The Hindu Business Line : Kothari Sugars in expansion mode

This represents a significant turnaround for a company that came under the BIFR (Board for Industrial and Financial Reconstruction) purview in 1999 and was ordered to be wound up in 2002.

The company has now informed the stock exchange that it is exploring the feasibility of expanding its sugar business. Sources in the know say that of the two lines of business that the company is in - chemicals and sugar - it is of the view that sugar represents a more attractive option in the long term. Therefore, it is exploring the possibilities of expanding this line of business.

As to the situation regarding the BIFR, the company is well on its way to implementing the approved scheme. The promoters have brought in nearly Rs 50 crore and the company is getting back on its feet, they said.

It may be recalled that the company's Chairman, Mr B.H. Kothari, had earlier said that the rehabilitation package involved a relief of about Rs 150-160 crore to bring down accumulated losses of Rs 233 crore to Rs 50-60 crore.

BIFR had ordered the winding up of the company in May 2002. Kothari Sugars appealed against the order in July that year and filed a revised rehabilitation package in January 2003. The Appellate Authority for Industrial and Financial Restructure approved the revised proposal through an order dated June 17, 2004.

Under the rehabilitation package, a promoter company, Parvathi Trading, brought in Rs 47.30 crore and now holds 57 per cent stake in the equity. The total share capital is Rs 82 crore following inflow of funds under the rehabilitation programme.

The restructure package envisaged loan repayments, waiver of interest from 1999, reduction in existing capital and induction of additional capital by promoters to fund down payment for settlement and cost of the scheme.

The sugar division contributes to more than 50 per cent of the company's revenues.

In the first quarter ending June 30, 2005, the company has reported a net profit of Rs 6.79 crore on net sales of Rs 48.33 crore.

Sugar division accounted for revenue of Rs 28.46 crore, distillery Rs 5.51 crore and petrochem Rs 20.09 crore.

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