The Hindu Business Line : Riga Sugar plans public issue or GDR

Future plans
The capacity of the unit at Sitamarhi district would be increased to 4,200 tcd in the first phase.
In the second phase, it would be further increased to 5,000 tcd.

Kolkata , April 14

The Bihar-based Riga Sugar Co Ltd plans to go either for a public issue or a GDR (global depository receipt) to raise funds for its capacity expansion-cum-diversification programme.

According to Mr O.P. Dhanuka, Chairman and Managing Director, a final decision on this matter would be taken in the next three weeks. He would not mind reducing his holding in the company.

"At present, I am holding around 55 per cent. I might reduce it to below 50 per cent and I am worried about it because the shareholding pattern is spread wide," Mr Dhanuka told Business Line.

The cost of the proposed capacity expansion and diversification project, along with immediate working capital needs, has been pegged at Rs 60 crore. Apart from equity, there would be small debt from the Sugar Development Fund.

Capacity expansion

The unit of Riga Sugar is located at Sitamarhi district of Bihar. Its existing capacity is 2,500 tonnes crushed per day (tcd). In the first phase, which would end by November 2006, the capacity would be increased to 4,200 tcd.

Subsequently, in the second phase the capacity would be further increased to 5,000 tcd. Capacity of the baggase-based co-generation power plant would be increased from 7 MW to 19 MW in 2007-08.

"Out of 19 MW, we would need 12 MW for our own consumption. The rest, 7.7 MW, would be sold to the state grid," he said.

Riga Sugar is also setting up an ethanol plant of 45 kilolitres per day (klpd) capacity and an ENA plant of 25 klpd. The distillery would be situated in the same location and it would be ready by the year-end.

Expects Govt sops

According to Mr Dhanuka, the new Bihar government would give the company a 10 per cent capital subsidy and a five years holiday for cess and all local taxes. Excise would be refunded too during this period.

The company had earlier planned this capacity expansion in 2002. However, the management shelved because of the crisis that was prevalent at that time.

"Today the sugar sector is enjoying a bull phase. Prices are going to remain firm for the next three to four years," he said.

For the accounting year ended September 30, 2005, Riga Sugar recorded net sales of Rs 76.5 crore against Rs 60.1 crore in the previous year. Net profit increased marginally to Rs 2.47 crore from Rs 2.02 crore.

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