What are the major global trends in bio-based chemicals and ethanol sector? 

There is an upcoming trend of renewable chemicals also called the biogenic carbon to meet the needs of our fuels and chemicals. The world is seeking to mitigate climate change and the Government of India has announced an aggressive programme called E20 i.e. 20% ethanol blending goal by 2025. This is a tremendous programme and it would need close to 10-11 billion litres of ethanol by 2025.  

The government estimates to create 15 billion litres capacity, half from grain and half from sugarcane. And, as ethanol has other uses, the 10 to 11 billion litre will go into the blending programme as there is ample demand. This serves three purposes. First, energy security as it supplements India's energy security especially in the current geopolitical situation. Second, it also helps in mitigating the negative impact on climate change and third, it helps assure farmer incomes. These three reasons give the Indian sugar crushing industry an edge as the surplus sugarcane in the country is used to meet the energy needs of the country. So, I think there is a tremendous opportunity for growth. 

As far as chemicals are concerned, the entire world is looking at mitigating climate change, boardroom commitments, customer preferences, regulation, and incentives are all driving companies towards paths to net zero. 

With the path to net zero, companies across the world are looking to partner with companies such as Godavari Biorefineries who use biogenic carbon to make these chemicals. Hence, we have global and local opportunities with respect to biogenic carbon being converted to fuels and materials. 

How has Godavari Biorefineries performed in FY 2022-23? What is your plans for bio-based chemicals, ethanol, and power portfolio for the current financial year? 

Godavari has performed better than the previous year. There were challenges last year, especially the geopolitical situation including the war in Europe that caused disruptions. In our case, we had an increase in energy costs and a reduction in demand with certain chemicals. On the other hand, we witnessed an increase in ethanol capacity and greater demand. Overall, the company has performed better in 2023. Going forward, we continue to look at opportunities to grow ethanol capacity further and also develop new chemicals which we have been working with partners across the globe to meet their path to net zero approach. 

What were the ballpark numbers for revenue in FY 2022-23?  

In the last financial year, we crossed Rs. 2,000 crore in terms of revenue at around an annual growth rate of 10 percent. 

Revenue forecast numbers for the next financial year?  

We will see how that goes, but it will be around the same range as last year. 

In terms of Capex, what was the investment made in FY 2022-23 and what are your plans for FY 2023-24?  

Last year, we grew our ethanol capacity from 400,000 litre to 600,000 litre. We produced 100 million litre in the last financial year. We also expanded our sugarcane crushing capacity by close to 20,000 tonnes per day and are investing in increasing the capacity of some other specialty chemicals. The Capex last year was somewhere between north of Rs. 150 crore. Going forward, we will continue to look at expansion of our ethanol capacity as well as specialty chemicals. 

Do you see the same Capex numbers this financial year as well?  

No, I think the expansions that we are targeting will more or less happen in the following financial year. There is always a lead time as we target expansion and as it comes out.  

For the next two years, what is the Capex plan?  

This is still a work in progress. We have a plan and we will be deciding that and taking it to the Board for approval. We will have a much better idea only after that but the broader direction is that we will continue to increase the capacities in ethanol, renewable chemicals, and more towards specialty and maybe some increase in our co-generation of biomass based power. 

What are Godavari Biorefineries plans for FY 2023-24? 

As mentioned, most of the investments that we are contemplating to make will come on stream in the year after. We are looking at better performance in FY 2023-24 primarily because of two reasons. First, we expect the energy prices have come to a better level compared to the last year. Second, we are seeing some growth in the specialty chemicals that we are making. Third, the ethanol capacity that we brought on stream from 400,000 to 600,00 litre per day which happened towards the end of the last year. So, we will see better numbers in FY 2023-24 than FY 2022-23. 

The company is also looking at setting up grain based ethanol capacity. When it will be operational and how will it help in increasing overall ethanol capacity?  

We just got the environmental clearance for the grain based ethanol plant and we see it as a bolt-on facility, i.e. we will supplement our current capacity of ethanol. Grain is a short duration crop such as maize and also climate resilient. With that, when the sugarcane crushing season ends and we stop using the sugarcane syrups to produce the ethanol, we will combine grains with the molasses at the dual feed facility to optimize ethanol production. 

Once both the current expansion on sugarcane based as well as grain based are operations, what will be your annual ethanol production?  

We will exceed the production of 150 million litre of ethanol per year after the implementation of this project. 

You are talking about specialty chemicals as a focus area and also bio-based chemicals. Please shed some light on how you plan to expand on these fronts?  

There are companies which either through -- board room compulsions, regulations or regulatory incentives or through customer preferences -- are looking to reduce their carbon footprint and have all made commitments to use renewables or a path to net zero or reducing the total carbon footprint.

Our company is known to be innovative and of course, using renewables as a feedstock. Many of these projects involve working with global companies in which you work to either exactly substitute a fossil equivalent, which is often called a drop in, or you might make an equivalent item which may have slightly different properties, and those properties may be superior to what it replaces, or may sometimes be equal to. It is certainly a requirement. We are working with a few companies globally, right now and in time we will be working at pilot level followed by bench scale pilot level, semi commercial and commercial level. We look forward to seeing some of these projects on a commercial level. 

Which are your priority areas on the R&D front currently? 

 On the R&D front, our main focus is on converting renewable biomass feedstock into chemicals and into bio-based products. As a research driven company, we also wanted to think about creating a molecule that addresses an unmet need globally. We have targeted breast cancer, particularly with reference to triple negative breast cancer. We have been working to create such a molecule for more than 13 years. I am happy to say that we have done it through the preclinical stage and currently the molecule is under testing for safety studies. 

Godavari is partnering with Somaiya Vidyavihar University, KJ Institute of Applied Research, and Michigan State University to improve soil carbon and overall soil health. Would you like to explain the decarbonization process? 

The whole point is that it is the carbon that has been depleting. Keeping the whole depletion process in center, we are looking at depletion of gas reserves, oil reserves, coal reserves and even before these trees. However, what we don’t see is the soil carbon. It is the soil carbon that converts itself into carbon in plants. This carbon in plants is what we eat to make ourselves what we are. It is important to regenerate this carbon but unlike the carbon storage of one that is generated in a chimney. 

The other point which we are trying to say is how would you take the CO2 in the atmosphere and find a way to increase soil carbon. The whole earth soil can be used, therefore, to regenerate itself and increase all carbon for mitigating climate change and meeting the biomass leaves that we have.  

Godavari Biorefineries cannot operate on its own. It has been a long time since the KJ Somaiya Institute of Applied Research has been supporting this as an independent research body, looking at various issues relating to agriculture. We are adding a facet to this which is regenerative carbon and working in partnership with Somaiya Vidyavihar University which is here in Mumbai and I am very proud to say that even universities such as Michigan State in the US, some of their faculty are working with us to help take this whole goal forward.  

To put in a perspective, we are a company using renewable carbon to meet needs of food, energy, electricity, and materials. And we are innovating more materials from renewable carbon and renewable biomass. At the same time, when we look at circularity we also want to look at carbon source itself and the whole regenerative carbon is to make sure that while we use atmospheric carbon which comes through the soil, we also have to make sure that that soil carbon is actually improved. 

As our feedstock comes from soil, I often think this is overlooked and it will affect years of food and biomass, and this has to be addressed on a global scale. Our attempt is to do it in an ecosystem that we serve. This is why we brought the University into it is because if it's successful, it can work on a wider ecosystem. We are also working with a University in Kenya.