India Ethanol Tender Drops Cane: Venky's, Gulshan Polyols Maize Risk

India has set the sugar diverted to ethanol for the 2026-27 supply year at zero, Bloomberg and other outlets reported on October 17, 2026. The new ethanol tender no longer buys cane-route ethanol, so the gap shifts to grain, and maize-based poultry feed in India could get more expensive.[1][2]

What the India ethanol tender changed

State oil companies tendered for about 11 billion litres.[3] Cane juice, sugar syrup and B-heavy molasses are excluded.[1][3] The tender also cuts the maize-ethanol price from Rs71.86 to Rs68.86 per litre.[3]

The government acted after El Nino hurt the cane crop.[1] The USDA Foreign Agricultural Service forecasts India's 2026-27 sugar output at about 29.5 million tonnes.[4]

Background: how India makes ethanol

India blends ethanol into petrol; state oil companies buy it by tender from distillers.

One feedstock family is cane: cane juice, or the molasses left after sugar is made. B-heavy molasses keeps more sugar, so using it for ethanol means less sugar. The other family is grain, mainly maize and rice.

Through August of the 2025-26 supply year, India delivered about 8.95 billion litres of ethanol. Cane juice supplied 1.49 billion litres and B-heavy molasses 1.07 billion, 2.56 billion together; grain supplied 6.24 billion.[5] About 3.4 million tonnes of sugar went to ethanol that year.[2]

From cane to maize to chicken feed

Step 1. The roughly 2.56 billion litres that cane routes supplied must now come from grain or other molasses. Against the 6.24 billion litres grain delivered, that is about 40% more.[5]

Step 2. Grain ethanol needs more maize. The Grain Ethanol Manufacturers Association estimates that ethanol's maize demand could rise 40-50% next year if rice supply stays unchanged.[6] In late August, Indian maize had already reached about Rs26,500 per tonne.[7]

Step 3. Maize is about 55% of poultry feed by weight, and poultry consumes about 60% of India's maize.[6][7] Dearer maize raises feed costs and squeezes poultry margins.

Step 4. Grain distillers may win orders but get Rs3 less per litre and pay more for maize.

Step 5. Cane returns to sugar, adding domestic supply. India allowed 1 million tonnes of duty-free raw sugar imports this year, and that demand pushed ICE raw sugar to 18.73 cents per pound in September.[8][9] More domestic sugar could shrink that import demand.

Companies that may be affected

Venky's (VENKEYS) is an integrated Indian poultry company that makes feed, raises birds and sells chicken, on the maize-to-feed link.

In Q1 FY27 (April-June 2026), Venky's revenue was Rs1,118.38 crore, of which poultry was Rs516.89 crore, about 46%. Poultry pre-tax profit was only Rs16.25 crore, and group net profit was about Rs50 crore.[10] In February 2026, the company attributed part of a doubled quarterly profit to lower maize, soybean and millet prices.[11]

An assumption-based estimate: if maize rises 10% and is about one third of poultry revenue, annual costs rise about Rs65-70 crore, roughly 30-35% of annualised net profit of about Rs200 crore. Poultry margin and pre-tax profit could fall. On October 16 it closed at Rs1,704, for a market cap of about Rs2,397 crore, up 1.9% over one month. The tender news came on Saturday, October 17, after that close.[12]

Gulshan Polyols (GULPOLY) is a grain-based ethanol producer; FY26 revenue was Rs2,312 crore, about 70% from ethanol.[13] For 2025-26 it won an order of 175,652 KL, worth Rs1,184.86 crore.[14]

It may gain grain-route orders but faces the Rs3 per litre cut and dearer maize. The estimate puts the net effect near +10% of EBITDA, in a -15% to +15% range, depending on its allocation.[13][14] On October 16, the stock closed at Rs170.80, for a market cap of about Rs1,050 crore.[15]

How to check this chain

In November-December 2026, oil companies announce 2026-27 allocations. Watch whether the grain route gets clearly more than last year and Gulshan Polyols wins more than 175,652 KL.[14]

If wholesale maize holds at or above about Rs26,500 per tonne through the November-February kharif harvest, ethanol demand is lifting it.[7] Venky's November and February results will show whether poultry profit falls on feed costs.

On sugar, the duty-free import window closes October 31 and the Indian Sugar Mills Association gives its first estimate in November; watch whether imports fall short of 1 million tonnes.

The chain breaks if the government reverses or loosens the curb, as soon happened after a similar December 2023 restriction;[16] if oil companies leave the tender under-filled instead of adding grain orders; or if the Food Corporation of India sells enough rice to distillers at a fixed Rs2,390 per quintal that maize does not rise.[17]

This piece maps possibly overlooked transmission chains; it is not a stock recommendation.

Sources

[1] Bloomberg · 2026-10-17 · India halts sugar diversion to ethanol · https://www.bloomberg.com/news/articles/2026-10-17/india-halts-sugar-diversion-to-ethanol-after-el-nino-hurts-crops [2] BusinessToday · 2026-10-17 · Government sets sugar diversion for ethanol to zero · https://businesstoday.in/india/story/2026-27-supply-season-government-sets-sugar-diversion-for-ethanol-to-zero-heres-why-562257-2026-10-17 [3] Free Press Journal · 2026-10-17 · India invites bids for 11 billion litres · https://www.freepressjournal.in/business/india-halts-sugar-diversion-for-ethanol-in-2026-27-invites-bids-for-11-billion-litres-amid-rising-prices [4] AAStocks · 2026-10-07 · USDA FAS: India 2026-27 sugar 29.5 Mt · https://www.aastocks.com/tc/stocks/news/aafn-con/GLH2699591L/latest-news/GLH [5] AutocarPro · 2026-09-12 · Ethanol supplies reach 895 crore litres (AIDA) · https://www.autocarpro.in/news/india-ethanol-supplies-reach-895-crore-litres-by-august-end-134667 [6] BusinessToday · 2026-09-16 · Sugar to maize: eggs, chicken costlier · https://www.businesstoday.in/india/story/sugar-to-maize-why-ethanol-demand-could-make-your-eggs-chicken-costlier-555876-2026-09-16 [7] BusinessToday · 2026-08-26 · Ethanol pushes maize to Rs26,500 · https://www.businesstoday.in/india/story/will-your-breakfast-get-costlier-egg-prices-jump-40-as-ethanol-pushes-maize-to-rs26500-551402-2026-08-26 [8] The Hindu · 2026-08-24 · 10 lakh t raw sugar imports permitted · https://www.thehindu.com/business/agri-business/sugar-prices-fall-in-the-domestic-market-concerns-remain-on-price-volatility/article71385599.ece [9] AAStocks · 2026-09-10 · ICE raw sugar hits 18.73c/lb · https://www.aastocks.com/tc/stocks/news/aafn-con/GLH2662268L/latest-news/GLH [10] ScanX · 2026-08-11 · Venky's Q1 FY27 results · https://scanx.trade/stock-market-news/companies/venky-s-q1-results-net-profit-surges-216-yoy-to-50-crore/47986018 [11] Food Business MEA · 2026-02-11 · Venky's Q3 profit doubles on lower feed costs · https://www.foodbusinessmea.com/venkys-india-q3-profit-doubles-on-lower-feed-costs-poultry-recovery/ [12] Bajaj Broking · 2026-10-16 · Venky's (India) share price page · https://www.bajajbroking.in/stock/venky-s-india-limited-share-price [13] CRISIL Ratings · 2026-07-23 · Gulshan Polyols Limited rating rationale · https://www.crisil.com/mnt/winshare/Ratings/RatingList/RatingDocs/GulshanPolyolsLimited_July%2023_%202026_RR_393385.html [14] HDFC Sky · 2025-10-23 · Gulshan Polyols ethanol supply contract · https://hdfcsky.com/news/gulshan-polyols-wins-1184-86-crore-ethanol-supply-contract [15] Bajaj Broking · 2026-10-16 · Gulshan Polyols share price page · https://www.bajajbroking.in/stock/gulshan-polyols-ltd-share-price [16] BusinessToday · 2023-12-07 · December 2023 precedent · https://www.businesstoday.in/markets/company-stock/story/sugar-stocks-plunged-up-to-7-today-heres-why-408530-2023-12-07 [17] Scroll · 2026-07-28 · FCI rice to distilleries at Rs2,390/qtl · https://scroll.in/latest/1094618/food-corporation-sold-rice-to-ethanol-plants-at-lower-price-than-it-paid-for-the-grain-centre