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Kohinoor Mandal

The company has decided to increase its capacity from 25,000 tonnes crushed per day to 40,000 tonnes crushed per day in the next three years.

KOLKATA, Feb. 7

SUGAR major Balrampur Chini Mills Ltd sees no immediate financial gains either in the company's topline or bottomline as a result of the Union Cabinet's decision on decontrolling the sector.

Instead, the company feels it can concentrate more on increasing its production capacity and improving the quality of its product.

It may even go to the extent of introducing branded sugar in the market but before anything, it will wait for things to develop further.

Mr Kishore Shah, Chief Financial Officer of Balrampur Chini, said at present there was hardly any price difference between levy and non-levy sugar. While levy sugar is sold at Rs 13 per kg, the market price of the non-levy portion is somewhere around Rs 13.50 per kg.

``So, if there is an immediate decontrol of the sugar prices, there will be a minor correction. The corrected price may hover around Rs 13.30-13.40 per kg. Hence, there will hardly be any significant financial gain for the company'', Mr Shah told Business Line. After the Cabinet decision, Mr Shanta Kumar, Union Minister for Food and Distribution, explained that sugar would be totally decontrolled by October 1.

However, by that time, the sugar futures exchanges will be ready and the Government will also work out a new sugar cane price mechanism.

Balrampur Chini feels that the recent Government moves are in the right direction as they will help stronger players to get a better hold on the market. Mr Shah felt that the Indian sugar industry might soon witness some consolidation. ``Mergers and acquisitions will start because marginal players will not be able to survive'', he said. So, It will help Balrampur Chini to maintain its number one position in the industry.

Currently, its market share is only two per cent and it hopes to increase it to three per cent in the next three years.

Sugar quality will be another focus area of Balrampur Chini. The Government's decision to give inland transport subsidies to sugar exporters will also help the company.

For the nine-month period ending December 31, 2001, Balrampur Chini's net sales and net profit dropped by 15 per cent and 18 per cent respectively. The company cited lack of export orders as the reason for this poor show.

Being located in the heart of Uttar Pradesh, carrying out export transactions was not lucrative as inland transport cost was high. However, the Government announcement will give Balrampur Chini a boost.

For the nine months ended December 31, 2001, the company's net sales and net profit were Rs 401.22 crore and Rs 28.87 crore respectively, against Rs 471.06 crore and Rs 35.07 crore in the corresponding period of the previous fiscal.

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