose Only***
Liink :https://www.youtube.com/watch?v=rTRz0WbGui4&feature=youtu.be
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