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

Chennai-headquartered Murugappa Group’s E.I.D.-Parry (India) Ltd is a prominent player in the sugar industry with an interest in nutraceuticals. The ₹5,617 crore company runs six sugar factories in south India. While it continues to expand in its core business, it seeks to focus more on emerging business segments such as ethanol blending and food and nutrition. Muthu Murugappan, Chief Executive Officer of the company, spoke to businessline about the company’s growth plans and the emerging businesses. Excerpts.

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Q.WHAT IS THE OUTLOOK FOR THE SUGAR INDUSTRY?

As per the ISMA estimates, the crushing is estimated at over 32.5 million tonnes for SY22-23, which is a dip from what was envisaged initially (34 million tonnes). and this is because of early season closures in Maharashtra and, to some extent in Karnataka. So, the production has come down against what was guided. Meanwhile, global sugar prices are trading fairly well. In India, we’ve been given an export quota of about 6 million tonnes and I think most of the sugar mills, including E.I.D Parry, have gained to utilise it. We will await any further quota. Exports have been gainful because you get a Delta of almost ₹3 per kg compared to local trade prices.

Q.WILL THERE BE AN INCREASE IN SUGAR DIVERSION TO ETHANOL PRODUCTION THIS YEAR?

Sugar diversion to ethanol in the current sugar year is estimated at 4-4.5 million tonnes (as against 3.2 million tonnes diverted in SY 2021-22). The  ethanol blending opportunity with gasoline is a great move and we have always welcomed this programme. A large part of that demand is currently met by sugarcane-brd ethanol or sugarcane feedstock, which is molasses as well as syrup. Almost 700 crore litres of that within the next one and a half years will come from sugarcane-brd ethanol. The balance will have to come from grain-brd ethanol. In the future, perhaps from 2G ethanol plants, which use surplus biomass and Agri waste. But I think we have some time away from that as it is still in discovery mode.

Q. HOW DO YOU SEE THE OPPORTUNITY IN THE ETHANOL SPACE, AND WHAT IS THE CAPEX RAMP-UP TO GROW THE BUSINESS?

The ethanol blending programme has also helped the industry as well as settling farmers’ dues on time. It has provided better realisations too. We have also consistently expanded our distillery capacity. At this point, we have 475 kilolitres per day (klpd) of capacity. And with new investments that we’re making, the capacity will reach closer to 600 klpd by the start of Q1 next year. In this fiscal year, we will be investing about ₹275 crore to ramp up our distilleries’ capacities. Some portion will also go into strengthening our environmental safety compliance.

Q.HOW DO YOU VIEW TAMIL NADU’S ETHANOL BLENDING POLICY?

The policy is clearer. For the longest time, local permissions were unavailable in Tamil Nadu to manufacture ethanol. This has now been made available for more than a year. The policy has also been followed so and we welcome it. The policy also covers grain-brd ethanol. I’m sure this will prompt companies in the sector to consider adding grain-brd capacities due to the availability of grains. From a grain-brd product perspective, we may see new players enter the segment. Now, E.I.D is largely focused on molasses and grain in Andhra Pradesh.

Q.THERE IS A STRONG PUSH TO GROW YOUR RETAIL BUSINESS. CAN YOU EXPLAIN?

We are keen on growing in the retail segment for a couple of reasons. Firstly, it is margin and realisation accretive to us. Secondly, there is a white space to offer a bouquet of sweetening solutions to both institutional customers (Britannia, Nestle, Pepsi etc) and individual consumers. Being a reputed house in this business, it’s certainly a good opportunity for us. We have seen good growth in recent years. We used to do about 600 tonnes per month in retail four years ago, we now do north of 10,000 tonnes. Currently, the share of retail in domestic volumes is under 30 per cent and we intend to grow that significantly.

Q.WHAT ARE NEW PACKAGED PRODUCTS IN THE PIPELINE?

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

Q. HOW ARE YOU EXPANDING YOUR RETAIL PRESENCE? WILL YOU GO PAN-INDIA?

Currently, we are largely in the south, and we aspire to grow beyond this region. Our direct coverage is very small. It’s just about 100,000 outlets now. We don’t have a store of our own. Most FMCG companies or brands work largely with the general trade as well as with the large format modern trade stores and nowadays with e-commerce as well. So I think we also do the same thing. We have deep relationships with different kinds of trade. e.g, Reliance, D-Mart or other supermarkets. We will have a lot of brand promotion programmes also.

Q. ARE YOU STILL FACING BIG CHALLENGES IN YOUR BUSINESSES?

If I was to go back in recent history, we had a rough decade. We had to invest a fair amount of time and resources in turning around the business. We still have to do more to put refinery and nutraceutical businesses on a better strategic path as we are still facing challenges in these two. But from the core operations perspective. We’ve done a reasonable turnaround and that has to keep going. We managed to get retail up and running. So, the immediate focus is to build a better narrative on biofuel, food and nutrition.

Q. GOING FORWARD, WHAT WILL BE YOUR KEY GROWTH AREAS?

I think the growth driver is certainly biofuel. We are also very hopeful that the ethanol and ethanol infrastructure will also have a play in sustainable aviation fuel, which is now in the discovery and research stage, but presents a very, very large opportunity in the future. From a retail perspective, food and nutrition will also drive growth. Consumers in India largely spend on food and beverages. So those will be the growth drivers and we aspire to transform into a biofuel and food and nutrition company. We don’t want to be known as a sugar company. This transition plan is in keeping with the time. There are many benefits from green and ESG perspectives on moving towards biofuel as it helps all stakeholders.

The above news was originally posted on news.google.com

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