Shares of Praj Industries took a massive hit and plummeted 14% on 8 December after the government of India took a decisive step to ensure adequate sugar supply and price stability and banned all sugar mills and distilleries from using sugarcane juice to produce ethanol.

This decision is set to have a significant impact on India’s ethanol production landscape.

Currently, B-heavy molasses accounts for 65% of ethanol production, C-heavy accounts for 10% of ethanol production, and sugarcane syrup accounts for 25%.

The ban on sugarcane for ethanol production will have a significant impact on companies like Praj Industries, which generates a significant portion of its revenue from this sector.

The long-term impact of this decision remains to be seen; the profitability of Praj Industries may decrease due to the loss of ethanol revenue.

The company has had a strong market share of around 60-65% in the manufacturing of domestic ethanol for over 15 years. The company’s experience includes 1G and 2G ethanol technologies along with sustainable solutions for various sugar streams and lignocellulosic biomass.

At 3:30 pm, the shares of Praj Industries closed 11% lower at Rs 540.70 on NSE.