Financial Daily from THE HINDU group of publications
Tuesday, Dec 17, 2002
Financial Daily from THE HINDU group of publications Tuesday, Dec 17, 2002 |
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Corporate
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Mergers & Acquisitions Bangur group cos may take stake in sugar unit Kohinoor Mandal
KOLKATA, Dec. 16 THE sugar venture of the city-based S.K. Bangur group, Bharat Sugar Mills Ltd, may not remain a subsidiary of the group's flagship - West Coast Paper Mills Ltd - for long as other companies of the group are likely to take an equity stake in it. According to the company's official spokesperson, the initial investments have been made by West Coast Paper Mills, but other group companies may also invest in this business as and when necessary. It may be noted that West Coast Paper Mills has been contemplating setting up a sugar unit in Karnataka for almost two years. However, it is going slow on the project as, of late, the sugar industry has been plagued by poor returns and instability. According to the in-house corporate plan, Bharat Sugar Mills will set up a 1,250 tonnes crushed per day (tcd) unit at a cost of Rs 48.87 crore. There will be a bagasse-based co-generation power plant too. The project will be funded through internal accruals, equity from group companies and loans from banks and financial institutions. The S.K. Bangur group was earlier considering setting up a 3,500 tcd sugar unit. In fact, after getting formal clearance from the Karnataka government for a 2,500 tcd capacity, it made a fresh application to increase the installed capacity by another 1,000 tcd. "There is no shortage of funds. Bharat Sugar Mills has become a subsidiary of West Coast Paper Mills as it is the first company to invest in the project. Other group companies, including investment companies, may also hold a stake in the sugar venture,'' the spokesperson told Business Line. Recently, Bharat Sugar Mills allotted 50,000 equity shares of Rs 10 each for cash at par to West Coast Paper Mills by virtue of which West Coast's stake in Bharat Sugar has gone up to 98.62 per cent. Apart from paper, the Rs 500-crore S.K. Bangur group is into power, telecom and optical cables, chemicals, tea, coffee, rubber and information technology. Sugar will be their latest diversification project, which, incidentally, has some synergy with the paper business as the bagasse can be utilised for paper production. Other companies in the S.K. Bangur group are Fort Gloster Cables, Jayshree Chemicals, Kil Kotagiri Tea & Coffee Estate Co, Thirumbadi Rubber, Global IT Services, Sudarshan Telecom and Speciality Coating & Lamination. In 2001-02, West Coast Paper Mills recorded a net profit of Rs 31.86 crore on a turnover of Rs 487.20 crore. The sugar mill will come up at the Kesoralli village in Karnataka. The company has already received land from the Karnataka Industrial Areas Development Board.
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