The Hindu Business Line : Leasing, acquisition being explored — Pvt sugar mills mull options to hike cane crushing capacity

PRIVATE sector sugar mills in Tamil Nadu are exploring opportunities to increase sugarcane crushing capacities in the short-term driven by a buoyant trend in the sector.

One option is leasing the cooperative sector mills, which is now available in Karnataka.

Shri Ambika Sugars, an associate company of Thiru Arooran Sugars Ltd, has taken on lease a cooperative sugar mill in Karnataka. Earlier, Kothari Sugars announced that it was taking a lease of a mill in Mandya District, Karnataka.

Limited opportunities: Another option would be to go for acquisition, but the opportunities are now limited — buoyancy being the reason for the same.

Mr Ram Tyagarajan, Chairman and Managing Director, Thiru Arooran Sugars, said leasing, though not an ideal option, was the only one currently available. But it is only short-term. Sugar mills do not really have too many opportunities to expand. Also, Karnataka is leasing its mills only for a seven-year period, which means mills will have to take it as it is. There could not be any significant investments to modernise or upgrade that mill, he said.

Race for mill: According to industry sources, another option is acquisitionofArunachalam Sugar's mill in Tiruvannamalai District, which is on the block as a part of debt recovery proceedings. A number of private sector mills in Tamil Nadu have evinced in the bid, which closes later this month.

The mill has a capacity to crush about 2,500 tonnes sugarcane a day and comes with a 19-MW capacity cogeneration plant. The reserve price is fixed at Rs 96 crore.

The mill is on the block for dues owed to the Indian Renewable Energy Development Agency, which took it over under the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002. Last year, the Murugappa group acquired Arunachalam Sugar's group company New Horizon Sugars which has a sugar mill in Pondicherry.