The Hindu Business Line : GMR Ind prepares for Rs 1,000-cr expansion

Corporate - Diversification
Agri-Biz & Commodities - Sugar
Web Extras - New Projects
States - Andhra Pradesh
GMR Ind prepares for Rs 1,000-cr expansion

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May consider FCCB issue for funding

Expansion plans include Rs 40 crore for the ongoing sugar facility in Andhra Pradesh.

Hyderabad , Oct. 26

GMR Industries Ltd, the flagship company of GMR group, is mulling a major expansion programme involving close to Rs 1,000 crore investment over the next few years. The company is eying a three-fold increase in turnover to reach Rs 1,000 crore by 2010-11 from the existing level of around Rs 350 crore.

Addressing newspersons here on Thursday, the GMR Industries Managing Director, Mr K Narayana Rao, said the expansion plans include the Rs 40 crore for the ongoing sugar facility in Andhra Pradesh and the Rs 273-crore Greenfield sugar complex coming up near Hubli in Karnataka, which recently attained financial closure.

Further, the company's Business Development Group is exploring the possibilities of setting up two more sugar complexes with co-generation and distillery in Maharashtra and Bihar at a cost of around Rs 275 crore each, a medium density fibre board (MDF) manufacturing facility using surplus bagasse at a cost of Rs 100 crore and an integrated dairy project at an investment of Rs 20 crore to improve farmers' non-agricultural income, Mr Rao said.

To part finance the expansion programmes, the company would consider raising required funds through issue of foreign currency convertible bonds (FCCBs) or private placement of equity at an appropriate time. "We may firm up our plans on these expansions within the next six months," Mr Rao said.

Hiving off ferro alloys

In a bid to have more focus on each business, the company is hiving off its ferro alloys business into a separate company - GMR Ferro Alloys & Industries Ltd. The board has approved the demerger based on ratio determined by Deloitte Haskins & Sells. Further, the company is expecting to obtain mining lease in Orissa, which it expects would result in significant reduction in raw material cost.

Carbon trading

Stating that the company has decided to enter the field of carbon trading, Mr Rao said the company's sugar complex has registered with the United Nations Framework Convention on Climate Change to participate in emission trading. ]

The company is now eligible for 44,729 certified emission reduction (CERs) per year. Taking the current rate of $10 per CER, the company expects additional revenue of $0.45-million (Rs 2 crore) per annum, which could be doubled from next year.

Further, the company has also taken up registration of 16MW co-generation power plant in the Clean Development Mechanism and expects additional revenue from the sale of CERs in respect of methane gas from distillery and 16MW co-generation project starting from 2007-08.

Q2 sales up

The company reported a growth of 13.9 per cent in turnover at Rs 79.46 crore (Rs 69.76 crore) and a marginal fall in net profit at Rs 10.1 crore (Rs 10.86 crore) for the second quarter of the current fiscal ended September 2006. Mr Rao attributed the fall in profit to decrease in selling prices of sugar.

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