Grainspan invests ₹520 cr in ethanol units, benefits from govt's subsidy

Business Standard

15-06-2025

Encouraged by the Union Food Ministry's interest subsidy scheme, Grainspan Nutrients has invested ₹520 crore to set up two grain-based ethanol plants in Ahmedabad and is supplying green fuel for blending with petrol.
The two plants, which use maize and rice as feedstock, have a total installed capacity of 350 kilolitres per day.
Grainspan's first grain-based ethanol plant, located at Bhamsara Village in Ahmedabad district, became operational in May 2023 with a capacity of 110 kilolitres per day. This plant was Gujarat's first grain-based ethanol facility.
Enthused by the success, the company last month commissioned its second facility, which has been built at a cost of Rs 360 crore with an installed capacity of 240 kilolitres per day at the same location.
The company supplies ethanol to Oil Marketing Companies (OMCs) under the Ethanol Blending Programme (EBP).
"There are three grain-based ethanol plants in Gujarat, of which two facilities are being operated by us. We were the first to set up such a plant in the state, thanks to the central government subsidy," Grainspan Nutrients Pvt Ltd CEO Manoj Khandelwal said here.
He said there is an immense growth potential in ethanol production in India, not only to meet domestic demand but exports also.
Grainspan, which has been into manufacturing of food ingredients since 2014, forayed into ethanol a few years back to diversify its business taking advantage of interest subsidy.
The decision has helped the company increase its turnover which touched Rs 760 crore last fiscal.
Grainspan Ingredients Pvt Ltd CFO Pankit Shah said the company has invested a total of Rs 520 crore in these two plants, which are fully operational.
"The first plant has been set up with the help of Central Government interest subsidy. We have taken a loan of Rs 120 crore for the first plant," he said, adding that there is no interest subsidy on the second plant.
In the 2024-25 Ethanol Supply Year (ESY) that runs from November to October, Grainspan Nutrients will supply around 8 crore litre to OMCs at a fixed rate of nearly Rs 72 per litre.
In the next ESY, the figure will reach 12 crore litres generating a topline of more than Rs 800 crore.
Apart from grain-based, Gujarat has 13 sugarcane-based distilleries.
Till June 8 of the current ESY, the ethanol blending has reached 18.9 per cent in the state with the supply of nearly 33 crore litres of green fuel.
The Centre has notified various ethanol interest subvention schemes from 2018 to 2022 (in 2021 ethanol production from grain was also included under these schemes) to encourage sugar mills and distilleries to enhance their ethanol production capacities.
Under all these subvention schemes, the government is facilitating project proponents to avail loans from banks/financial institutions. It provides interest subvention at 6 per cent or 50 per cent of the interest, whichever is lower, for a period of five years including one-year moratorium period.
A new interest subvention scheme for cooperative sugar mills has also been notified in March 2025 for conversion of their existing sugarcane-based plants into multi-feed-based ethanol plants.
Grainspan CFO said that the company's turnover rose 20 per cent to Rs 758 crore last fiscal, of which Rs 416 crore came from the food business and Rs 342 crore from ethanol.
Pan-India, many companies and cooperatives have taken advantage of the interest subsidy incentive to set up new or expand ethanol-making capacities with sugarcane and grain (maize and rice) as feedstock.
As a result, India's total ethanol-making capacity has jumped over four times in the last 11 years of the current government.
Till year 2013, ethanol distillation capacity in the country was 421 crore litres.
At present, the ethanol production capacity in the country has reached 1,810 crore litres, which includes 816 crore litres of molasses-based capacity, 136 crore litres of dual feed capacity and 858 crore litres of grain-based capacity.
Additional capacity has led to an increase in percentage of ethanol blending with petrol.
Till year 2013, supply of ethanol to OMCs was only 38 crore litres with blending levels of only 1.53 per cent in 2013-14 ESY.
Production of fuel-grade ethanol and its supply to OMCs has increased by more than 18 times from ESY 2013-14 to ESY 2023-24.
In ESY 2023-24, about 707 crore litres of ethanol has been blended by OMCs thereby achieving a blending of 14.60 per cent.
In the current ESY 2024-25 till May 25, about 548 crore litres of ethanol has been blended by achieving a blending of 18.74 per cent.
The government has set a target of 20 per cent blending by 2025-26.