Shares of Shree Renuka Sugars soared 6% on March 31 after the company said it had begun commercial production of ethanol blended with gasoline using expanded capacity.

“Following our announcement on February 13, 2023, to start commissioning activities at its expanded ethanol production capacity at Athani (from 300 KLPD to 450 KLPD) and Munoli (from 120 KLPD to 500 KLPD) plants, we are pleased to inform you that the company has started commercial production of ethanol has commenced using the expanded capacity,” the company said in a bourse filing.

After commissioning, the company’s ethanol production capacity will increase from 720 KLPD to 1,250 KLPD.

Shares of the company were up 4.1% at Rs 44.51 on the BSE at 12:57 pm.

Shree Renuka Sugars, executive chairman Atul Chaturvedi, recently told CNBC-TV18 that the full benefits of ethanol capacity expansion would be realised in FY24.

He said operating margins in FY23 will be much better, with revenue growth of over 40%, while exports will be 30-35% higher.

Even if crude oil prices fall, ethanol demand will not be affected. He said the company expanded its capacity from 520 KLPD to 1,250 KLPD as ethanol is still more cost-effective than fuel in the country.

Chaturvedi said ethanol would allow the company to increase revenue, noting that ethanol production has increased by 20-25%.