The attached document on EBP comprehensively looks at the game-changing opportunities for Indian states. The perspective is being shared for having a realistic understanding and what can undermine the potentiality. EBP has been my dream since 2003 and I ardently propagate Biofuels and judiciously study and share on various platforms.

1. India fuel Ethanol market
Fuel Ethanol is basically Anhydrous Ethanol which is made unpotable (Not fit for Human
consumption) by adding denaturant (Bitrex).
The biofuel sector has the potential to create substantial employment for both skilled and unskilled
labour. The sugar industry is the source of livelihood for 45 million farmers and their dependents,
comprising 7.5 percent of the rural population. Another 500,000 people are employed as skilled or
semi-skilled labourers in sugarcane cultivation.
With second-generation biofuel industries becoming more established, there is greater potential to
generate both direct and indirect jobs. These jobs may not be in the primary agricultural sector
because the proposed feedstocks are by-products of agriculture.
However, jobs will be generated in the collection and transport of residues, biomass pre-
processing, and the generation of bioethanol and related by-products.
Compared with current-generation biofuels, the new technologies demand more highly skilled
workers because the quality of feedstock and process technologies is more complex for thermo-
chemical or bio-chemical conversion technologies compared with first-generation biofuels. India
has highly skilled engineers due to the country’s lengthy experience in energy industries, and the
need for having skilled labour should not complicate the establishment of a second-generation
biofuel industry with regard to human resources for second-generation biofuel production.
Of prime importance, a number of studies indicate that farmers benefit from engaging in feedstock
Production when the enabling environment (via tax incentives, land titles, subsidies, and land right
policies) is profitable, equitable, and there are built-in measures to diversify. Furthermore,
providing incentives (e.g., seeds and tax breaks) and expanding the existing infrastructure create
opportunities for agents along the value chain.
Unlike fuel-free technologies (e.g., wind and solar PV), which mainly create jobs distant from their
point of application, biofuel production is more labour intensive at the point of feedstock growth
and production. For developing countries or even developed countries that seek to promote
investment in rural areas, this characteristic of biofuels is of value. Important in the development
context, although labour productivity is evolving through time, studies have shown that renewable
energy technologies are currently more labour intensive than fossil fuel technologies.
A large part of India’s population, mostly in rural areas, still does not have access to energy
services. Enhanced use of biofuels in rural areas is closely linked to poverty reduction, improved
health because greater access to energy services can
a) Facilitate access to pumped drinking water;
b) Reduce the time spent by women and children on basic survival activities, such as gathering
firewood, fetching water, and cooking;
c) Allow the lighting of rural households; and
d) Reduce deforestation and indoor pollution caused by firewood use.
Considering that approximately 300 million people in India are without access to electricity,
developing access to modern decentralised energy technologies, particularly Renewables (including
biofuels), is an important element of effective poverty alleviation policies. A programme that
develops energy from raw materials grown in rural areas can go a long way in providing energy
security to rural people.
Smallholders stand to benefit directly from the additional income generated by selling residues and
from cropping marginal lands/wastelands for second-generation biofuel feed stock cultivation.
Farmers’ cooperatives, Self-support groups and NGOs can assemble smallholders, impart training
when needed, and organise support activities to ensure a competitive market position for these
groups.

2. HIERARCHY OF
PRODUCTION
State Capacity in
Crores Lts
2019-20
Capacity in
Crores Lts
2020-21
Letter of Intent
TO SUPPLY OMC
Crores lts
1 UP 150 127 106
2 MAHARASHTRA 128 108 28
3 KARNATAKA 78 67 21
4 TAMILNADU 20 17 1
5 BIHAR 12 10 9
6 GUJARAT 11 10 4
7 ANDHRA 8 7 2
8 PUNJAB 5 4 5
9 TELANGANA 1 4 1
10 UTTARAKHAND 4 3 4
11 MADHYAPRADESH 3 3 2
12 HARYANA 2 2 0
TOTAL 427 363 183
UP, Maharashtra and Karnataka produce 83% of total India production.
Emerging state Bihar is role model for EBP.
States of Gujarat, Punjab and Uttarakhand can better their delivery as have abundant feedstock’s
and can be a future growth story of Karnataka which has moved few notches above in last few years
in south. Southern states AP& TamilNadu are falling back in production exception being
Karnataka which is third in India rank. Agronomical failures due to farmer’s reluctance, state
policy apathy and water shortages seen as major impediments.
With 12 states now producing varied capacity India has to cater to rest non-producing states from
areas of production so logistics cost goes up. Multimode transport by rail rake should emerge to
convention tank trucks that are supplying within producing state from factory/distillery to
Pump/terminal of OMC. With 5 more states Chhattisgarh, Orissa, west Bengal, Rajasthan and
Goa also coming up with new distillery the production landscape will change with management’s
optimisation and Policy support at regional level.
Now more than ever Feedstock Molasses should have no import duties amongst states and should be
allowed to be freely transported among states without additional taxes and charges. Optimising
cost of raw material is fundamental to ethanol success. With EBP of 20% on the anvil in 2 years and
Sustainable aviation fuel, Marine Fuel, Lamination and cooking possibilities from ethanol also visible
we should build infrastructure at receiving stations. Automobile vehicle manufacturers should adapt
fast to changing needs of industry and consumer.
ISMA says 361 projects received approval from DFPD (department of food and public distribution),
expected 13,454 KLPD which is 444 crores per year.
August 2020 GOI press release says soft loans of 18,600 crores being disbursed through banks to
362 projects of 600 crores lts capacity for enhancement and augmentation of ethanol production
capacity for which an interest subvention of 4045 crores for 5 years is being done by GOI.
Applications for 186 Grain based, 113 molasses based and 80 mixed both molasses and grain
based have been applied for distillation. West Bengal, Rajasthan, Orissa, Chhattisgarh and
Goa have also joined the race for distillation along above 12 so total 18 States are in Frey for
ethanol growth story. Kerala can also try using Tapioca as it has exposure to Tapioca crop
cultivation.
Loans had been sanctioned for 64 projects proponent and on completion of these, ethanol
capacity would enhance to 165 cores lts in 2 years. Thus distillation capacity would increase
from about 427 Crores lts per year to 590 crores lts per year by 2022.

3. To achieve the total required 1000-1100 crores lts (capacity at 623 Crores lts by 2022), the
balance 400/450 Crores lts of ethanol capacity by 2023 India needs to increase current
capacity by 3 to 3.5 times by 2023.
No distillery can operate 100% to capacity as maintenance shutdowns, raw material availability and
climatic and other vagaries can halt schedules.
C heavy Molasses produces: 50% which is 92 crores lts
B heavy molasses 40%: 73 Crores Lts
Sugarcane Juice to Ethanol 10%: 18 Crores Lts
Molasses is the primary feedstock producing 90% which is 165 Crores Lts.
Suppliers Landscape:
 India Glycols: UP state
 Bajaj Hindusthan: UP state
 Dhampur sugars: UP State
 Godavari Biorefineries: Karnataka, Maharashtra
 Shree Renuka sugars: Karnataka, Maharashtra State
 Triveni Engineering: UP state
 Balarampur Chini Mills: UP state
 Mawana Sugars: UP state
 HPCL Biofuels ltd: Bihar State
 Simbholi Sugars: UP, Punjab
 BSM Sugar : UP
 EID Parry Ltd: TN, AP, KN
 Andhra sugars, AP
New Investments announced:
New Investments had been announced with production augmentation. Loans had been sanctioned
for 64 projects proponent and on completion of these, ethanol capacity would enhance to 165
cores lts in 2 years. Thus distillation capacity would increase from about 427 Crores lts per
year to 590 crores lts per year by 2022.
In Sep 2020, 238 projects (Capacity enhancement) approved with loan amount of 16000 Crores.
Additional 583 cores lts capacity from this investment and expecting least production of 400
crores lts by Mach 2024.
Procurement Economics:
Fuel ethanol procured by OMC is on tendering and payment fortnightly on submission of bills.
For domestic trade or for exports ethanol is traded against full payment receivable only.
Mills or distillery if they have their own raw material in-house which is sufficient with their capacity
of production need not invest for raw material, else they need to plan sourcing enough quantities
looking at their financials, storing capacity infrastructure and looking at raw material pricing
changes and its impact on manufacturing costs.

4. Ethanol transportation:
Ethanol is predominantly transported in tank trucks. Being hygroscopic and also quality parameters
strict as a Class A product for blending ethanol Stainless steel tanks are used for transport and
cleaning a SS tank is easy using Steaming.
Usually a truck used for ethanol is not used for other chemicals if its used it has to be thoroughly
cleaned for all sediment and also washed internally on walls with ethanol prior to loading cargos so
nothing is contaminated.
The transportation price for truck is Ra 1.90 to 2.00 per KL Per KM and it has to be calculated for
two ways. Truck goes from distillery after filling to OMC pump, terminal and returns empty after
unloading. This price is for above 300KM and for below 300 KM price would be between 2.25 to
2.50 per Kl per KM roundtrip. The specific gravity of ethanol is 0.8 so trucks usually carry 29 to 34
KL based on trucks tare weight capacity.
Commercial Terms:
Both for private sale and for exports sale happens with 100 percent payment in advance.
Usually 50-60% payment is taken as advance for booking followed by balance settlement at the time
of lifting. Ethanol is not sold on credit by manufacturers.
In case of OMC ethanol is tendered as Ethanol supply year and it can be supplied on quarterly
(August/September) basis of 4 quarters every 3 months with rates negotiated on quarterly
allocation. It’s also annually tendered for long term contract: 1st
Dec to 30th
Nov.
Bidders quote the qty they wish to supply Feedstock wise, Qty wise and Location wise.
OMC decides on economic linkages calculated as per distances of distillery to OMC location.
After mapping Ethanol qty offers from suppliers with procurement demand of OMC location ethanol
qty gets allocated to eligible suppliers.
Legally binding contracts are signed between suppliers and OMC after collecting 5% of purchase
Order as BG amount.
For ethanol manufactured by new category of product DFPB issues guidelines which form basis for
the competent authority the state to certify ethanol manufactured in that category.
There is provision for penalty under price reduction clause (PRC)of tender document if supplies are
less than 80% in a month or 95% in a quarter whichever is higher.
Damaged food grain (unfit for Human consumption) price will be decided by OMC.
Additional GST as applicable and transport charges as decided by OMC shall be payable to suppliers.
Bills submitted will be paid every 15 days from date of submission dates.
Escrow account by Sugar mill/Distillery, OMC and Banks to be created for availing soft loans.
Initiatives for EBP:
Interest Subvention scheme for molasses and Grain based distillery by DFPD. Not much
incentives available from state Govts, they should free raw materials from tax net and free
interstate movement of product.
 Molasses based distillery capacity 426 Crores lts
 39 more projects with capacity of 93 Cores lts by March 2022
-------------------------
Total Capacity 519 crores lts

5. In Sep 2020, 238 projects (Capacity enhancement) approved with loan amount of 16000 Crores.
Additional 583 cores lts capacity from this investment and expecting least production of 400 crores
lts by Mach 2024.
With 328 distilleries already existent in the country including160 sugar mills, the additional 361
projects coming up, and the domestic requirements is going to catapult. As investment of 40k to
50K is envisaged the availability of feedstock across the year with competitive pricing is critical.
Domestic requirements:
 Potable liquor industry: 1billion litres
 Blending programme: 1billion litres
 Chemical Industry: 0.5billion litres
Raw material:
First Generation distillation:
C heavy molasses
B heavy molasses
Sugarcane Juice
Grains: starch from broken rice and Maize
Tapioca, Sweet Beet: Tapioca has not succeeded due to limited feedstock and environmental
impact issues of Cyanide and silica and in case of Sweet Beet scale of agronomy and climatic
conditions required.
2 G Distillation:
Sweet Sorghum, Energy cane, Switch Grass: adaptability and Agronomy for commercialisation
issues.
Municipal Solid waste for ethanol
Corn Cobs, Rice Husks etc.
2G distillation is nothing but Cellulosic distillation which requires more advanced technologies and
raw materials in fermentation Yeast, Enzymes becoming affordable and scale of operation becomes
bigger in size and continuity to feedstock availability across the year as major Indian feedstock’s
are seasonal from 3 to 6 months maximum availability. Manpower and advanced scientific
knowledge required but India can definitely adapt in phases.
Supply chain Mapping:
Ideal Storage at receiving locations: OMC is the Receiver and it has infrastructure at terminal and
can be enhanced. A tank hardly takes 2/3 months to fabricate and erect on a foundation. But
future blending will happen at pump and India has no mechanism for this so OMC should gradually
enhance its blending and storing capacity at pump.
Since ethanol is Hygroscopic it the tank has to be erected underground but it should be guarded
from Monsoon water seepages. As flash point is high temperatures should be monitored. For above
ground storage floating roof tanks are used. OMC should have a minimum of 10/15 day storage
capacity for EBP.

6. Molasses Feedstock is available for 6/10 months based on agronomy and cane availability which
again is dependent on climate vagaries, crop pests, diseases and cane yields. Mills crush for 6
month and if crop is more continue up to 8 months. Due to crop shortages several mills in south
Indian states have been shutdown and some under NCLT, its revival and taking advantage of EBP
depends on its success on agronomical front. Raw material is key component its voluminous
production and cost are key to success of ethanol distillation 1G or 2G.Optimising and maximising
Agronomical and raw material cost is key but Unfortunately India is one among the largest
exporters in Global Molasses trade annually exporting 1, 2 Million tons and the best quality Raw
material from North Karnataka, Maharashtra, Gujarat, Punjab, Haryana and MP. The States of
Haryana and MP which have good quality molasses have been lacking in investment in
distillation and production which shows glaring deficit. More is achievable in Gujarat, Punjab
and Uttarakhand.
Moving Ethanol after production in higher volumes has not got policy attention future
transportation from production surplus to deficit areas requires investment in infrastructure at
deficit areas for storage, blending and supply. Ethanol infrastructure of Tankage, pipelines should
be stainless steel as its hygroscopic and corrosive. Aluminum also can be used in some areas but
durability and maintenance issues are visible. In extreme temperature regions storage needs to be
monitored for temperature as flashpoint is high. Sprinklers on floating roof, sulfur pads are used
for cutting heat. As ethanol can be misused it’s made unpotable at manufacturing itself using
denaturant like Bitrex etc.
Market:
From initial EBP implementation from 2003 to 2021 the ethanol annual mean percentage growth
annually is 0.7% but in next 2 years it has to achieve 12% more blending average to achieve 20%.
With capacities under construction anticipated growth would multiply in next 3/5 years. Raw
material availability and pricing is key component with molasses based distillation being maximum
price of molasses, its availability and quality is the key.
North Karnataka, Maharashtra, South Gujarat, MP, Haryana, Punjab have better molasses
quality compared to UP though it has largest quantity.
In a draught when molasses feedstock availability is low other grains could be a buffer.
With future requirements for automotive ethanol for SAF (Sustainable aviation Fuel) demand is
bound to multiply. Ethanol is fundamental building block for green chemistry in industrial usage in
Solvents, chemicals etc. For the next 5/10 years whichever technology 1G, 2G Volumes can be
absorbed in Indian market but production costs should be optimised for improving margins and
profitability.
Demand Analysis:
As long as Ethanol is seen as oxygenate alike MTBE, ETBE the demand, Price has a continued
growth. But if ethanol is compared to Hydrocarbons and international Crude prices and Calorific
values it cannot compete so it requires favourable policy support when crude pricing is lower. But
Environmental Targets on emissions and honorable Supreme court intervention on particulate
emissions have been a succor to highlight importance of Ethanol for reducing tailpipe emissions.
Also future switch to multipurpose vehicles that run on multiple blends will also help enhanced
even 100% ethanol run vehicles in cities and agronomy.
Sustainable aviation has given momentum to SAF for ethanol blends. With India moving from 7th
to
3r d
place in Global passenger traffic by 2024 and in domestic passenger traffic at 341.05 million in
FY-20, India has potential growth at 11.3% annual growth FY-20 in aviation and clear skies.
Then there is also ethanol requirement as illuminant in rural and hilly areas and also as cooking
fuel. All these use anhydrous denatured ethanol only. So potential growth though yet to be
quantified opportunities for more growth are vibrant and visible.

7. Investment for Conventional Distillery :
One KLPD (Kilo Lts Per day); 1 to 1.5 crores (Max)
Lower distillery size has more per klpd cost, when compared to higher sizes as you can optimise
costs.
Second Generation Distillation:
Two main channels for the production of second-generation biofuels from lignocellulosic feedstocks
as follows:
Biochemical – enzymes and other micro-organisms are used to convert cellulose and hemicelluloses
components of the feedstocks to sugars prior to their fermentation to produce ethanol.
Thermo chemical – pyrolysis/gasification technologies produce a synthesis gas (CO + H2) from
which a wide range of long carbon chain biofuels, such as synthetic diesel or aviation fuel, can be
reformed.
While the biochemical route produces ethanol only, the thermo chemical route can produce a range
of longer-chain hydrocarbons which include biofuels that are better suited for aviation and marine
purposes.
For a Greenfield/stand-alone project, a non-core area such as cogeneration increases the initial
investment needed by more than 30 percent. In the absence of synergies with external utilities,
additional costs are incurred through the use of storage equipment and other logistical issues. In
comparison with a stand-alone plant, a co-located plant may require less than 50 percent in capital
investment.
For a project to be commercially viable, after accounting for feedstock, reducing investment cost
through a reduction in the auxiliary equipment is the second step in the process. In this context,
the main challenge facing the industry is locational flexibility to avail of more viable technical and
economical projects. According to their estimates, investment cost ranges between $10 and 14/gal,
for a plant with a nominal plate of 25 thousand gal/day depending on its location.
Outside of the main logistic model, other cost-cutting options include enzyme cost reduction by
improving activity, valorization of the lignin contained in the raw material, increasing the pre-
treatment efficiency or improving the yeast production organism.
Within the entire process, “pre-treatment” is the area that requires an investment of between 30
percent and 50 percent of the total equipment cost. The intrinsic recalcitrance of the
lignocellulosic biomass which results in lower biomass to sugar yields contributes to higher pre-
treatment costs, and this is a huge challenge that the industry currently faces.
Not all pre-treatment are created equal, the processes that show potential commercialization
should satisfy most of the criteria below.
Common pre-treatment methods include:
(i) physical pre-treatment, which involves mechanical processing and extrusion where the
objective is to reduce particle size but increase surface area,
(ii) chemical pre-treatment, which is carried out in acidic, neutral, or basic conditions,
(iii) physiochemical pre-treatment, which involves steam explosion (in the presence or
absence of SO2) and CO2 explosion (using super critical CO2 that produces carbonic
acid), and
(iv) Biological pre-treatment where microorganisms like brown, white, and soft-rot fungi
are used to pretreat biomass. However, not all pre-treatment’s methods are equally
commercially viable.
The ease with which a (pre-treatment) process can be commercialized depends on the following
factors:

8. A) A pre-treatment process that is ideal for decentralized biomass processing is one that involves
opening of the cell wall to bring lignin to the surface. This has the potential to efficiently density
after pre-treatment without the addition of any external binding agents and to increase the
durability of biomass for long term storage.
B) Commercial viability increases if the densified, pretreated biomass has dual application
(fertilizer, soil amendments, animal feed, and biomass composites) in addition to using them as
Biorefinery feedstock.
C) Pre-treatment processes that require large amounts of water to remove toxins from the
pretreated biomass make the process more expensive and therefore less profitable.
D) Processes that can be scaled up to meet the Biorefinery needs of handling more than 2000 tons
per day or more are more viable.
E) Processes that consume less energy and cheaper chemicals, lower processing cost are therefore
more profitable.
F) Processes that preserve lignin during pre-treatment (as opposed to pre-treatment’s
like alkaline hydrogen peroxide and ozonolysis that have the tendency to degrade lignin) and hence
the energy density of lignin are far more viable (commercially).
G) Pre-treatment’s requiring moderate temperatures are preferred from a cost perspective.
H) Processes that use supercritical fluids (water and CO2) operate at a very high pressure and
require additional cost.
After pre-treatment, enzymatic hydrolysis represents the second main operational cost, accounting
for 25–30 percent of the operational costs as compared with 1G which is below 3 percent. Viability
of 2G technology depends critically on the contribution of the enzymatic cocktail cost and there is
a consensus that the final enzyme cost contribution should be stabilized around $0.4/gal.
Biochemical vs. Thermo chemical Cost Comparison
Actual numbers associated with each of these pathways are, however, fairly uncertain and more
importantly, treated with a high degree of commercial propriety. Even within the industry, a
comparison of these two technology routes has proven to be very contentious. Unavailability of
published cost data has been the biggest limiting factor.
These limitations notwithstanding, the IEA has estimated the commercial-scale production costs of
2G biofuels to be in the range of USD 0.80 – 1.00/liter of gasoline equivalent (lge) for ethanol.
advanced biofuel production methods to grain-based ethanol production found that total costs per
gallon would be 44 percent higher for the biochemical cellulosic ethanol process compared to the
grain-based process and 48 percent higher for the thermo chemical cellulosic biofuel process
compared to grain-based ethanol production.3 Further, they found that it would require
approximately 6.8 times and 7.7 times the initial capital dollars to build a biochemical cellulosic
ethanol plant and a thermo chemical cellulosic plant, respectively, as compared to a grain-based
plant that produced the same in terms of gasoline equivalents.
Despite a lack of consensus on the favored technology choice, the potential for cost reductions is
likely to be greater for ethanol produced via the biochemical route than for liquid fuels produced
by the thermo chemical route, because much of the technology for biomass-to-liquid plants (based
on Fischer-Tropsch conversion) is mature and the process mainly involves linking several proven
components together.
As of August 2016:
1) The Indian Government was set to invest $74.8 million in a second-generation ethanol plant at
the Indian Oil Corporation’s (IOC) oil refinery in Panipat using crop residues as feedstock. IOC
selected Praj as its technology partner for setting up multiple 2nd Generation bioethanol plants
based on indigenously developed technology. IOC will be setting up three such 2G bioethanol
plants; using ligno-cellulosic biomass feed stocks.
2) The biofuels industry was set to invest $2.25 billion in new projects over the next few years to
build up the industry’s value towards $7.5 billion by 2022.

9. 3) A subsidiary of Bharat Petroleum Corporation announced it would build a 300,000 metric ton
biofuel plant.
4) Praj (the first 2G refinery in India) said it would undertake multiple Biorefineries projects valued
at $142 million,
5) CVC Biorefinery will set up two projects in Gujarat and Punjab,
6) IOC planned to team with the Celanese to build a 1 million metric ton per year, synthetic
ethanol production capacity in the eastern town of Paradip. Petroleum coke will be the feedstock
for the facility.
7) Bharat Petroleum will build a $75 million second-generation ethanol plant using (municipal solid
waste) MSW and agricultural waste as feedstock in Kochi, where it will be located at the (Bharat
Petroleum Corporation Limited (BPCL)-Kochi Refinery.
The limitations faced by 2G technology in India, shares a lot of common ground with those faced by
1G technology and considering that the two are not mutually exclusive (as identified by IEA in its
set of policy prescriptions), this comes as no surprise.
GOI has undertaken several policy measures (higher procurement prices of ethanol from grains and
crop waste being the latest in its line of measures4 in a bid to augment the production of biofuels
during the past decade. Despite policy efforts, production of biofuels using 2G technology has a
long way to go.
Land Constraints in the Cultivation of Biofuel Crops
While the National Bio Fuels Policy mandates that non-edible oil crops shall be grown only on
‘wastelands’ in the forest and non-forest areas, it does not define the term ‘wasteland.’
The other interesting question that arises in this respect is whether India has availability of enough
wasteland to cultivate biofuel crops to meet the blending mandate. Interestingly enough, there
also isn’t any consensus among policy makers in this regard (Raju, S et al., 2009).
According to Kumar Biswas (2010), a related problem in this context is that a huge portion of the
wastelands have been illegally acquired by landless laborers and other poor people and Government
intervention to determine end use is imperative.
SWOT Analysis:
Strengths:
 Knowledge and its accessibility
 Skilled manpower
 Sustainable energy, raw material supply
 Additional income to mills & farmers
Weakness:
 Technical immaturity
 Higher Capex & Opex
 Food & Fuel concerns
 Land consuming feedstock for biofuels
 Lower Calorific Value
Opportunities:
 Employment creation in primary, secondary, tertiary sectors
 Strengthening economy and foreign reserves
 Energy security
 Environmental improvement with particulate reduction
 Less dependency on Hydrocarbon Imports

10. Threats:
 Less availability of surplus feedstock
 Higher Uncertainty
 Direct competition with food due to limited arable land
 Lack of robustness of Industrial process.
Porters 5 forces analysis
5 forces that determine competitive intensity therefore attractiveness of an Industry
Level of competitiveness of industry
Attractiveness is overall profitability of Industry.
5 Forces
3 forces from Horizontal competition
 Threat of substitute product/services: Methanol, Hydrogen partly may gain entry.
 Threat of established rivals: Feedstock costs, Optimisation and yields establish profits.
 Threat of new entrants: This is prevalent in any business and rediscovering and continuous
up skilling enables entity to compete.
2 forces from vertical competition
 Bargaining power of suppliers: EBP is worked on established formula and CCI has checks and
balances for cartelisation. So a mix of EBP and Industrial, potable manufacturing will open
diverse portfolio within ethanol if you have funds.
 Bargaining power of customers: EBP is more dependent on policy support so in a high
hydrocarbon prices or lows if prices are in tune with Oxygenates industry can sustain.
Threat of new entrants
Profitable markets that yield high returns will attract new firms. This results in new entrants which
will decrease profitability for all firms. Unless new entrants are blocked by existing players profit
rate will trend towards zero.
Existence of barriers to entry (Patents, rights etc): for 2G patents helps and 1st
generation not
much barriers in entry. Efficiencies and financial discipline helps.
Most attractive segment is where entry barriers high, exit barriers low.
Few new firms can enter and non performing firms exit easily.
 Govt policy
 Capital requirement
 Absolute cost
 Cost disadvantages independent of size
 Economics of scale
 Economics of product difference
 Product differentiation
 Brand equity
 Switching costs or sunk costs
 Expected retaliation

11.  Access to distribution
 Customer loyalty to established brands
 Industry profitability (the more profitable industry the more attractive to new customers)
Threat of Substitute products/services:
Potential factors:
 Buyer’s propensity to substitute
 Relative price performance of substitute
 Buyers switching costs
 Perceived level of product differentiation
 Number of substitute products available in market
 Ease of substitution
 Substandard product
 Quality depreciation
 Availability of close substitute
Bargaining power of Customers:
 Buyer power is higher if buyer has many alternatives
 Buyer power is lower if they act independently
Potential factors:
 Buyer concentration to firm concentration
 Degree of dependency upon existing channels of distribution
 Bargaining leverage particularly in industries with high fixed costs
 Buyer switching costs relative to firm switching costs
 Buyer information availability
 Force down prices
 Availability of existing substitute products
 Buyer price sensitivity
 Differential advantage (Uniqueness) of industry products
 RFMC (Customer value) analysis
 The total amount of its edge
Bargaining power of suppliers:
 Supplier switching costs to firm switching costs
 Degree of differentiation inputs
 Impact on inputs on cost differentiation
 Presence of substitute inputs
 Strength of distribution channel
 Supplier concentration to firm concentration ratio
 Employee solidarity (labour unions)
 Supplier competition: the ability to forward vertically integrate and cut out the buyer
Intensity of Competitive rivalry:
Major determinant of the competitiveness of the industry

12. Potential factors:
 Sustainable competitive advantage through innovation
 Competition between online/offline companies
 Level of advertising expense
 Powerful competitive strategy
 Firm concentration ratio
 Degree of transparency
6th
force:
 Government National and Regional
 Pressure groups influencing industry
Molasses is a state subject the trading of molasses out of state to rest of Indian states or for
overseas exports is in the hands of state govt. So if a ban is imposed on exports domestic prices will
stabilise and industry raw material input costs will stabilise on the other hand if exports are
allowed without ban then prices will skyrocket effecting usage of molasses in industry and ethanol
production.
Pressure groups will influence on price mechanism of procurement. Though Indian Govt fixes
minimum statutory price sometimes due to local dynamics the procurement will be above MSP
there by effecting Industry and its profitability.
For the last few years India has been consistently exporting raw material Molasses more than a
million tons and this sugar season 2020/21 it has exported more than 1.5 million ton moving
towards 2 million tons. Now with almost 90 percent of ethanol being produced from Molasses to
achieve 590 Crores lts distillation from Molasses by 2022 we require 25106382 MT of Molasses (one
MT of molasses produces 235 Lts of ethanol), in addition molasses is needed for domestic industry
like Ferro alloys, Chemical Industry, yeast manufactures, Potable alcohol and cattle feed for dairy.
India annually produces around 10 to 13.5 million ton of molasses and if we do not have a cap on
how much each state requires monthly/annually for EBP and domestic industry India continues to
fail in enhancing envisaged growth in biofuels and blending. So both states and GOI should
comprehensively work and align at understanding needs of Feedstock molasses to overcome high
domestic prices and uncontrolled exports without states imposing quota releasing mechanism.
Whether its a private firm cooperative or public sector raw material molasses should be prioritised
for Indian needs first and foremost.
Production of molasses
State
2018-
2019 (000
tonnes)
2017-
2018 (000
tonnes)
2016-
2017 (000
tonnes)
2015-
2016 (000
tonnes)
2014-
2015
(000
tonnes)
2013- 2014
(000
tonnes)
Andhra Pradesh 264 232 202 288 282 323
North Bihar 392 361 285 249 273 335
Gujarat 540 498 408 542 524 482

13. Haryana 352 335 320 248 282 282
Karnataka 1801 1596 1001 1779 2056 1686
Kerala & Goa 3 3 3 5 6 6
Madhya Pradesh & Chhattisgarh 272 250 193 187 219 192
Maharashtra 3807 3663 1585 3197 3855 2730
Punjab 337 368 306 292 254 223
Rajasthan 6 4 7 6 4 3
Tamil Nadu & Pondicherry 358 287 589 761 722 782
Telangana 121 111 53 121 141 149
Uttar Pradesh 4798 4167 3888 3039 3674 3494
U.P. Central 2275 2342 1476 1154 1357 1213
U.P. East 1095 871 1175 985 1197 1216
U.P. West 1428 954 1237 900 1120 1065
Uttarakhand 167 189 164 131 164 153
Others - Assam, Orissa, Nagaland& West
Bengal
20 27 22 28 26 42
All India 13238 12091 9026 10873 12482 10882
The output is based on cane crushed in normal monsoon production is good else it falls, so
maintaining carry forward is necessary to take care of enhanced requirements. In Such a situation
the rapidly growing exports of molasses past 3 seasons which has reflected on domestic molasses
pricing has been a cause of worry.
Moreover with entire world trade of cane molasses in the hands of just 3 entity and who have total
sway on Indian exporters and pricing with marginal benefit accrued to factory or farmer and
cartelisation stemming needs a restrategising trade in staggered manner in quota system by states
looking at domestic requirements of state and adjacent states so that EBP and domestic Industry
doesn’t suffer due to domestic pricing or availability.
As observed in 2005 India had imported several lakhs of tons of molasses to supply domestic
distillation, to overcome such a future situation (sugarcane requires abundant water for cultivation
and monsoon dependent) carryover of feedstock between seasons is a must which is not happening
and we need a uniform molasses, ethanol policy across all states. The entire EBP investment,
growth, optimisation, profitability is totally revolving around feedstock and so it requires a holistic
approach looking at domestic industry as priority sector along with EBP.