Avantika Saraogi, an executive director on the board of BCML, is betting on diversifying into biochemicals and other organic materials in the face of growing environmental concerns. Her plans have an unusual moat—the company’s direct connection to over 550,000 sugarcane farmers.
Besides cane, the farmers can also supply the company with biowaste, which could, in theory, become the feedstock for making bioplastics or ethanol.
“The same farmer plants everything. We as an industry are sitting on bio-oil well. We are the oil rig,” said Saraogi, 33. “I have a 50-year relationship with my farmers. And I have 5.5 lakh farmers.”
Saraogi’s plan involves breaking down the feedstock received from farms into complex sugars and lignin. The complex sugars would then go into making biomaterials.
She is also exploring commercially viable technologies for using lignin, which is a complex polymer that lends structure and strength to plants.
“Biochemicals and biomaterials, besides bioplastics, are an ocean. PLA is not even the tip of the iceberg,” she said. PLA, or polylactic acid, is a biodegradable polyester derived from renewable resources like corn or sugarcane and used in manufacturing biodegradable plastic.
Saraogi’s math is simple: the cost of a carbon element in a sugar molecule is cheaper than that in crude oil. Now, the industry has to figure out how to extract the carbon in bio-based feedstock more effectively, she said.
“Everything requires heavy processing. It’s just that the traditional plastic industry has had 100 years to do it. We will be more efficient in the future,” she said.
A decadal vision
Saraogi’s plan, however, is far from firm. Neither the technology nor the chemistry are fully cracked. Once the technology is developed, ramping it to commercial scale and making it economically viable would also be a significant challenge.
But the biggest hurdle for Saraogi would be to convince the 50-year-old company’s board of directors. It took her “only four-and-a-half years” to convince them to greenlight the bioplastic plant. At an investment of ₹2,850 crore, it will be India’s first large-scale PLA factory.
Saraogi plans to position the bioplastic produced at the plant as an eco-friendly alternative to single-use plastics such as bags, straws, sticks, and water bottles.
When Saraogi joined Balrampur Chini Mills about five years ago she had two mandates—to work on maintaining farmer relationships and sugar cane procurement; and to figure out value additions from products and by-products.
BCML’s bioplastic plant is expected to be operational by the end of 2026. The company estimates it will ramp up to its full capacity of 80,000 tonnes of PLA per annum within six months of beginning operations.
Saraogi has the next 10 years of expansion for Balrampur Chini Mills mapped out. Once the PLA plant becomes operational and ramps up to full capacity, the company will chart out plans for a larger unit, she said.
She has also received the board’s nod to invest another ₹65 crore to install new equipment that would allow the plant to also use grain as feedstock instead of sugar.
“If the company is able to achieve its target of full utilisation within six months, phase-2 of PLA is definitely on the cards, in our view,” analysts at JM Financial said in a 13 August report. “In such a case, the company’s shift to specialised products from commodities could be even faster than anticipated.”
Wind in its favour
When its bioplastic plant is up, Balrampur Chini Mills will benefits from being the only producer globally with a fully integrated setup—from sugar cane procurement to PLA production in one location. Other PLA producers globally source either sugar or lactic acid, which is then processed into PLA.
Among the few globally companies making PLA at scale are NatureWorks Llc in the US and Thailand, Futerro in Belgium, TotalEnergies Corbion in Thailand, BASF SE in Germany, and some companies in China.
The total capacity of these companies is about 620,000 tonnes per annum, with plans of ramping it up to 900,000 tonnes in the near term, as per research from JM Financial. This places BCML’s 80,000-tonne unit competitively against global competitors.
BCML’s bioplastic push also has several policy tailwinds behind it.
The Uttar Pradesh government has introduced a Bioplastic Incentive Policy that offers 50% capital subsidy disbursed over seven years post the commissioning of a plant and when its capital expenditure exceeds ₹1,000 crore.
The state government also offers subsidized loans, 10 years of electricity duty exemption, and 10 years of net state goods and services tax reimbursement to bioplastic manufacturers. BCML’s first PLA plant at Kumbhi in the state qualifies for this.
In addition, many state governments have already banned various types of plastics and others are in the process of doing so. Himachal Pradesh has banned the use of 500 ml plastic water bottles at hotels and government events. Assam and Delhi have banned the use of 250 ml plastic bottles. In 2022, the Indian government announced a ban on the use of single-use plastic across the country.
“With favourable [government] measures in place, PLA can act as a replacement for [single-use plastics] and banned water bottles,” JM Financial analysts said in a June report.
The next-generation: Not just about bioplastics
The Saraogi family was one of the founders of Balrampur Chini Mills in 1975, when it was a modest outfit based in Balrampur Uttar Pradesh. Over the following years, the Saraogi family bought out their relatives to become the sole promoters of what is today the second-largest and the most-profitable sugar company in India.
The Saraogi family is based in Kolkata but has its entire business concentrated in eastern and central Uttar Pradesh.
Meenakshi Saraogi, the grandmother of Avantika and the second-generation promoter of the company, was instrumental to the company’s expansion to 10 factories from one. She oversaw the farmer relations and cane procurement. “Nobody can beat me at understanding the cane industry,” she said in a 2011 interview to Fortune magazine.
She was succeeded by her son Vivek Saraogi, now the managing director of BCML.
Avantika, who started running two restaurants in her home city of Kolkata in 2015, never planned on joining the family business. However, when her father Vivek asked her if she wanted to join BCML or if the family should look at a professional management to run the business, she rose to the challenge.
She joined BCML in 2019 and the first order of business was to take over farmer relations and cane procurement from her grandmother.
Her plan to diversify beyond sugar and ethanol isn’t just about sustainability—it’s expected to help Balrampur Chini Mills partially insulate itself from the vagaries of the sugar industry.
In an industry where cane, sugar, ethanol, and power prices are heavily regulated by the government, companies are left with few tools to overcome external challenges like an unfavourable monsoon.
The stagnant prices of ethanol the past two years have weighed on the profitability and share prices of sugar companies. BCML shares have fallen by more than 16% on BSE this year.
“Any potential increase in cane prices in UP without a similar rise in sugar and ethanol price poses further strain on financials of sugar mills,” analysts at Elara Capital said in a report dated 13 August. “A material increase in MSP (maximum selling price) of sugar and allowing exports would bolster sentiments as well as financials.”
