Financial Daily from THE HINDU group of publications
Wednesday, Aug 17, 2005
Financial Daily from THE HINDU group of publications Wednesday, Aug 17, 2005 |
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Corporate
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Rights Issue Agri-Biz & Commodities - Sugar K.K. Birla group to invest Rs 450 cr on sugar capacity expansion Our Bureau
Kolkata , Aug. 16 THE K.K. Birla group is planning to invest approximately Rs 400-450 crore during the next two years in its three sugar companies. The investment will be mostly in capacity expansion programme and in one greenfield project. These three sugar companies are Upper Ganges Sugar & Industries Ltd, Oudh Sugar Mills Ltd and Govind Sugar Mills Ltd. By 2006-07, the group aims to increase its total sugar producing capacity to 50,000 tonnes crushed per day (tcd) from the existing level of 40,000 tcd. According to Mr C.S. Nopany, Director of Upper Ganges Sugar & Industries, the group will increase its total distillery capacity too because it wants to produce more ethanol, which has an immediate demand among the oil companies. The group would also set up co-generation power units. At a board meeting held on Tuesday, Upper Ganges has decided to set up a greenfield sugar plant of 7,000 tcd in Uttar Pradesh. The plant is likely to be ready within the next 14 months and would be commissioned by 2006-07. It would be the first sulphur-free sugar producing unit of the K.K. Birla group. It would also have a co-generation power unit. Site of the new plant would be ready within the next one month. Mr Nopany was, however, hesitant on spelling out the actual cost of the plant. According to him, there are several factors which might lead to a wide variation in the cost structure. However, sources said that it would be in the region of Rs 275 crore. The board had also decided to come out with a rights issue of Rs 65-70 crore for working capital requirements. The premium and ratio of the rights issue would be decided later on. "We wish to complete the issue by the end of this year. In all probability Enam Securities would be the lead manager," Mr Nopany told reporters at a press conference on Tuesday. Upper Ganges had also decided to pay an interim dividend of 40 per cent or Rs 4 for every share of Rs 10 face value, against 30 per cent of the last financial year. The company could finalise its accounts for the period July-June 2004-05, as it had undergoing a restructuring exercise. According to him, a capacity expansion programme is currently on at Oudh Sugar where the capacity is being increased to 10,000 tcd from 7,500 tcd. The distillery capacity is also being increased to 125 kilolitres per day (klpd) from 65 klpd. The cost of this capacity expansion is Rs 90 crore. The company had conducted a rights issue of Rs 39 crore about three months ago. "We would also expand the capacity of the Govind Sugar Mills. At present, it is 6,500 tcd. Plans would be drawn some time during next year and it would cost anywhere around Rs 50-100 crore," he said. It may be noted that Upper Ganges' last rights issue was floated in 1995 when it mopped up Rs 9.3 crore. The ratio was two shares for every one share held.
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