Saddled with huge losses due to a glut in the industry, sugar mills are going all out for co-generation and distilleries now.
Co-generation is the use of a heat engine or a power station to simultaneously generate both electricity and useful heat.
Co-generation and distilleries are emerging as the growth drivers for sugar producers across the country, offsetting the negative trend in revenues from their core sugar production activity.
Sugar producers incurred heavy losses (roughly Rs 4 per kg of sugar produced) in October 2006-September 2007, as against the 20 per cent revenue from sugar sales earned in the previous year.
The scenario will get worse next year because of excess sugarcane production.
Sixty per cent of revenue of sugar companies came from co-generation and 40 per cent through distilleries.
Some 100 sugar units across the country generate about 1700 MW per annum, of which 925 MW is supplied to state electricity boards.
This is the topmost co-generation capacity in the world, a result of low sugar prices and assured purchase agreement with SEBs.
Uttar Pradesh tops in electricity generation by sugar plants. Mills in Uttar Pradesh produce about 450 mw and about 400 mw of capacity is under various stages of implementation.
Sugar units in Tamil Nadu produce 285 mw, Karnataka 271 mw, Andhra Pradesh 171 mw and Punjab 6 mw.
Sugar units in Maharashtra, however, barely produce 1-2 MW more than their captive consumption.
Co-generation and distilleries have to be in the forefront of business if sugar units have to survive.
The scenario had changed dramatically with co-generation and distilleries assuming maximum importance.
India, it is estimated, will produce about 28.5 million tonnes of sugar in 2006-07, as against the installed capacity of 23 million tonnes.
The next season is going to be more difficult for companies depending on sugar with the addition of new installed capacity of 2 million tonnes. The production could be still higher at 31 million tonnes.
