Chairman’s Message

The Coronavirus continues to affect lives and livelihoods. Many of our colleagues were affected by the pandemic, either directly or indirectly. The first wave was followed by a much more dangerous and more widespread second wave which is sweeping through the country. This is affecting the economy much deeper than the first wave. It is also affecting young people. The Government of India can only combat this with rapid vaccinations and as we have seen in the recent past, some form of lockdowns. We feel that lockdowns will have an impact on livelihoods, but it will be necessary to save lives. We also saw that the economic activity recovered quickly once the first wave receded. Our company has continued its manufacturing operations since many of our products are essential.

As a company, we started making sanitizers under the brand name Paavan, and our scientists and engineers quickly developed a process to make an intermediate that is used in the manufacture of Remdesivir

The Indian economy continues to produce more sugarcane and consequently, more sugar than it can consume. In the current sugar season, Indian is likely to produce over 30.5 million tons of sugar. The ethanol blending programme continues to grow and this year more than 3 billion litres of ethanol contracts were signed with oil companies.

The graph on the right shows the growth in the ethanol blending programme and the fact that much of the feedstock for the same is now from B heavy molasses and Sugarcane juice - something that Godavari pioneered in the last 2 years. The Government has advanced the 20% blending target from 2030 to 2025 in response to the sugar industry's rapid adoption of converting B Heavy and/or sugarcane juice to ethanol. The Government has also notified the E20 standard and has begun piloting E100. This creates a great growth opportunity for Indian agriculture and the sugarcane processing industry.

 

We are continuing on our journey of creating a world class cascading biorefinery. Our strategy is to add value to our feedstock, and its related biomass. To convert biomass into value added products, chemically, physically or biologically.

Your company was one of the first companies in India to start the manufacture of ethanol from sugarcane juice /syrup. In the season 2019-20, we had increased our capacity of ethanol from 200,000 lpd to 320,000 lpd. In November 2020, we further expanded our distillery to 400 klpd. With this expansion, we have increased our ethanol production from about 20 million litres in 2017 to an estimated 80 million litres in the FY 2022.

This is among the largest ethanol capacity at one location in India at this time. More than 35% of our sugar in sugarcane is diverted to make ethanol. This degree of optionality is only with Brazilian mills.

We have also got permission to further expand our ethanol capacity to 600 klpd accompanied with an increase in sugarcane crushing capacity. The capacity addition will be supplemented by planning ways of adding additional feedstocks so as to target an annual ethanol production exceeding 140 million litres. The graph on the right shows the growth of our ethanol production and estimates of future production. Ethyl alcohol is 30% of our business and with the revised policy to advance the 20% blending mandate by 2025, there will be tremendous growth in this business.

Chemicals

Chemicals are the largest portion of our product mix at 35% of our business and are a growth opportunity. We have identified new specialty chemicals to make and/or expand.

We continue to make more value added chemicals from renewable resources. The world is looking at renewable and sustainable ways of making products. Climate change needs to be combated. Godavari Biorefineries has been a pioneer in the use of Sustainable and Renewable Resources to produce chemicals. Our close cooperation with many of the large companies to develop and produce products for them is helping us sustain and grow our pipeline for new products. Customers have expressed renewed and strong interest in sourcing products that are renewable, sustainable, and adhering to the 'green chemistry' principles. We are continuing our dialogue with them. Customers globally are demanding more sustainable and renewable products with a lower carbon footprint. In turn, companies are taking a fresh look at their supply chains to adapt to this new reality and mitigate climate change.

As a result of our efforts, we continue to make a diversified product mix. The chart below shows the distribution of our business by product in 2021. The ethanol and chemical business now comprise of more than 65% of the business and are both sectors that are poised for growth.

Your Company plans to implement the production of SOP (Sulphate of Potash) which is a valuable fertilizer to the farmer as it improves the quality and crop yields. SOP is considered a premium-quality potash that makes plants more resilient to drought, frost, insects and even disease. Our researchers have been able to extract potash from the waste of the incinerator boiler. A successful commissioning of the same will result in a circular economy in Potash. Farm, process, extract, recycle and so on.

We continue to work closely with the farmer. We are inextricably linked together. Our aim is to see that the farmer and the farm are healthy. To do this, we continue to work on introducing drip irrigation, intercropping, soil testing, subsequent supply of quality inputs, supply of tissue culture plantlets, and agronomic practices for achieving high yield. We collaborate with KIAAR, K J Somaiya Institute of Applied Agriculture Research, to demonstrate new techniques that would improve productivity, optimize resource use, and maintain soil fertility. Our experiments on using older and traditional techniques and modern science with KIAAR have shown good results.

I am delighted to say that your company has been awarded the winner in the category of Best Combined Heat and Power Plant Boiler by Honourable Labour Minister Mr. Hebbar, Government of Karnataka, at State Level Safety Award - 2021 on the 4th March 2021 at Bengaluru.

In closing, these are difficult times. We have created optionality by participating in the ethanol blending programme announced by the Government of India. This optionality allows us to better manage risk. With the recent announcements by the Government of India, we will further expand our production and will be working on adding additional feedstocks to further increase our production of ethanol. We are also trying to add value by working on value added chemistry. Finally, we continue to be working on creating a circular and cascading biorefinery. Our proposed SOP project is a step in that direction. We hope that we set an example of creating a sustainable and innovative enterprise that adds value to all stakeholders.

Before I end, I want to mention about the work being undertaken by our sister organisations in times of this pandemic. During the first wave, The K J Somaiya Trust had provided land temporarily to the city of Mumbai so that the city could continue to have the supply chain of fruit and vegetables. It has now provided land to the city to make arrangements for creating a jumbo facility should a third wave hit us. In addition, during the first wave, Somaiya Vidyavihar and the K J Somaiya College of Physiotherapy had provided space to the Government for quarantine and also to house COVID positive patients. Finally, the most work is being done by the K J Somaiya Hospital where more than 400 beds were made available to fight the pandemic. Over 4000 patients were treated for the disease. The K J Somaiya Hospital was and will be a vaccination centre in the continuing fight against the disease. Hoping and praying that the world returns to normalcy soon and that the pandemic is behind us.

Samir Somaiya
Chairman and Managing Director
(2020-2021)