Faced with cane supply constraints in the last two years, sugar mills in the country are planning to set up independent refineries to process imported raw sugar. A majority of them is planning refinery facilities near ports in order to avoid political hurdles like in Uttar Pradesh (UP).
Delhi-based sugar producer Simbhaoli Sugars is planning to set up a 1,000 tonnes per day (tpd) raw sugar refining facility at Gandhidham, barely 2-km away from Kandla port in Gujarat. The company proposes to invest Rs 180 crore on the plant. The company currently has most of the cane crushing, distillery and co-generation facilities in UP. Now, it is planning a refining facility for the first time outside the state to avoid any political rift with the government.
Today, the UP government banned processing of imported raw sugar in the state until the end of the current crushing season.
The state government fears that mills will reduce purchases of cane from farmers if they are allowed to process imported raw sugar during peak season. This will also ease availability of sugar in the state thereby, reducing farmers’ income. Farmers in the state get Rs 260 a quintal for cane supplied to mills.
The state’s decision has jeopardised supply of sugar in the country as mills’ now fully depend on local cane supply from farmers which in any case is lower this year due to reduced cane area. During the current season, sugar mills’ operating capacity has declined to 60-65 per cent despite peak harvesting season being on. When cane area is normal, sugar mills are operated with over 100 per cent of operating capacity during this time around.
Justifying the need for such refinery near international harbour, Sanjay Tapriya, director-finance, Simbhaoli Sugars, said, “We are planning to maintain the cycle of the sugar season when the supply constrains emerge after every three years.”
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“In case, supply remains smooth in India, we will focus on exports in deficit countries such as Sri Lanka, Pakistan and the West Asia. But, when demand surpasses the supply we will divert our output to domestic market,” Tapriya said.
The Kolkata-headquartered Balrampur Chini has proposed to install balancing equipment on its 500 tpd of refining facility at Hydergarh, Uttar Pradesh, which is expected to entail in investment of Rs 5-6 crore.
Since, the plant already exist, we require some specific equipment to commence refining, said Kishore Shah, Chief Financial Officer of Balrampur Chini.
Murugappa Group flagship firm EID Parry has also formed a joint venture with Cargill International SA to set up a port-based standalone sugar refinery in Kakinada, Andhra Pradesh, at an estimated investment of Rs 3.25 billion ($72 million).
With an initial capacity of 600,000 tonnes per annum, expandable to 10,00,000 tonnes, the refinery would be the largest in the south-Asian region. In the joint venture, EID Parry will hold 51 per cent, while the remaining 49 per cent of equity will be held by Cargill International.
According to company sources, the plant is expected to commence commercial production soon.
Another sugar and ethanol producer, Shree Renuka Sugars is planning up a refinery to process and refine raw imported sugar near Kandla port in Gujarat.
The company’s proposed 3,000 tpd will entail an investment of Rs 200 crore.Industry officials termed it as part of a long-term strategy which will benefit the country.