A Gujarat Factory Quit Yarn and Bet Everything on Ethanol

A Factory That Stopped Making Yarn

For three straight fiscal years, the factory at Moraiya Village in Ahmedabad had almost no revenue. Not because it lost customers, but because it deliberately shut its old business down. [9]

That looks alarming until you look at the balance sheet. Capital work-in-progress moved from ₹0.04 Crore in March 2023 to ₹25.46 Crore by March 2024, then ₹208.48 Crore by March 2025. The company was taking one factory apart and building another one in its place. [9]

From Yarn to Ethanol

The company was incorporated on December 17, 2003 as Nova Poly Yarn Limited in Dadra Nagar Haveli. It made Partially Oriented Yarn and Fully Drawn Yarn—synthetic yarn used in fabric. [1]

In 2009, a demerger from Nova Petrochemicals Limited turned it into CIL Nova Petrochemicals Limited, part of the Ahmedabad-based Chiripal Group. For more than a decade it operated in a cyclical, margin-compressed textile market. [1][2]

The group also has education and solar interests through Shanti Educational Initiatives and Grew Renewables. [3]

By 2023–2024, management began converting the Moraiya facility from textiles into a bio-energy complex. In September 2024, the board approved a name change, and on December 4, 2024, the company became True Green Bio Energy Limited. [2][1]

Who Runs the Show

True Green sits inside the Chiripal Group. The chairman is Jyotiprasad Chiripal. Day-to-day operations are led by Rajan Srivastava and Pooransingh Mathuria, with independent directors re-appointed for a second five-year term through September 13, 2030. [2][12]

What the Plant Actually Does

The new core is a 300 KLPD grain-based ethanol distillery. That means the plant is designed to produce 300 kilolitres of ethanol per day from grain. [3]

Unlike a molasses distillery tied to the sugar season, a grain-based plant can process broken rice, damaged food grains supplied through the Food Corporation of India, and maize. [6]

The main product is denatured anhydrous ethanol, with less than 1% water. It is made to IS 15464:2004 specifications for blending into petrol under the government's ethanol-blended petrol programme. [3][4]

The co-product is DDGS—Dried Distillers Grains with Solubles—a protein-rich animal feed. Selling DDGS helps cover the cost of grain and stabilises margins. [4]

The site also has a 6.42 MW captive power plant. The plant generates electricity first, then uses the exhaust steam for distillation heating. That reduces dependence on state power tariffs. [3]

The Numbers Turned a Corner

The financials look like a J-curve. In FY21, the old business recorded net sales of ₹154.20 Crore and a net profit of ₹5.33 Crore. Then revenue fell to effectively zero for FY22, FY23 and FY24 as legacy lines were idled. [9]

By March 2025, the new plant was in trial production. That fiscal year closed with revenue of ₹23.29 Crore and a net loss of ₹2.19 Crore. [2]

Then the plant stabilised. The quarterly progression tells the story. [9]

The December 2025 quarter was the definitive turning point. Net sales reached ₹84.20 Crore, of which ethanol contributed ₹81.66 Crore. The old yarn business was down to ₹2.53 Crore. [9][2]

March 2026 was stronger. Revenue reached ₹190.28 Crore, EBITDA came in at ₹43.47 Crore, and net profit hit ₹28.67 Crore. [9]

June 2026 kept the momentum: net sales of ₹227.57 Crore and net profit of ₹21.85 Crore. For full-year FY26, revenue scaled to approximately ₹284 Crore, EBITDA to ₹60.7 Crore and net profit to ₹31.3 Crore. Trailing return on equity reached 22.8%, with return on capital employed at 13.9%. [9][10][4]

A plant with almost no revenue for three years generated ₹227.57 Crore in a single quarter once it switched on. That is the whole story in one number.

The Catch: Debt, Pledges and Working Capital

Building a 300 KLPD distillery is expensive. Long-term borrowings rose from ₹0.06 Crore in March 2024 to ₹152.38 Crore by March 2025. By 2026, disclosures under the Large Corporates framework showed outstanding borrowings of ₹253.08 Crore. [9][11]

The interest bill now runs between ₹6.3 Crore and ₹6.5 Crore each quarter. Meanwhile, OMC payments are not instant—debtor days have moved from 67.0 days to 94.8 days. [9][4]

Promoters own 61.27% of the equity as of June 2026. FIIs hold about 17.84% to 25.40%. Of the promoter holding, 57.50% is pledged with lenders. [9][4]

Pledged shares can trigger margin calls if the stock falls sharply. The pledge shows skin in the game, but it also means a market correction can create ownership risk independent of the ethanol business. [4]

Why This Story Matters Beyond One Company

India has an E20 target: 20% ethanol in every litre of petrol. Meeting that target requires roughly 1,050 to 1,100 Crore litres of ethanol annually. [3][7]

Ethanol blending also supports the macro economy. It replaces imported crude with domestic grain and sugarcane, saving foreign exchange and creating a large buyer for farm output. [14]

Sugarcane alone cannot supply enough ethanol, especially in weak monsoon years. That is why the government has pushed grain-based distilleries into the gap. [13]

Grain Prices Decide the Margin

For grain-based ethanol, the core question is the crack spread—the gap between the cost of grain and the price OMCs pay for ethanol. The government influences both sides. [15][17]

Under ESY 2025–26 modalities issued on May 8, 2026, FCI rice for ethanol was capped at 72 Lakh Metric Tonnes—52 LMT in the base allocation and a further 20 LMT tranche. The price was uniform at ₹2,320 per quintal from November 1, 2025 to June 30, 2026. [15]

The conditions are strict. Only distilleries with a signed Ethanol Supply Agreement with an OMC can access FCI rice. Payment is 100% upfront. Release Orders are issued within 24 hours, and the rice must be lifted within 10 working days. Transport costs fall on the distillery. [15][16]

For the next ethanol supply year, the broken rice reserve price moved to ₹2,390 per quintal. A Dynamic Reserve Price mechanism now allows quarterly recalibration, and an additional 55 lakh tonnes of 100% broken rice was opened for electronic auction. [13]

Maize is the alternative. India's projected maize output for 2025–26 is 55 million tonnes. In the previous ethanol supply year, about 13.1 million tonnes of maize went into ethanol, surpassing sugarcane's share for the first time. [14]

A plant that can switch feedstocks has a better chance of protecting its margin when one grain gets expensive or restricted. [6]

The OMC Tender Machine

The buyers are Indian Oil, Bharat Petroleum and Hindustan Petroleum. They issue joint tenders for each ethanol supply year, which runs from November 1 to October 31. [7]

For 2025–26, the OMC tender sought about 1,050 Crore litres of denatured anhydrous ethanol. Bids are sorted by feedstock category. [7]

The government sets a different procurement price for each feedstock. The table shows maize at a premium to encourage use, while molasses categories carry their own incentive structures. [17]

Bidding rules are tight. A distillery cannot bid more than one-fourth of its licensed annual capacity in any single quarter. For a 300 KLPD plant running about 330 days a year, that means a theoretical annual ceiling of roughly 9.9 Crore litres and a quarterly cap around 2.47 Crore litres. A minimum bid of 100 KL is also enforced. [8][7]

There is also a political valve. During ESY 25-26, OMCs capped ethanol made from FCI rice at 234 Crore litres nationwide pending Ministry clearances. If that valve tightens, True Green must shift to maize or damaged grain to keep the plant running. [7]

Competition

True Green is a mid-sized regional player in a sector with much bigger rivals. TruAlt Bioenergy has 2,000 KLPD of installed capacity, and it is moving into sustainable aviation fuel with ₹150 Crore in support under the PM JI-VAN Yojana for a 10-crore-litre-per-annum facility. [18]

BCL Industries is another major grain-based player, with an order book exceeding 151,000 KL. Gulshan Polyols has also scaled grain-based ethanol capacity and reported Q1 revenue of ₹640 Crore. [19][18]

True Green's edge is a single lean site with captive power and a location in Gujarat's industrial corridor. Its limitation is concentration—it does not yet have the multi-state footprint of the larger players. [5]

What Could Go Wrong

• Feedstock margin compression: if grain prices rise and OMC ethanol prices do not adjust, EBITDA can shrink quickly. [13]
• Leverage and promoter pledging: borrowings of ₹253.08 Crore and promoter pledging of 57.50% create margin-call risk if the stock or operations weaken. [11][4]
• Working capital strain: FCI requires 100% pre-payment, while OMC payments can stretch to nearly 95 days. [15][4]
• Single-asset concentration: the ethanol business is centred at the Moraiya Village complex, so a site-specific disruption hits revenue directly.

What Comes Next

True Green has moved from execution risk—building and commissioning the plant—to operational risk. The next phase is less about distillation capacity and more about supply-chain execution: winning OMC allocations, managing feedstock choices, and collecting payments without squeezing liquidity.

The company carries ₹253.08 Crore in borrowings and a working capital cycle that demands large upfront grain purchases. If current cash flows are used to reduce debt and unpledge promoter shares, the balance sheet gets safer. If not, the same leverage that built the plant becomes its main vulnerability. [11]

The June 2026 quarter already shows the plant can operate at scale. The rest comes down to how well management navigates a market where the government sets the grain price, the ethanol price, and the rules of the tender. [9]

The Point of It All

Every litre of petrol now carries a little more ethanol from plants like this one. True Green's pivot is a small node in India's larger shift away from imported crude. The financials are one part. The policy machine around it is the other.