EID Parry aims to transform into a biofuel and food & nutrition company: Muthu Murugappan

Murugappa Group based in Chennai EID-Parry (India) Ltd It is a prominent player in the sugar industry with an interest in nutrients. The ₹5,617 crore company operates six sugar mills in South India. While it continues to expand its core business, it seeks to focus more on emerging business segments such as ethanol blending and food and nutrition. Talk to Muthu Murugappan, CEO of the company business line About the company’s growth plans and emerging businesses. excerpts.

What is the outlook for the sugar industry?

According to ISMA estimates, fracking is estimated at more than 32.5 million tons for SY22-23, which is down from what was initially envisioned (34 million tons). This is due to the early closing of the season in Maharashtra, and to some extent in Karnataka. So, production fell short against what was directed. Meanwhile, global sugar prices are trading fairly well. In India, we have an export quota of about 6 million tons and I think most of the sugar mills, including EID Parry, have gained the benefit of it. We’ll wait for another share. Exports were profitable because you got a delta of about $3 a kilo compared to domestic trade prices.

Will there be an increase in the conversion of sugar to ethanol production this year?

The conversion of sugar to ethanol in the current sugar year is estimated at 4-4.5 million tons (compared to 3.2 million tons converted in 2021-22 Syrian pounds). The opportunity to blend ethanol with gasoline is a great move and we have always welcomed this program. Much of this demand is currently met by sugarcane-based ethanol or sugarcane feedstock, which is molasses as well as syrup. Almost 700 crore liters of that in the next year and a half will come from sugarcane-based ethanol. The balance should come from grain-based ethanol. In the future, perhaps from 2G ethanol plants, which use surplus biomass and agricultural waste. But I think we have some time away from that because it’s still in discovery mode.

How do you see the opportunity in the ethanol space, and what is the increased capital expenditure to grow the business?

The ethanol blending program has also helped the industry as well in settling farmers’ dues on time. It also provided better realization. We have also continually expanded our distillation capacity. At this point, we have 475 kiloliters per day of capacity. And with new investments we makeThe capacity will reach approximately 600 kilobars per day by the beginning of the first quarter of next year. In this financial year, we will invest around Rs. 275 crore to ramp up our distillery capacities. Some part will also go towards enhancing our environmental safety compliance.

How do you see the ethanol blending policy in Tamil Nadu?

The policy is clearer. For the longest time, local permissions were not available for manufacturing in Tamil Nadu ethanol. This has now been provided for over a year. This policy has also been followed and we welcome it. The policy also covers ethanol made from grain. I’m sure this will prompt companies in the sector to consider adding capacities based on grain given grain availability. From a grain-based product perspective, we may see new players enter the segment. Now, EID is largely focused on molasses and grains in Andhra Pradesh.

There is a strong push to grow your retail business. Can you explain?

We are keen to grow in the retail sector for several reasons. First, it is a marginal and cumulative perception of us. Secondly, there is white space to offer a bouquet of sweetening solutions to both institutional customers (Britannia, Nestle, Pepsi, etc.) and individual consumers. Being a prestigious house in this area is definitely a good opportunity for us. We have seen good growth in recent years. We used to do about 600 tons a month in the retail business four years ago, and now we’re doing over 10,000 tons. At the moment, the share of retail in domestic volumes is less than 30 percent and we intend to significantly increase this.

What new packaged products are in the pipeline?

We have over 8-9 products in the retail market, and we aspire to grow this business – be it brown sugar, jaggery powder, low glycemic index sugars, or dry jaggery powders. Our Amrit Brown Sugar is a strong product. We’ve expanded capacity on that — earlier, it was only made in TN. Now we have started production in Karnataka to cater to more people. We’ve expanded our jaggery capabilities as well. It is a traditional Indian sweetener and is an important part of the sweetener market in India. There are some other new products that are in the pipeline. As a long-standing company in this segment, we aspire to provide a bouquet of sweetening products – such as low-calorie sweeteners or low-glycemic index sweeteners – across price points to satisfy consumers’ sweetener baskets.

How are you expanding your retail presence? Are you going all India?

Currently, we are very much in the South, and we aspire to expand beyond this region. Our live coverage is very small. Now there are only about 100,000 outlets. We do not have our own store. Most FMCG companies or brands are very much in business with general commerce as well as with modern large format retail stores and nowadays with e-commerce as well. So I think we’re doing the same thing, too. We have deep relationships with different kinds of trade. For example, Reliance, D-Mart or other supermarkets. We will have a lot of brand promotion programs too.

Are you still facing major challenges in your work?

If I were to go back in recent history, we had a tough decade. We had to invest a fair amount of time and resources in changing course of action. We still have to do more to put the refining and feed business on a better strategic path because we continue to face challenges in both of those areas. But from the perspective of basic operations. We have made a reasonable conversion and that must continue. We were able to get retail up and running. Therefore, the immediate focus is on building a better biofuel, food and nutrition narrative.

Going forward, what are your key growth areas?

I think the growth engine is definitely a biofuel. We also hope that ethanol infrastructure and ethanol play a role in sustainable aviation fuel, which is now in the discovery and research phase, but represents a very, very big opportunity in the future. From a retail perspective, food and nutrition will also drive growth. Consumers in India spend heavily on food and beverages. So those will be the drivers of growth and we aspire to transform into a biofuels, food and nutrition company. We don’t want to be known as a sugar company. This transition plan is keeping pace with the times. There are many benefits from green and ESG perspectives in moving towards biofuels as it helps all stakeholders.

Posted on June 19, 2023