KRIBHCO invests Rs 1,100 crore in ethanol plants, reports strong financial growth

KRIBHCO, the fertiliser cooperative, is making an investment of approximately Rs 1,100 crore to establish three ethanol manufacturing facilities that will use maize and broken rice as raw materials. These plants, with a daily production capacity of 250 kilo litres, are being set up in the states of Gujarat, Telangana, and Andhra Pradesh as part of the cooperative's diversification strategy.

Chandra Pal Singh, Chairperson of KRIBHCO, expressed, "We are setting up three bio ethanol plants as part of our diversification plan." Rajan Chowdhry, Managing Director of KRIBHCO, added that these plants are expected to become operational by the end of the next year. He further explained that the investment for this project will be sourced through a combination of internal funds and debt.

The cooperative's intention is to supply the ethanol produced to oil marketing companies (OMCs) for blending with petrol. Currently, the ethanol blending rate with petrol stands at 12 per cent, with a target to increase it to 20 per cent by 2025.

SPV establishment details

To facilitate these bio ethanol projects, KRIBHCO has established a 100 per cent owned Special Purpose Vehicle (SPV) called 'KRIBHCO Green Energy Private Limited.' This SPV has received environmental clearance and preliminary approval from the Department of Food and Public Distribution for the interest subvention scheme for all three projects.

Lump Sum Turn Key (LSTK) contracts for all three bio ethanol projects have been awarded to Excel Engineers and Consultants by the SPV.

Production and sales

On the financial front, KRIBHCO reported a substantial increase in total income, reaching Rs 25,715.07 crore during the last fiscal year, attributed to improved sales. The cooperative declared a 20 per cent dividend and saw its net worth rise from Rs 4,643.10 crore in FY22 to Rs 5,128.61 crore in the last fiscal year.

KRIBHCO, with a membership consisting of 9,470 cooperative societies, continues to play a vital role in the agriculture and fertilizer sectors. They produced 22.21 lakh tonnes of urea and 13.24 lakh tonnes of ammonia during 2022-23, achieving capacity utilisation rates of 101.20 per cent and 106.16 per cent, respectively. The cooperative also sold 57.08 lakh tonnes of fertilisers, including urea and complex fertilisers, during the same fiscal year.

In addition to their core operations, KRIBHCO has diversified its business by establishing two wholly-owned subsidiaries, KRIBHCO Agri Business Ltd (KABL) and KRIBHCO Green Energy Pvt Ltd. In its first year of operation, KABL achieved an impressive turnover of Rs 200 crore.