If the recent price hike of sugar has made you think about the profitability of an Indian Sugar Mills, then perhaps you should think again. While the price hike was inevitable, yet there were other factors too that have impacted the industry. However, there are many farmers in India who still depend on the milling facilities for their livelihood. The industry is still thriving and so is the country as a whole. This article will discuss the significance of the ethanol plant and the sugar mills in India.
The analysts said that the demand for ethanol blend in India is likely to increase in the coming years and probably touch the billion litres mark. The demand for ethanol blend in the USA has also shot up in the recent past, as has the need for vegetable oil for blending. Sugar mills get orders to supply 302 cr litres of ethanol per year. The demand for the vegetable oil is believed to be driven by the increased consumption of food and the resultant increase in the demand for meat as well.
According to the analysts, the government is investing a lot in research and development of bio-fuel and that is why it is concentrating on the sugar mills to produce ethanol blend. The Analyst said that the present crop is not as good as the years before. Hence, investing in the sugar mills will be a worthwhile decision. The government needs the sugar industry and is willing to invest in it, but it needs to be assured of the return on its investment.
The analysts have estimated that there may be further investments required in the coming years as the demand for ethanol is increasing by the day. In addition, the price of sugar has gone up over the past few months and is now more expensive than rice. The analysts are however, hopeful that the prices will come down once the demand for it increases. The demand is expected to touch the million barrels per day level in the next few years. The rise in the prices has encouraged many small scale traders to start investing in the industry. These small scale traders are known as ‘micro-mills’ and they get orders from across the country for the supply of ethanol blend.
The ethanol rally is being led by the sugar mills across the country. There are investors across the globe who are buying the corn sweetening products as the prices are cheap and the profit margin is high. However, there are experts who believe that the rally will end sooner rather than later because the corn is in short supply. This means that the prices cannot go much higher.
The demand for ethanol will continue to grow faster than the supply. The prices of Ethanol in the U.S. has dropped to its lowest in decades. The demand is so high that the corn refining companies are having trouble keeping up with it. The ethanol plants also need the corn storage capacity to keep the stocks up to date. The ethanol production facilities are now turning out to be a gold mine for countries in South America, Australia and India. The new found gold in ethanol production, is proving to be the perfect opportunity for the small scale investors as well as the multinational corporations to invest in India, China, South America and Australia.
