Strategy
Continuing to diversify product offerings and improving operational efficiency.
We currently manufacture a range of products, primarily consisting of Bio-based Chemicals, 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, bio-acetic acid, butanol, EVE, and paraldehyde which are downstream products of Ethanol.
We intend to expand our distillery capacity from 600 KLPD (as at March 31, 2024) to 1,000 KLPD and have obtained environmental clearance for such expansion.
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, leveraging our manufacturing capabilities and track record, we commenced the manufacture of EVE in Fiscal 2024 and intend to similarly develop products which are synergetic to our existing product portfolio and manufacturing capabilities.
We also 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. For instance, with respect to the products under the ‘Jivana’ brand, we aim to expand our geographical footprint across India and expand our portfolio of sugar, salt, jaggery, turmeric and allied products.
We aim to optimise our operational efficiency and accordingly are evaluating various avenues to diversify feedstock used in the production of Ethanol, including developing capabilities for utilising grains and bagasse as feedstock. 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.
Further, we also intend to improve our consumption norms and utility norms through better heat integration and maximisation of process yields through optimisation of process parameters for the process plants. We are also working towards reducing the use of fossil fuels for production of utilities at our Manufacturing Facilities by using renewable energy resources such as biomass briquettes and pellets.
We also believe that our relationship with existing customers, established track record of catering to our customers, access to raw materials and quality certifications will help us to successfully commercialize our products whilst enhancing our manufacturing processes to further improve our operational efficiency.
Implementation of additional measures for improving feedstock security and increasing value derived from feedstock.
We use sugarcane as feedstock in the manufacturing of majority of our products. We have a large network of farmers in Karnataka, from whom we source sugarcane and have a long-standing relationship 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.
Further, we intend to augment our sugarcane crushing capacity at the Sameerwadi Manufacturing Facility beyond 18,000 TCD (as of March 31, 2024), which should help us in securing feedstock for our proposed expansion in distillery segment. We have also piloted the prospect of manufacturing 2nd generation Ethanol to further improve the availability of feedstock for our distillery segment and have entered into a memorandum of agreement with the Centre for High Technology, an administrative control of the Ministry of Petroleum & Natural Gas, Government of India in relation to grant of financial assistance to our Company for a maximum amount of ₹150.00 million for the proposed installation of a 2G ethanol plant at our Sameerwadi Manufacturing Facility. We have entered into a memorandum of understanding to carry out joint research activities in various fields including soil testing, production of tissue culture settlings, production and supply of bio-fertilizers, transfer of technology to farmers, organic farming and energy cane.
We aim to further diversify feedstock used in the production of Ethanol. For instance, we are evaluating various avenues, including developing capabilities for utilising grains and bagasse as feedstock in the production of 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. Further, usage of grains for production of Ethanol will provide us with the flexibility to operate throughout the year.
We intend to diversify our Bio-based Chemical offerings by utilising bagasse to manufacture cellulose and its derivatives. We have received environmental clearance to expand our existing capacities and to manufacture a wider range of speciality chemicals including cellulose and its derivatives.
Increasing the share of business of existing customers and further diversifying our customer base.
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 and higher margin products.
In the past, we have been able to, and we believe that will continue to be able to leverage our relationships with customers to increase the number of products they purchase from us. For instance, while a major Indian bio-pharmaceutical company initially purchased Ethanol manufactured by us, it has subsequently also commenced purchasing ethyl acetate from us. Similarly, 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.
Further, we aim to enter into new arrangements for developing custom made products for customers. In the past, we had developed MPO for IFF Inc. 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.
In terms of our international presence, while we have expanded our global footprint in the last three Fiscals by catering to over 20 countries including Australia, China, Germany, France, Italy Japan, Kenya, Netherlands, Singapore, United Kingdom, United Arab Emirates, Indonesia and United States of America, we intend to add more export oriented products and further increase our global footprint and augment growth in current geographies.
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.
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 the Frost and Sullivan Report, the green chemical wave is inevitable, and it is just a matter of time when the adoption of these new age products will be mandatory and obligatory. According to the Frost & Sullivan Report, our Company, has the widest portfolio of bio-based products in India.
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, the “Outstanding Renewable Energy Generation Projects- Biofuel” award from the Indian Federation of Green Energy in 2021, the “Platinum Award for Best Sugarcane Development for the season 2021-2022” from the South Indian Sugarcane & Sugar Technologists’ Association in 2022, FICCI Chemicals and Petrochemicals Awards 2023 for "Excellence in Corporate Environment Responsibility in Chemicals” in 2023, the “Best Technical Efficiency Award (Private Sugar Factory)” for season 2022-23 from S. Nijalingappa Sugar Institute, Belagavi in 2023 and 4th India Green Energy Award in the category of “Bioenergy – Outstanding Chemical Process based Project – Ethanol” from the Indian Federation of Green Energy in 2024. We have obtained certification confirming compliance with the requirements of BONSUCRO in the “production of white refined sugar and molasses from sugarcane” and “farming activities and production of sugarcane” for the Sameerwadi Manufacturing Facility and for “production of ethanol, ethyl acetate, acetic acid, butyl acetate, 1,3 butylene glycol and butanol” for the Sameerwadi Manufacturing Facility and Sakarwadi Manufacturing Facility. 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 seek to improve valorisation 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 intended to be used for the manufacturing of compressed biogas, 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 Ethanol to manufacture a range of Bio-based Chemicals. We also intend to treat the carbon dioxide produced and as a step towards our decarbonisation strategies, we have entered into an agreement with a Category I Deemed to be University in Mumbai, Maharashtra on developing certain carbon capture initiatives which includes the development of a technology to produce value added chemicals and fuels from CO2.
We have power plants at the Sameerwadi Manufacturing Facility with an aggregate installed capacity of 45.56 MW as at March 31, 2024. Energy demand at the Sameerwadi Manufacturing Facility is fulfilled through self-generated electricity at the plant and excess electricity generated is further exported to the grid. Further, we are also working towards reducing the use of fossil fuels for production of utilities at our Manufacturing Facilities by using renewable energy resources such as biomass briquettes and pellets. We aim to continue to increase our cogeneration capacity, enhance our energy efficiency initiatives and scale up the usage of alternative fuels and renewable energy sources in our operations.
Further, we have implemented water resource management practices to reduce our dependence on fresh water sources. We have installed a water treatment plant at our Sakarwadi Manufacturing Facility and an incineration boiler at our Sameerwadi Manufacturing Facility to enable water efficiency, recycle, recover and repurpose the treated wastewater.
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. Potash may be used by farmers as a fertiliser and it improves the quality of the soil and crop yields.
We intend to continue to strengthen our control over the raw materials and power required for our operations by broad-basing our sources of raw materials, optimising our expenses and improving our profitability margins.
Reduction of borrowings and leverage.
We intend to reduce our borrowings and our debt to equity ratio. This will help us reduce a portion of our outstanding indebtedness and debt servicing costs, assist us in maintaining a favourable debt to equity ratio and enable utilisation of our internal accruals for further investment in business growth and expansion. In addition, the improvement in the debt-to-equity ratio of our Company is intended to enable us to raise further resources in the future to fund potential business development opportunities and plans to grow and expand our business in the future.
