News: How mills stand to gain from cogeneration, alcohol

(BL 17/02/2007) New Delhi - Every 100 tonnes of sugarcane crushed by mills yields roughly 10 tonnes of sugar, 4.5 tonnes of molasses and 30 tonnes of bagasse.

Out of the 30 tonnes of bagasse, mills typically use up 21-22 tonnes to produce steam for captive consumption. This assumes steam consumption of 45 tonnes per 100 tonnes of cane and a bagasse-to-steam ratio of 1:2.1. That leaves a surplus bagasse of 8-9 tonnes.

If factories were to sell 10 tonnes of sugar, 4.5 tonnes of molasses and eight tonnes of bagasse at say, Rs 15,000, Rs 2,000-2,500 and Rs 1,000-1,500 a tonne respectively, the maximum they can gross from crushing 100 tonnes of cane would be in the region of Rs 1,70,000. It would be even lower in the present scenario — where bagasse realisations have crashed to Rs 250 a tonne in Uttar Pradesh and molasses are fetching Rs 500 a tonne in Tamil Nadu. What would be the economics if mills were to erect cogeneration and distillation facilities?

According to Ram Tyagarajan, CMD of Thiru Arooran Sugars, from one tonne of cane, anywhere from 120 to 150 units of electricity can be generated, depending on the pressure at which steam is raised in the boiler and taken to the turbine. After netting out 25 units of in-process consumption by the mill and 12-15 units of auxiliary consumption in the boilers and turbo-generators, 85 to 110 units can be exported to the grid.

Likewise, one tonne of molasses yields roughly 220 litres of alcohol. Thus, for every 100 tonnes of cane crushed, a mill can sell 10,000 units of electricity (at Rs 3 a unit) and 990 litres of alcohol (at Rs 20 a litre), besides 10 tonnes of sugar. The gross realisation, then, works out to almost Rs 2,00,000 — an additional 17.6 per cent.

Not everyone though is in a position to harvest this extra income. As of now, the two significant players in cogen, with annual revenues of Rs 125 crore plus, are Balrampur Chini and Thiru Arooran. Triveni Engineering's cogen income amounted to Rs 60 crore in 2005-06, while Sakthi Sugars and EID Parry are said to be doing business of Rs 50-60 crore.