Dhampur Sugar Mills Ltd is one of the leading integrated sugarcane processing companies in India. It was incorporated on 22nd May 1933 at Lucknow. Its continuous and often pioneering efforts to harness the full potential of sugarcane has enabled company to expand their portfolio beyond sugar to include renewable power, fuel ethanol, alcohol, extra neutral alcohol, alcohol based chemicals and bio fertilizers. Dhampur’s pioneering efforts has resulted in the introduction of new technologies like fibrizors, pressure feeders, pressure evaporation system with falling film type evaporator bodies, vertical continuous pans, 150 ata bagasse fired boiler etc, becoming the mainstay of sugar technology in India. Dhampur’s sugarcane co-generation capacity is one of the largest in the country and it has perhaps the highest ethanol manufacturing capacity relative to its cane crushing capacity, in the country. It is also the first and the largest producer to refined sulphurless sugar in India. Dhampur owns and operates five integrated sugarcane crushing complexes and has a capacity:
i) To crush 45,500 metric tonnes of cane per day.
ii) To refine 1,700 metric tonnes of sugar per day.
iii) To generate 209 MWH of renewable power.
iv) To export upto 125 MWH of renewable power to grid.
v) To produce 3,00,000 liters of alcohol/fuel ethanol per day.
vi) To produce 140 tonnes of ethyl acetate.
vii) To produce 20 tonnes of liquid carbon dioxide per day.
viii) To produce 1000 litres of liquid bio-fertilizers per month.
ix) To produce 20,000 tonnes of bio fertilizers per annum.
Businesses:
1) Sugar: Dhampur has a crushing capacity of 45,500 metric tonnes of cane per day. Dhampur has a capacity to produce 1700MT per day of refined sugar. Dhampur’s refined sugar is also sold in one and five kilograms consumer packs under the brand “ Dhampure Sulphurless Sugar”. Dhampur has the ability to produce refined sugar both during the season where in the sugar from the sugarcane is first used to manufacture raw sugar and subsequently refined to produce refined supphurless sugar and in off season when coupled with cogeneration dhampur can use raw sugar procured from outside to produce refined sugar.
2) Power: bagasse, the residual fiber of sugarcane after crushing and extraction, is a valuable by product generated during the sugar manufacturing process. It has high calorific value and is therefore used to generate steam and thereby electricity, which is a conventional thermal alternative and eliminates emission of green house gases. In 1994, dhampur was the first sugar company in India to start eco friendly cogeneration at one of its units, with a low project outlay as compared to conventional power in order to meet the energy requirements of the sugar factory. However, dhampur was first to realize the tremendous potential it had towards reducing the power deficit, by supplying to the grid, thereby contributing to the bio-energy effort undertaken by the country. The company’s combine co-generation capacity stands at 209 MWH. Dhampur was one of the first in the sugar cogenerater in India to install and operate 105kg/cm 2 boiler and turbine, which has increased efficiencies in bagasse usage and made it perhaps the most efficient cogeneration unit in the world. Dhampur was the first company in Uttar Pradesh, which has allowed export of power under open access.
3) Ethanol: dhampur sugar produces 3,00,000 liters of ethanol per day, rectified spirit 3,00,000 liters per day, extra neutral alcohol 1,40,000 liters per day, special denatured spirit 3,00,000 liters per day. Ethanol is a generic name for ethyl alcohol which can be produced by fermenting sugarcane molasses or juices. It is a volatile, flammable and colourless liquid. Ethyl alcohol has three principle usage: i) Portable- Portable alcohol is used varying ratios and blends in the production of liquor. There are two main grades of portable alcohol and they are: a) Rectified spirit or RS, which has a purity of 95%. b) Extra Neutral alcohol is produced by redistilling RS and is used in production of portable. ii) Industrial- Industrial alcohol is produced by denaturing alcohol with bitterants and thereby making it unfit for human consumption. This form of alcohol is called special denatured spirit. iii) Fuel ethanol- This grade of alcohol is also termed as Anhydrous alcohol. Usage of ethanol blended gasoline began in the late 1970s. Environmentally, the use of ethanol blends has assisted in reducing carbon monoxide emissions. In the United states, one out of every eight gallons of gasoline sold contains ethanol. Most of this ethanol is purchased as blends of 10% ethanol amd 90% gasoline, known as E10, and is used as an octane enhancer to improve air quality. In India we are presently using E5 that is, 5% ethanol blend with gasoline but a government recently order for 10% blend. Most sugar companies in India are evolving into integrated players as diversification into distillery, ethanol and power has become possible. This has improved the demand for molasses and ensure better economics. The government of India has made blending of 5% ethanol in motor vehicle fuels, compulsory all over India. This directive has provided sugar mills the opportunity to implement forward integration. A 5% ethanol blend on all India basis would require around 1330 million liters. The current installed capacity would be adequate to meet this requirement as also for E10 blend, even after fully meeting the requirement of the chemical industry and potable sectors, as India is the second largest producer of sugar in the world. Ethanol blended fuels are advantageous due to the following characteristics:
a) Renewable source of energy, b) Use molasses which is readily available and is by-product of the sugar process. c) Diversifies the sugar industry. d) Utilizes industrial installed capacity, improving the economy of the industry. e) Energy security, trade balance and risk reduction. f ) Reduce use of gasoline and ensures less dependence on imports of oil. g) market opportunity for agricultural crops. h) Rural economic development and boost to the agricultural sector. i) Environmental benefits. j) Displaces dangerous and environmental damaging components in gasoline, such as benzene.
4) Alcochem: Ethyl Acetate 140MT/day. Ethyl acetate is the ester of ethanol and acetic acid. This colorless liquid has a characteristic sweet smell and is used on a large scale for use as solvent.
5) Industrial Gases: Carbon Dioxide 25 MT/day. Carbon Dioxide is a co-product of distillery fermentation house, recovered and purified to 99.9%
6) Bio Fertilizer: Liquid bio fertilizers 1000 liters per day
7) Organic Fertilizer: 20,000 metric tonned per annum.
Company has five production facalities with present capacities of:
1) Asmoli :
Sugar- 9,000 metric tonnes of cane per day, renewable power- 44MW per hour, Distilley overall- 1,00,000 liters per day, ethanol- 1,00,000 liters per day,extra Neutral Alcoho- rectified spirit- 1,00,000 liters per day, Industrial Alcohol – 1,00,000 per day, Bio Fertilizer- 5,000 tonnes per annum.
2) Dhampur:
Sugar- 15,000 MT of cane per day, Renewable Power-65 MW per hour, Distillery- overall 2,00,000 liters per day, ethanol- 2,00,000 liters per day, extra neutral alcohol- 50,000 liters per day, rectified spirit- 2,00,000 liters per day, Industrial alcohol- 2,00,000 liters per day, alco chemicals- 140 tonnes of ethyl acetate per day, industrial gases- 20 tonnes of CO2 per day, Bio-fertilizer- 15,000 tonnes per annum.
3) Mansurpur:
Sugar- 8000 MT of cane per day, renewable power- 33MW per hour
4) Meergang:
Sugar- 5,000 MT of cane per day, Renewable power-19 MW per hour.
5) Rajpura:
Sugar- 8,500 MT of cane per day, renewable power- 48MW per hour, Liquid Bio Fertilizer- 1,000 liters per day.
Over the last five years, the global sugar manufacturing industry declined by 1.2% to reach US$73 billion. The number of businesses engaged in this sector has declined by 0.3%. The global sugar market is course for a shortfall of 1.36 million tonnes for 2019-2020. Key sugar producing countries during 2018-2019 (October –september) Brazil: Brazils production fell by 8.3 million tonnes to 30.1 million tonnes due to lower yields and more sugarcane being diverted towards ethanol production as a record global sugar supply weakened prices. Exports are projected to drop to 19.6 million, lowering Brazils market share of exports to 34% (down from a five year average of 45%). Stocks and consumption both remained unchanged. Thailand: Thailand production decline to 9,00,000 tonnes to 13.8 million tonnes due to lower yields of sugar extraction rates due to lower than expected precipitation levels. Consumption fell slightly due to lower industrial demand in response to a new sugar excise tax being imposed on beverages. Capitalizing on the record production levels during the last year, exports reached a record of 11.5 million tonnes, bringing stocks down to 6.9 million tonnes. European Union: production fall by 1.4 million tonnes to 19.5 million tonnes following a return to average yields compared to last year record. Because of lowered supplies, exports fall by 6,00,000 tonnes to 3 million tonnes. With imports and consumption levels staying unchanged , stocks will tighten.US production went down by 3% to 8.2 million tonnes. Pakistan: production went down by 9,00,000 tonnes to 6.5 million tonnes. Russia: production went down by 4,00,000 tonnes to 6.1 million tonnes. Australia: production went up by 4% to 5 million tonnes. Indian sugar balance sheet, 2018-2019:
| Particulars | Figures (Lakh Tonnes) |
| Opening Balance ( as on 1st Oct 2018) | 107 |
| Estimated Sugar Production | 330 |
| Sugar Availability during the season | 437 |
| Estimated Sugar consumption | 260 |
| Estimated Exports | 30 |
| Closing Balance (As on 30th September 2019) | 147 |
| India’s sugar Production & Consumption | 2011-12 | 2012-13 | 2013-14 | 2014-15 | 2015-16 | 2016-17 | 2017-18 | 2018-19 |
| Sugar Production (mn) | 263 | 251 | 244 | 283 | 251 | 203 | 325 | 330 |
| Sugar Consumption (mn) | 226 | 228 | 242 | 256 | 248 | 245 | 254 | 260 |
Minimum support prices hike will boost realizations and free up Rs 3,000 crore for payment towards cane arrears. While the MSP remains below the cost of production of Rs 34 per kilogram for Uttar Pradesh and Rs 33 kilograms for Maharashtra, realization from allied segments such as distillery and cogeneration will continue to be the key profit drivers such for integrated sugar mills. After the central government raised sugar minimum floor price to Rs 3,100 per quintal from Rs 2,900 per quintal, the Maharashtra state co-operative bank, the apex co-operative bank in the state increased the valuation for sugar by Rs 100 per quintal to Rs 3,100 per quintal helping cash strapped mils. Consequently, margins were pegged tom improve by 300-400 bps for the sugar season (October 2018 to September 2019). Government doubled import duty on sugar to 100% from 50% and scrapped the 20% export duty introduced minimum indicative export quotas for enhancing sugar exports government announced a Rs 8,500 crore package including soft loans worth Rs 4,400 crore with an interest subvention of Rs 1,332 crore. For enhancing ethanol capacities government announced assistance of Rs 13.88 per quintal of cane crushed for 2018-2019, costing over Rs 4,100 crore to the exchequer . Government allocated Rs 1,200 crore for creation of 30 lakh tonnes of buffer stock. Government planned to mobilize a second tranche of soft loans worth Rs 7,500 crore in bid to boost ethanol production capacities. Government approved a 25% hike in the price of ethanol produced directly from sugarcane juice for blending in petrol to cut surplus sugar production and reduce oil imports. The central government allowed sugar mills to manufacture ethanol directly from sugarcane juice or an intermediate product called B-heavy molasses. The decision was taken to help mills divert cane juice for ethanol manufacturing during surplus years. In India Ethanol is traditionally made from C-heavy molasses. Currently India has an ethanol production capacity of Rs 300 crore litres, including 30 crore liters from grain based ethanol. During the last season, average realizations from ethanol stood at Rs 37.5 a litre. Although the cabinet committee on Economic affairs made the 10% blending rate mandatory in 2015, even 6% blending rate has proven to be impossible to achieve. Currently 4-5% of ethanol is mixed, which is significantly lower than the 25% mandated in Brazil. In order to achieve a blending target, there is a requirement of 3.3 billion liters of ethanol, which indicates the enormous headroom for growth available to Indian Sugar mills. Out of the 3,292.61 million liters of ethanol required by oil manufacturing companies for blending with petrol, sugar mills offered 3,137.32 million liters. Oil manufacturing companies finalized a tender to lift 2.593.37 million liters of which 11.61% or 301.10 million liters has been supplied so far. With ethanol production capacities being set up at an accelerated pace, another 200 crore liters of ethanol is expected to be produced in the next two years, reaching 450-500 crore liters by 2020-2021.
| YEAR | REQUIRED BY OMC | OFFERED BY SUGAR MILLS | FINALISED BY OMC | PROCURED |
| 2014-15 | 1,559 | 1,311 | 887 | 674 |
| 2015-16 | 2,656 | 1,473 | 1,316 | 1,110 |
| 2016-17 | 2,809 | 1,172 | 807 | 665 |
| 2017-18 | 3,136 | 1,763 | 1,588 | 935 |
| 2018-19 | 3,300 | 3,100 | 2,500 | 301 |
India looks likely to produce 26.5 million tonnes of sugar this year, half a million tonnes more than a previous forecast of a leading producers body, exacerbating surplus supplies in the world’s biggest producer of the sweetener. Bountiful sugar output in India, also the world’s number 1 consumer, in the current 2019-20 season will leave around 6 million tonnes of surplus for the next year beginning . Mounting cane dues and mills deteriorating financial condition forced the government to approve a subsidy of Rs 10,448 rupees a tonne for export of 6 million tonnes in the 2019/20 season. Indian government has decided to give subsidies for exports irked Brazil, which vies with India as the world’s biggest sugar producer. Brazil has taken India’s subsidies for sugar exports to the world trade organization, saying they are not in line with WTO rules and would hurt free competition in the global market. Other than giving incentives for exports, the government also created a buffer stock of 4 million tonnes of sugar in an attempt to suck the extra supply out of the domestic market and prop up local prices. Carry over stocks on October 1, when the next 2020-2021 season begins, are expected at around 10 million tonnes, down from 14.5 million tonnes in the previous year. Factoring in the October 1, 2020 inventories and local consumption, and assuming that the government would again create a buffer stock of 4 million tonnes, India’s 2020-2021 sugar surplus would stand at 6 million tonnes which the country would try to sell on the world market. India’s sugar sale in both domestic and overseas market have taken a beating in view of the nationwide lockdown imposed by the government for preventing the spread of the deadly COVID-19. Domestic sugar mills are facing impediments in supplying ethanol to the oil marketing companies (OMC) for mixing in fuel, since the demand for petrol and diesel has come down drastically following corona virus lockdown. Due to dip in demand for vehicular fuel, several OMC deposits are witnessing slower petrol offtake with the result that the mills are unable to supply ethanol, a sugar by-product, owing to the paucity of storage and mixing space with such deposits. In past few quarters sugar mills were investing in a big way as a measure of diversification of product base. Since, the ethanol requisition was contracted for by the OMC targeting 10% fuel mixing ratio, the reduction in the fuel demand has impacted ethanol requirement too. The Indian sugar Mills association (ISMA) has asked the OMCs to reallocate ethanol to other depots, which have ready storage space or were already deficient in ethanol for fuel mixing. There are depots in several states, including Madhya Pradesh, Jharkhand, Chattisgarh, Rajasthan, Odisha, West Bengal which either have zero or very little ethanol supply owing to short supply. Therefore they have requested the OMCs to reallocate the ethanol, else its distilleries would have to close down since sugar companies have limited ethanol storage spaces. With falling fuel demand and therefore ethanol demand due to lockdown called to slow the spread of COVID-19, sugar mills in Uttar Pradesh want OMCs to call a third tender after the first two tenders failed to secure sufficient quantities of pre coronavirus demand. Only 1.85 billion liters of ethanol will likely to be contracted after the completion of current tender processes compared to 5.11 billion liters originally sought for blending. Exports slowing down and not much domestic lifting of sugar by institutional consumers has significantly undermined the ability of mills to make cane payments. Uttar Pradesh’s factories have till now crushed cane worth roughly Rs 32,000 crore in the 2019-2020 season, but managed to pay only Rs 16,456 crore. The state government, announced a scheme of mills giving willing farmers one quintal each of sugar for the next three months, in lieu of cane payments due to them. Maharashtra mills, too, had paid only Rs 11,310 crore out of their total cane dues of Rs 12,539 crore. The industry’s problem is not from sugar alone. The lockdown has reduced offtake of alcohol, be it potable liquor or ethanol for blending with petrol. UP mills, according to the states’s cane commissioner Sanjay Bhoosreddy, may produce around 100 crore liters of ethanol this season, compared to 51.5 crore liters in 2018-2019. But with cars and two wheelers not running, oil market companies aren’t very keen to procure ethanol. Sinking crude prices appear an even bigger factor. When oil prices are high, sugar mills tend to divert cane for making ethanol that is used for blending with petrol. Since demand in oil has gone down, rates of oil has also fallen down. And demand of oil is expected to be down for longer period of time, so rates of oil will also remain low for longer period of time. So sugar mills and sugar industries will have to face bad time ahead. Company’s income from operations increased to Rs 2,954.06 crore in March 2019 from Rs 1,510.97 crore in March 2012. Company’s net profit increase to Rs 250.92 crore from Rs 29.63 crore in March 2012. The net worth of company increased by 22% from Rs 1,001.30 crore as on March 31, 2018 to Rs 1,224.70 crore as on March 31, 2019. Long term debt of the company increased by 31% from Rs 518.35 crore as on March, 2018 to Rs 679.35 crore as on March 2019 owing to soft loan at concessional rate sponsored by state government. Cash and bank balances of the company stood at Rs 13.18 crore as on March 2019. Since India has surplus sugar and , oil demand and prices of oil will stay at lower levels for longer period of time, so I prefer not to buy DHAMPUR SUGAR LIMITED at CMP of Rs 98.30 on 6th May 2020, till oil demand and oil rates does not recover.