Unsold hand sanitizers stock is new headache for Distilleries and Sugar Mills
Sugar mills in Maharashtra, which had started manufacturing hand sanitizers, are now unable to sell their produce. Lack of knowledge of retail marketing has proven to be the biggest hurdle for mills even as demand for hand sanitizer surges amid the coronavirus pandemic.
Soon after the first coronavirus case was identified in India, panic buying of hand sanitizers saw them flying off shelves. Prices skyrocketed, which forced the central government to put them in the list of Essential Commodities items to prevent hoarding. Manufacturers jacked up their production capacity to meet the demand.
Chemically, hand sanitizers contain more than 70 per cent ethanol and so, sugar mills with their in-house ethanol plants were the first to diversify into production of hand sanitizers.
Ethanol, which is more than 99.95 per cent pure alcohol, is a by-product of sugar production and mills sell this to oil marketing companies as a fuel additive. For the last two years, the central government is promoting ethanol production as an alternative to sugar to help mills increase their liquidity.
Since early April, mills had started accruing licences from the excise commissioner to start production of hand sanitizers for retail and wholesale markets. The combined capacity in Maharashtra is at least 20 lakh litres per day with both cooperative and private mills taking part in the production.
While mills had shown alacrity when it came to production of hand sanitizers, the marketing aspect has put them in a bind.
Estimates by the sugar commissioner’s office show that till date, as many as 40 lakh litres of hand sanitizers were manufactured in the state of which 12 lakh litres still lies unsold, mainly with cooperative mills.
Cooperative millers admit they have failed to crack the retail sales markets, which is necessary to offload hand sanitizers. Unlike sugar or ethanol, where traders come to the mills in response to tenders, hand sanitizers has a separate marketing chain which these millers had failed to crack.
Early in April, the Maharashtra State Cooperative Sugar Factories Federation had written to the health secretary seeking directions to district collectors to direct, primary health centres, government hospitals and corporation hospitals to buy directly from cooperative mills. The mills were also asked to enter into rate contracts with the government-run health facilities to sell their hand sanitizers. The central government had capped the price at Rs. 500 per hand sanitizer. However, till date nothing concrete has happened in this regard.
On the other hand, private mills have managed to fare relatively well in marketing their produce. Bhairavnath B Thombare, president of the West Indian Sugar Mills Association (WISMA) — the apex body of private millers in the state — said retail sales of hand sanitizers can prove to be a good source of revenue for sugar mills. Thombare’s Natural Sugar and Allied Limited — which runs two units in Osmananad and Yavatmal — had produced 70,000 litres of sanitizers which was sold across Marathwada. “It does require a separate marketing channel but can prove to be a good source of revenue in the days to come,” he said.