XL all set for ethanol foray

XL, which is targeting a 300 per cent increase in turnover from Rs 250 crore in the last fiscal year to about Rs 750 crore in the current fiscal year, expects to shore up its topline and bottomline with the start of its ethanol division in Nanded on the border of Maharashtra and Andhra Pradesh.

The ethanol plant, which has been put up by XL, has the capacity to produce 1,50,000 litres of ethanol per day and the oil refining companies are expected to be the biggest customers of the company.

"Alfa Laval has provided us the technology know-how and we expect to participate in the tenders floated by the oil companies for the supply of ethanol," Kumar said.

XL may benefit from the Union government's guidelines that currently stipulate that petrol being sold in certain regions of the country should have a 5 per cent ethanol content.

This is expected to be upwardly revised to 10 per cent in the future. XL has entered into a contract farming arrangement with farmers in the Nanded area for growing sweet sorghum in about 20,000 acres at the rate of about Rs 400 per tonne of sweet sorghum.

"The ethanol business is expected to give us margins in the range of 25 per cent unlike the telecom business which gives us margins of only about 5 per cent," Kumar pointed out.