Sugar Stock Below Rs 10: Poised to Leverage Ethanol Production Capabilities to Achieve India’s Blending Targets

India's commitment to achieving its 20 per cent ethanol blending target by 2025-26, surpassing the original 2030 goal.

During the financial year 2024-2025, Davangere Sugar Company Limited is set to take a significant step in ethanol production by focusing on maize and other damaged grains as primary feedstocks until the sugarcane crushing season begins in October 2024. This strategic move aligns with the government's broader push for diversified biofuel production, encouraging sugar mills to explore alternative sources beyond traditional sugarcane. At a recent event organized by the National Federation of Cooperative Sugar Factories (NFCSF), Union Home Minister Amit Shah emphasized India's commitment to achieving its 20 per cent ethanol blending target by 2025-26, surpassing the original 2030 goal. Shah highlighted the dual benefits of this initiative: reducing the nation's crude oil import bill and mitigating environmental impacts.

Shah urged cooperative sugar mills to adopt a forward-thinking approach, advocating for the exploration of non-traditional feedstocks such as maize and bamboo. In response, Davangere Sugar Company Ltd. plans to procure larger quantities of maize from across the country, supported by favorable government policies and the establishment of a National Coordinating Agency (NAFED). This agency will facilitate the procurement of maize from farmers, ensuring a steady supply for ethanol production and enabling continuous, year-round operations.

The shift towards grain-based ethanol production has been gaining momentum, with government policies playing a crucial role in its expansion. In FY2023-2024, approximately 37 per cent of the country's ethanol was derived from grain. By FY 2024-2025, this figure is expected to rise to around 51 per cent, underscoring the growing importance of grain in India's ethanol landscape.

Beyond ethanol production, Davangere Sugar Company Ltd. is actively fostering relationships with local farmers by providing subsidized sugarcane seeds and other agricultural inputs. The company has also initiated a plantation subsidy program aimed at supporting farmers in achieving higher yields. With a target of cultivating 15,000 acres of sugarcane for the upcoming season, the company is committed to revolutionizing sugarcane cultivation practices. This includes expanding into regions traditionally not associated with cane cultivation, thereby securing a sustainable raw material supply and delivering socio-economic benefits to local farmers.

The company has expressed its dedication to ensuring that farmers in these regions receive assured and timely returns on their produce. By offering financial assistance and loans, Davangere Sugar Company Ltd. empowers farmers to adopt modern agricultural practices, access quality seeds, and acquire essential equipment, ultimately enhancing their productivity and profitability.

Since its inception in 1970, Davangere Sugar Company Limited has been a key player in Kukkuwada, Karnataka. The company has continually evolved, expanding its product portfolio beyond sugar to include sustainable power and ethanol solutions.

Davangere Sugar Company Ltd., with its refinery and high-capacity ethanol facility at the forefront of its operations. The company's commitment to Zero Waste and Green Energy principles is complemented by its efforts to promote local livelihoods and create significant employment opportunities.

The company's expansive sugar plant, with a capacity of 6,000 TCD (Tonnes of Cane Crushed per Day), spans approximately 165 acres and includes five large warehouses capable of storing 60,000 tonnes of sugar. These robust storage and distribution capabilities ensure a seamless supply chain. Additionally, with a 65 KLPD (Kilo Litres Per Day) ethanol production capacity and a 24.45-Megawatt co-generation power plant, Davangere Sugar Company Ltd. embodies its dedication to sustainable and eco-friendly energy solutions. The stock of Davangere Sugar Company trades at Rs 7.19 on NSE as of Wednesday.

Disclaimer: The article is for informational purposes only and not investment advice.