Molasses prices, however, are said to be sluggish, due to sufficient supplies from cane production and low offtake. This is feared to go down further with new cane arrivals in March next.

Industry sources say, one litre of potable and industrial alcohol requires around 12-15 litres of water. However, against this requirement, the alcohol industry complains of getting only 5-7 litres. This has resulted in the industrial alcohol prices to jump to Rs 13-15 per litre from Rs 8-9 per litre in November.

Ethyl alcohol (ethanol), a valuable raw material, is also widely used in the manufacture of various organic chemicals. It is also a source of energy and fuel. Traders say, most of the alcohol making units facing water shortage, have cut down the overall activity in the state.

Industry fears that, with drought like conditions hitting various parts of Maharashtra, alcohol prices will further increase soon by 10-15 per cent in the next few days. Among other leading domestic manufacturers of alcohol are: Ashok Organic Industries, Somaiya Organics India, Vam Organic Chemicals, etc.

``If the water shortage problems persists this year, we may not be able to export alcohol to other states and overseas,'' said All India Alcohol-based Industries Development Association president Ashok Kadakia. Total exports is said to be around 500 lakh bulk litres.

Of the total alcohol production in the state of around 3,700 lakh in bulk litres, 3,200 lakhs bulk litres are said to be consumed within the state, leaving the balance for export. But if shortage of water continues, it is feared that production will come down to around 25 per cent.

The price fuel is heightened due to the cutting down of production by the units. Currently, around 48 distilleries are working at half the installed capacity. Due to this it is estimated that there will be a corresponding loss in the overall production by around 25-30 per cent in the next couple of months, industry sources feel.

Alcohol prices vary from state to state. For example, in Gujarat it is sold at around Rs 13 per litre in Tamil Nadu, at Rs 7 per litre in Uttar Pradesh. In India, there are about 300 distilleries with a total capacity of about 2,825 million litres. Meanwhile, in the Mumbai chemical market, increase in the alcohol price has no major impact on downstream products, due to the fact that there is already over-supply of stocks. Leading alcohol traders said that due to heavy supply of various alcohol based acids, prices have remained sluggish.