1. Continuing to diversify product offerings and expanding our manufacturing capabilities.
We currently manufacture a range of products in the value chain from sugarcane, primarily consisting of Bio-based Chemicals, Rectified Spirits and Ethanol, sugar and power. The Bio-based Chemicals currently manufactured by us include ethyl acetate, bio-ethyl acetate, MPO, 1,3 butylene glycol, crotonaldehyde, acetaldehyde, acetic acid, bio-acetic acid and paraldehyde which are downstream products of Rectified Spirits and Ethanol.
We also currently sell sugar and certain other food products under the “Jivana” brand. We intend to leverage our manufacturing capabilities and the reputation of our Company and the Somaiya group to augment the scale of sale of such products, while also expanding the brand to include additional products in synergy with the current product portfolio.
We also intend to expand the installed capacities at our Manufacturing Facilities to support our growth initiatives.
Sameerwadi Manufacturing Facility
We propose to expand sugarcane crushing capacity at our Sameerwadi Manufacturing Facility from 15,000 TCD to 18,000 TCD to support our proposal for expanding our capacity for manufacturing rectified spirits from 400 KLPD to 600 KLPD and ethanol from 380 KLPD to 570 KLPD.
We are evaluating various avenues, including developing capabilities for utilising grains (including maize) as feedstock in the production of Rectified Spirits and Ethanol. We believe that such increase in the installed capacities at the Manufacturing Facilities will enable us to increase our scale of operations and avail benefits of economies of scale.
Sakarwadi Manufacturing Facility
We propose to expand our manufacturing capacity for various chemicals at our Sakarwadi Manufacturing Facility. We have received environmental clearance to expand our existing capacities and to manufacture a wider range of speciality chemicals including cellulose, MCC, xylitol, EVE, furfural, lignosulphonate and bio-composite.
We propose to establish a plant for the manufacturing of EVE at the Sakarwadi Manufacturing Facility, which will be India’s first manufacturing plant of EVE .
Additionally, we constantly evaluate opportunities to diversify our product portfolio by adding new products (including downstream and value-added products) which are synergistic with our existing products. We believe that we are well poised and technologically equipped to add additional products in the value chain.
For instance, we intend to diversify our Bio-based Chemical offerings by utilising bagasse to manufacture xylitol, cellulose and its derivatives (including MCC).
We believe that our relationships with existing customers, established track-record, access to raw materials and quality certifications will help us to successfully commercialize such products and achieve optimum utilization of increased capacities.
2. Implementation of additional measures for improving feedstock security and increasing value derived from feedstock.
Sugarcane is used as feedstock in the manufacturing of a range of products in the value chain. We have a large network of farmers in Karnataka, from whom we source sugarcane and long-standing relationships with a large number of farmers. However, given the critical role played by the farmers, we intend to introduce additional measures and strategies to improve and protect feedstock security.
We have introduced and shall continue to introduce and implement farmer related initiatives including providing technical guidance on certain farming practices including selection of varieties, soil, water testing and fertilizers, providing fertilizers, pesticides and irrigation materials, facilitating easier procurement of agricultural inputs by the farmers, organizing farmer training programmes and field visits and providing agricultural inputs to farmers against their future cane supplies.
We are also evaluating the production of 2nd generation ethanol, which is based on biomass such as sugarcane bagasse, wheat straw, rice straw and crop stubble that can be converted into ethanol.
We also aim to diversify feedstock used in the production of Rectified Spirits and Ethanol. Towards this end, we are evaluating various avenues, including developing capabilities for utilising grains (including maize) as feedstock in the production of Rectified Spirits and Ethanol.
We believe that such measures would ensure better availability of feedstock and reduce the volatility of the prices we are required to pay for feedstock.
We also intend to leverage our manufacturing capabilities and expertise, to improve the value derived by us from feedstock by developing bagasse-based speciality chemicals and 2nd generational ethanol, and also developing additional downstream or upstream products to ensure complete utilisation of feedstock and by-products of the feedstock. Additionally, we also intend to diversify our Bio-based Chemical offerings by utilising bagasse to manufacture xylitol and cellulose and its derivatives (including MCC) and utilising Acetaldehyde and Ethanol as raw materials to produce EVE. We have received environmental clearance to expand our existing capacities and to manufacture a wider range of speciality chemicals including cellulose, MCC, xylitol, EVE, furfural, lignosulphonate and bio-composite.
3. Increasing the share of business of existing customers
Our product development activities and commercialisation of products developed by us are dependent on the needs and requirements of our customers. We intend to leverage our relationships and goodwill with existing customers, manufacturing capabilities and knowledge of the preferences and requirements of customers, to increase the range of products they purchase from us, including more complex, higher margin products.
We believe that we have been able to and will continue to be able to leverage our relationships with customers to increase the number of products they purchase from us. While Biocon Limited initially purchased ethanol manufactured by us, it has subsequently also commenced purchasing ethyl acetate from us. Similarly, we believe that our long standing relations with customers especially in sugar and Bio-based Chemicals segments helps us understand the customer requirements and should enable us to cross-sell our new products to such customers. For instance, we believe that certain of our customers in the sugar segment also use xylitol and we intend to leverage our relationship with them to sell xylitol manufactured by us.
Further, we aim to enter into new arrangements for developing custom made products for customers. In the past, we have developed MPO for an identified customer. We believe that such manufacturing of products for identified customers enables us to expand our technical capabilities, enables better utilisation of our Manufacturing Facilities and provides us with higher predictability of revenue and cash flows.
We believe that some of our existing customers are market leaders in their respective categories and are generally well regarded for their procurement practices, quality requirements and sustainability practices. We intend to continue to leverage our products and our long-term relationships and credentials with our existing customers and referrals from such customers to further develop and strengthen our customer base.
4. Continuing focus on implementation of sustainable practices and strengthening our control over our inputs.
Across the world, companies are being pressured to reduce their impact on the environment, with a special focus on climate change, biodiversity, and prudent use of scarce resources. As per Frost and Sullivan Report, the green chemical wave is inevitable, and it is just matter of time by when the adoption of these new age products will be mandatory and obligatory. Our Company, which has a portfolio of green products including ethyl acetate, is the only company in India with such a vast portfolio of bio-based products (source: Frost & Sullivan Report).
In addition to our products, we have sought to introduce sustainable practices as part of our operations. We are Responsible Care® certified and have received various awards including the “Water Resource Management in Chemical Industry” Award from the Indian Chemical Council in 2015, the “Efficiency in Water Usage-Chemicals” award from FICCI in 2016, “Outstanding Renewable Energy Generation-Biofuel” award from the Indian Federation of Green Energy in 2019. We have obtained certification confirming compliance with the requirements of BONSUCRO in the “production of white refined sugar and molasses from sugarcane”. We have also been permitted by the United States Department of Agriculture to use the “USDA Certified Biobased Product” label for some of our products such as 1,3 butylene glycol and bio-based ethyl acetate.
We intend to continue implementing sustainable practices in all aspects of our operations. Our product value chain currently originates from the sugarcane feedstock and provides customers with traceability. We advise farmers on agricultural practices to increase productivity and yield for better realization and on seed quality and soil maintenance to promote sustainable agriculture.
We seek to maximise the utilisation of the sugarcane feedstock to manufacture a range of downstream products and accordingly, avoid wastage while maximising our revenue and margins. Every ‘waste stream’ that our Company produces is looked at as a resource for making products. The molasses from sugarcane is used at the Sameerwadi Manufacturing Facility for the manufacturing of Ethanol, while press mud is used for the manufacturing of fertilizer, bagasse is used for generating power and is intended to be used to manufacture bagasse-based chemicals and 2nd generational ethanol in the future. Further, at the Sakarwadi Manufacturing Facility we utilise Rectified Spirits and Ethanol to manufacture a range of Bio-based Chemicals. We also intend to treat the carbon dioxide produced to product bio compressed natural gas.
Further, as a part of our aim to build a circular and cascading biorefinery, we intend to establish a unit at the Sameerwadi Manufacturing Facility to manufacture potash.
We intend to continue to strengthen our control over the raw materials and power required for our operations by reducing dependence on third parties on raw materials, thereby reducing our expenses and improving our profitability and margins.