Ethyl alcohol is one of the co- products of the sugar industry. It is either made directly from sugarcane or from Molasses, which still contain some sugar, but this sugar cannot be extracted using current technologies. These Molasses are fermented with yeast to give ethyl alcohol. The mixture is then distilled to separate the alcohol from the mixture. Thus separated alcohol is about 95% pure and finds uses in pharmaceuticals, potable uses, industrial uses, and it can be further purified to about 99.5% purity to give Fuel Ethanol

Ethanol is used as an automotive fuel by itself and can be mixed with gasoline to form what has been called “gasohol”. Over 3.57 billion gallons of Ethanol are blended with gasoline every year in the United States (Renewable Fuels Association). Since the Ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions that pose a health hazard. Since Ethanol is produced from plants that harness the power of the sun, ethanol is a renewable fuel.

The use of alcohol-blended fuel as a clean fuel has increased the demand for ethanol in the last decade and a number of countries, including India, which have a government-sponsored minimum on mixing a fixed percentage of ethanol with petrol. With the Government imposing the blending of ethanol into unleaded petrol the production of ethanol from molasses has improved the financial viability of sugar mills. As a result, more sugar mills are now adopting an integrated business model that revolves around effective utilization of molasses.

Various Governments are providing incentives to expand Ethanol production and use. Brazil and United States use large quantities of Ethanol as a fuel. Some Canadian provinces promote Ethanol use as a fuel by offering subsidies of up to 45 cents per gallon of Ethanol. In France, Ethanol is produced from grapes that are of inferior quality for wine production. Prompted by the increase in oil prices in the 1970s, Brazil introduced a program to produce Ethanol for use in automobiles in order to reduce oil imports. Brazilian Ethanol is made from sugar cane. Pure Ethanol (100% Ethanol) is used in approximately 40 percent of the cars in Brazil. These cars are known as Flex Fuel cars since they provide an option of using petrol or Fuel Ethanol or both in any proportion. The remaining vehicles use blends upto 24 percent Ethanol with 76 percent gasoline. Brazil consumes nearly 4 billion gallons of Ethanol annually. In addition to consumption, Brazil also exports Ethanol to other countries.

Brazil and the United States are the largest ethanol producers, accounting for roughly 38% and 29% of the world market, respectively. In the United States , over 3.6 billion gallons of ethanol are blended with gasoline every year. On January 31, 2006 in his policy statement the US President recognized the future of ethanol as not only a blending component, but as a mixture of 85% ethanol and 15% gasoline.

The SSL has two Fuel ethanol plants having an aggregate capacity of 120 KLD. This will further go up to 180 KLD by March 2007 with the commencement of Brijnathpur Distillery. The technologically advanced ethanol plants are fully automated and employ the new generation molecular de-hydration sieve process. These plants have the optionalty to produce ENA with minor modifications, if desired, meeting the international standards. The Fuel Ethanol is to be supplied to petroleum companies in India.