In a business where the buying & selling price is fixed by the government, how is that the sugar stocks are rallying so much?

A thread 🧵 to learn how the sugar sector works. Do re-tweet and hence us educate more investors (1/n)

- Sugar is made out of Sugarcane
- The government fixes buying price (FRP – Fair & Remunerative price) for the mill from the farmers at 2.850/Kg
- Selling price is also fixed at Rs. 31/Kg (MSP – Minimum selling price) (2/n)

Lets understand the sector,

- Sugarcane purchased by the mill is crushed to remove the juice (exactly like you have sugarcane juice at a hotel)
- Juice is heated & boiled to remove sugar (3/n)

- The juice can be boiled upto 3 times to remove sugar. Each time it is boiled, sugar is removed, than some water is added and boiled again to remove more sugar (4/n)

- There are 2 by-products as well. The residue left behind after the boiling process is over is like a gum/paste called molasses & the fiber/stem of the sugarcane after juice is extracted (5/n)

Late aaye durust aaye #OmkaraEdge

Omkara covered this co with clients long back with proper DATA/ NUMBERS

Monishaaa, ‘Bio-refineries’ bolo beta…
This ‘Sugar Mills’ is just too middle class!

Sugar industry is poised to change drastically over the coming years from cyclical to structural.
We can fall in the footsteps of Brazil which produces ethanol and sugar equally from sugarcane and reduce the overcapacity issue of industry.
A thread

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Let's first understand how a sugar factory works:
Sugarcane is crushed in a sugar factory that primarily extracts sugar syrup and fiber which is called bagasse. Bagasse is used to generate electricity, the excess power generates is then sold to the electricity companies.

Sugar syrup is then boiled to extract sugar, the syrup can be boiled up to three times to extract maximum sugar, and the residue left is known as molasses
Molasses can be further processed to generate ethanol and alcohol

The sugar syrup if being boiled twice generate B heavy molasses which has more sugar content hence can generate higher ethanol, the syrup boiled three times leaves C heavy molasses which has very low sugar content having lower ethanol yield

Ethanol can also be extracted directly from sugar syrup without making sugar, this leads to the highest ethanol yield and also fetches higher ethanol prices in the market.

GAIL: Expect marketing biz to do well this yr considering the prices are higher, crude to remain above $60/bbl

Have submitted 2 pipelines to MoPNG for asset monetisation approval from cabinet

LNG import target at 130 cargoes of which 40-45 will come from US

GAIL: Will look at the renewable portfolio of 400 MW under SECI projects with EPC partner BHEL

GAIL plans to venture into JV for 1000 liter per day ethanol-blended production

GAIL to issue expression of interest for ethanol-blended production project within 2 months

Ethanol blending as a concept has roots in 1826. In 1876 a more evolved use began. Nicolaus Otto, the inventor of the modern 4-cycle IC engine, used ethanol to power an early engine

Modern industry has its root in crony capitalism of 1960-70s in US

It's still a sunrise sector🙄

Balrampur Chini Mills is betting big on distillery capacities. Company is setting up a 3,20,000 liters per day capacity, which will be start in December 2022.

Sugar was once promoted in newspaper ads as a healthy snack that helps save calories and prevents obesity.

Oh, how the tables turn.

@PuneethBM1 HPCL and GAIL are customers of ISGEC Heavy #ISGEC

Praj is not just an Ethanol Play. Found this bit to be the best, creating mind map of optionalities requires in-depth understanding and use of knowledge from multiple domains. Hats off @unseenvalue 🙌🙌
https://t.co/XP4SErAZVo

@varinder_bansal But we have surplus sugar production, ethanol plants are yet to come up. Policy of increasing the ethanol blend is announced. But infrastructure is not ready. Last year's huge stockpile in godown. Farmers not paid FRP in many states.

Avadhpur
Balrampur
Bazpur
Burhanpur
Dalmiapur
Dhampur 
Dwarikeshpur
Jaunpur
Kolhapur
Lakhimpur
Prajpur
Renukapur
Sitapur
Solapur
Sultanpur
Trivenipur
Wopur
Yepur
...
...

मिले सुर मेरा तुम्हारा तो Pur बने हमारा 🎶🎷🥁

@SterlingFincap @varinder_bansal EV and PV (Photovoltaic) will cut short the ethanol ramp up. Renuka will end up like their Brazillian misadventure. Disclaimer - Was stuck in Renuka for years and had written off the investments. Good to see green pasture holding with SL

@varinder_bansal

Well it's happening...

Someone who usually buys after I suggest, msgd me and said...
"U should read Renuka Sugar"

U don't know - Modi ji changing Ethanol Rules...

When I argued..immediate response was to send some watsapp msg & a reply "I bought Balrampur also sometime back"

Just to add : I have no views on sugar stocks.. I don't understand if Sugar stocks are overvalued or undervalued..

Balrampur chini to consider buy back on 9th August. 😀😀😀😀

@Drrajeshbheda @unseenvalue @contrarianEPS 😜