Dhampur Sugar Mills Board approves expansion of capacity of distillery at Asmoli unit
The Board of Dhampur Sugar Mills has approved the expansion of the capacity of the distillery by 100,000 LPD at Asmoli unit. The capacity will now increase from 150,000 LPD to 250,000 LPD. This has increased the capacity of the company from 400,000 LPD to 500,000 LPD. The Dhampur Sugar Mills Ltd is betting big on the distillery segment to drive growth, and continues to expand its capacities.
With capacity utilisation at 85% already, this is a positive development for the company and it will boost the overall revenue growth significantly going ahead.
India has continued to see a sugar surplus over the past few years putting pressure on sugar realisations. The surplus is likely to continue in the sugar season this year. The sugar season in India is October to September. Starting with 10.8 Million Tonne of opening inventory ( carried forward from the previous year, sugar production is estimated to be at 31.5 MT in the current sugar season against the demand of 26 MT. Clearly, supplies are outpacing demand putting pressure on sugar realisations. Meanwhile, there are concerns about rising sugar cane procurement pricec. The State Advised Price (SAP) for U.P is yet to be announced for current sugar year and any upside will lead to rising production costs too.
Not surprisingly the investments in Ethanol capacities is looking more optimistic. The company derives better realisations too. For Ethanol (B-Heavy and C-Heavy derived), the company had seen average realizations at ₹50.47 per barrel in Q2 FY21 as compared to ₹40.69 per barrel in Q2 FY20 Average realizations for chemicals stood at ₹57.58/Kg in Q2 FY21 as compared to ₹54.74/kg in Q2 FY20
The company had sugar crushing capacities of 45,500 TCD (tonne of cane per day) during the first half FY21. It still derives 79.5% revenues from sugar segment. Nevertheless, Ethanol and chemicals segment contributed 45 per cent to profit before interest and tax (PBIT) higher than 39% contributions to PBIT by sugar sales.