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Saturday, March 24, 2001



Industry | Next

`Molasses-based chemicals hold promise'

M. Ramesh

CHENNAI, March 23

ALTHOUGH India is a major producer of molasses and there is a growing demand the world over for molasses-based chemicals, the huge export opportunity is being lost, because, principally, the Indian industry is not fully aware of the business potential in this area.

Sugar mills produce around 8 million tonnes (mt) of molasses, which is projected to increase to 10.5 mt over the next ten years. About 14 per cent of the molasses produced today is exported, without any value addition. On the other hand, the country impo rts molasses-derived chemicals.

For the first time, a detailed study (commissioned by the Centre and conducted by a consultancy company called Nandini Chemical Consultancy) has identified some molasses-based products and the business potential for each of them.

The study's report has been submitted to the Government (which may be expected to form the basis of a Molasses Policy), and was also the subject of discussion at a seminar organised by Nandini Consultancy in Chennai recently.

The study, which advocates setting up of plants for the identified molasses-based chemicals, makes two postulates for its recommendations.

First, the price fluctuation of molasses in the country is immaterial because the value addition in the manufacture of these chemicals is so high that volatility in prices is inconsequential.

Second, the target market is the world market and any entrepreneur who wants to first establish a ``good domestic base'' might as well look for opportunities elsewhere.

Oxalic acid: Used in textile and detergent, plastic, pharmaceutical and film industries, oxalic acid is a ``sunset'' chemical in the developed countries. In India, oxalic acid is produced from sugar, by a dozen-odd companies, most of them Mumbai-based. T he total installed capacity is 30,000 tonnes and the production is of the order of 22,000 tonnes, of which about 9,000 tonnes are exported.

To produce one tonne of oxalic acid, 2.5 tonnes of molasses would be required.

The global demand is estimated at 250,000 tonnes, which is projected to grow at three per cent every year.

Nandini Chemicals recommends a minimum economic size of 15,000 tonnes, which will call for an investment of about Rs 17 crore.

There is, however, a small catch. The technology for producing oxalic acid from molasses still requires some fine-tuning.

Two companies have attempted to produce oxalic acid from molasses instead of sugar - but both attempts failed. One was a Chennai-based company called Krebs India, which put up a 300 tpa plant at Pondicherry. The other was Punjab Chemicals and Pharmaceuti cals Ltd, the largest producer of oxalic acid through the sugar route.

Mr Venkataraman believes that both attempts failed not because of any fundamental technology problems, but because of teething trouble, to solve which funds were not available. Krebs India could not bring in fresh funds to solve the problems, while Punja b Chemicals was not willing to.

He says that with a little R&D push, a unit would be able to produce oxalic acid from molasses. Producing the acid from cane molasses would be very cost-effective and India would be able to take a substantial share of the world market.

The cost advantage can be gauged by the fact that while it takes 600 kg of sugar to produce one tonne of oxalic acid, it takes 2.5 tonnes of molasses to produce the same.

Citric acid: Unlike oxalic acid, the technology for producing citric acid from molasses is established and available. This chemical is mainly used as a preservative in food processing, pharmaceutical and cosmetic industries. It is also used to manufactur e sodium citrate, used in the production of detergents.

Seven tonnes of molasses would be required to produce one tonne of citric acid.

The global demand for this chemical is estimated at 703,200 tonnes in 2001, which is projected to increase to 1,040,900 tonnes by 2011. Correspondingly, the domestic demand is set to rise from 12,000 tonnes now to 38,475 tonnes by 2011.

Here again, a huge export opportunity exists, as India, being a major producer of molasses, can produce this chemical at competitive rates.

The study suggests that if a 20,000 tonne plant is set up, then by the year 2011, the country can export some 4,610 tonnes, still accounting for only 0.4 per cent of the world market.

Although the study recommends a 20,000-tonne plant, Mr Venkataraman believes the Centre should encourage establishment of at least 50,000 tonnes, which can lead to harnessing of overseas business opportunities.

One discouraging aspect in setting up citric acid units in the country is the track-record of other units. Atleast three units viz., Bharat Starch Industries of the Thapar group, Citric India Ltd of Mumbai and Andhra Citrates of Hyderabad, have failed so far.

However, according to Mr Venkataraman, these units are not in operation due to various reasons such as change in the priorities of the management and lack of additional funds.

There are other units in the country (Citurgia Biochemicals of Mumbai) and abroad, which are doing well and an enterprising entrepreneur should be able to make profitable investments in this area.

Lactic acid: Described as ``the chemical of the future'' because of its use in the manufacture of polylactic acid, it is reckoned that polylactic acid could substantially replace plastic bags, since it is bio-degradable.

Five tonnes of molasses would be needed to produce one tonne of lactic acid.

An indication of the huge potential that this chemical offers for the future is provided by the fact that two of the world's top chemical companies, Dow Chemicals and Cargill, (though competitors in the market) are collaborating to put up a

125,000-tonne plant, which is likely to commence production in 2002. Once the product picks up, the two companies propose to raise the capacity to one million tonne, perhaps by the year 2005.

The global production meets the demand for this chemical which is today only 70,000 tonnes, but the advent of the ``bio-degradable plastic'' is expected to drastically change the demand scenario.

Here again, a few companies have successfully put up lactic acid plants in the country, while a few others have tried and failed.

Lactochem Ltd of the Malladi group has a 200 tpa plant in operation. Karnataka-based Munirabad Chemical Co, which has a 180 tpa plant, is another example of a successful plant.

Orchem Ltd, an associate unit of Atul Drug House, attempted to put up a 300-tpa plant, but did not succeed. The company first attempted to manufacture the chemical synthetically on a laboratory scale, but ran into difficulties when getting into commercia l scale operations.

Another company called Sangita Bio-Chem of Orissa also attempted a venture, but is said to be held up for want of funds.

Two new units are coming up. One is Prathista Industries in Andhra Pradesh, with 1m000 tpa capacity and Interspice Biotech near Chennai. The latter is coming up with technology from GaLactic S.A. of Belgium.

The study recommends setting up of a plant of 3,000 tonnes capacity, which would cost around Rs 27 crore. Domestic demand is expected to increase from 560 tonnes at present to 1,980 tonnes in 2011.

Global demand is projected to rise from 70,000 tonnes to 181,560 tonnes by 2011. Even if India exports 5,000 tonnes in the year 2011, it would only have a three per cent share of the market.

However, the global demand projections are really not clearly predictable because if the use of polylactic acid as a bio degradable plastic catches on, the world demand could shoot over the roof.

The Nandini Chemicals study has also said that huge export possibilities exist for other molasses-based products such as lysiene, a nutrient that the human body needs but does not produce, glutamic acid, itaconic acid, gloconic acid, ephedrine hydrochlor ide and yeast.

The thrust of the study, whose recommendations are with the Government, is that the chemicals derived from molasses could be produced cost effectively and be profitably exported.

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