“The new distillery will be integrated with our existing distillery. It will be a fungible facility that can change feedstock,” Samir Somaiya, managing director of the company told Reuters.
The company operates a sugar mill in northern Karnataka, a key corn-growing region, he said.
Indian sugar mills, long reliant on sugarcane for ethanol, are shifting to grain-based distilleries to run year-round and reduce exposure to swings in cane output.
Mills must pay a state-advised price to cane growers, which squeezes margins in surplus years when abundant supply depresses sugar prices while fixed cane payments remain in place.
There is a need to raise the minimum selling price of sugar to reflect higher cane costs and ensure mills can pay farmers the promised rates for their produce, said Somaiya.
Grain-based distilleries accounted for 69% of ethanol blended with petrol in the last marketing year, with sugarcane feedstock making up the remaining 31%, according to the All India Distillers’ Association.
Corn prices are trading nearly a third below the government-set floor price due to a production surplus, making corn-based ethanol more profitable than sugarcane-based output, industry officials said.