We continue to implementing our strategy to ‘Go beyond the ordinary’. Our strategy is to add value to our feedstock, and its related biomass. To convert biomass into useful product, chemically, physically or biologically. It is to create a brand, offer solutions to our customers, and to do so sustainably. It is to contribute to the community.
A successful implementation of this strategy would lead to a big difference in our sales, value add, and the value derived per ton of biomass. Our researchers are working in these areas, either to develop our own knowledge, protect the IP where possible, and license it where we need to.
We have made progress on all these fronts. We have completed the investment as envisaged under the investment made by Mandala. Under the same, we have commissioned the production of two new chemicals which are sold in the fragrance and the cosmetics industries. In fact, because of these products, we have successfully penetrated markets in North America and the Far East.
We have also optimised the production of sugar, and substantially expanded the production of ethanol and renewable electricity. The increased ethanol production will be in financial year 2018, and the increased power production in the financial year 2019. We have also spent much effort in water use efficiency and energy efficiency. For water conservation and reuse, we were given two awards last year. One by the ICC, and the other by FICCI. We also won the FKCCI award export excellence for 2017 for Bagalkot district amongst all industries.
In energy, we have implemented a bagasse dryer, and we have also installed an incineration boiler that extracts energy from the waste of distillation. With these improvements, we will be generating surplus bagasse, that will be used for added power generation in the coming couple of years, and then as a feedstock for making our cellulose based products. Our aim is to work on conversion of biomass to cellulose, hemicellulose, lignin, and their derivatives. Our surplus bagasse will be used to make these products at an industrial scale. We have been engaging with customers to get product approvals, and we have made progress on this front by receiving customer approvals.
We have already laid the Foundation stone for this next generation bagasse based biorefinery and ethanol based specialty chemicals. The Foundation stone was laid by Honourable Minister for Industries, Shri R. V. Deshpande. He was accompanied by Smt Umashree, Minister for Women and Child Development and Kannada and Culture, Shri Govind Karjol, MLA Mudhol, Shri, R B Timmapur, MLC.
Much of our pipeline has been created by our research. To give further impetus to research, we built a new Research Laboratory that was inaugurated by Padma Vibhushan Professor. M. M. Sharma. Dr. M. M. Sharma is a living legend in the Indian Chemical industry, and his support and guidance has always been a motivating force as we move forward. The new State of the Art Laboratory, further strengthens the company’s resources to build a future based on innovation and research.
But as we continue on our march forward, we have to live and face the challenges of the present. The severe drought in Karnataka and Maharashtra affected our operations in the season as we had predicted, in terms of recovery and crushing. Our recovery fell to 10.23% (we last had this recovery in 1987-88), and our crushing was 11.85 lakh tons of cane. This deeply affected our capacity utilisation, and in turn our profitability. Profitability was further affected by the collapse in power prices in the open access market.
Currently, we have signed a new Power Purchase Agreement ( PPA) with the Government of Karnataka. To help bridge the gap between demand and supply of sugar, the Government announced an quota based import policy of raw sugar to convert to white sugar. We have been allocated over 11,000 tons of raw sugar for processing to refined sugar during the 2017 off season. This will help the financials in the March 2018 financial year. Also, rains in the 2016 monsoon season were better and the cane was not affected, so we expect normal recoveries this year, and improved crushing in the coming season. With higher crushing, a diversified range of chemicals, and substantial increase in ethanol and power sales, we expect the company to do show a much better financial performance in the coming years.
In spite of the ups and downs of weather, it is necessary for us to work closely with the farmer, for the long term health of both of us. We are inextricably linked together. Our aim is to see that the farmer and the farm are healthy. In the short and long term. To do this, we continue to work on introducing drip irrigation, intercropping, soil testing, subsequent supply of quality inputs, supply of tissue culture plantlets, and agronomic practices for achieving high yield. We have launched a new app, Kisan Khazana, to help the farmer connect with us.
As we continue on this journey and transformation, we are conscious that as the world changes, we will need to change faster. In our pursuit of our objectives, we will also keep our attention on the triple bottom line. Financial, Social, and Environmental. In our CSR initiatives, we continue to make education opportunity available to the communities around us through schools, scholarships and vocational training centres.
Before I conclude, I would like to pay my respects to Dr B. R Barwale, who passed away this past year. He was a wonderful man, and served on the Board of Godavari Biorefineries for over 23 years. He had resigned from the Board of Godavari last year, due to his advancing age. He was the Founder of Mahyco, and was also a recipient of the World Food Prize. He was a great support to the company, and also to me, personally.
Chairman and Managing Director