The Hindu Business Line : Simbhaoli plans Rs 423-cr expansion

Buoyed by the good sugar season, the Rs 600-crore Simbhaoli Sugar Ltd plans to invest Rs 423 crore in overall expansion including a new sugar factory in Ghaziabad, Uttar Pradesh. The new investment will also augment the crushing capacity at its two existing sugar factories.

Post-expansion, the company's crushing capacity will go up from 11,000 tonnes crushed per day (tcd) to 20,000 tcd. "We will be investing Rs 125 crore in the new plant which will be fully automated and reduce the need for workforce by 50 per cent. The specialised sugar manufactured in this plant will target institutional users like pharma companies, candy manufacturers and high-end users," said Mr Sanjay Tapriya, Director, Simbhaoli Sugars Ltd.

Keeping pace with the country's retail boom, the branded sugar business is growing at 30-40 per cent per year. Sold under the Trust brand name, Simbhaoli Sugar enjoys about 20 per cent of the market share.

To finance the expansion plan, the company has raised Rs 52 crore through rights issue, Rs 150 crore through foreign currency convertible bonds, Rs 70 crore from banks, Rs 50 crore from internal accruals and Rs 80 crore from sugar development fund.

Simbhaoli is also on the look out for acquisition for further expansion. "The growing competition among the sugar companies in Uttar Pradesh will force smaller units to sell out as cost of buying sugarcane going up on a regular basis. This will open up opportunities for us to go in for cheap acquisition," Mr Tapriya said. The company is eyeing Maharashtra Government's privatisation programme for acquisition. The company is also scouting in Gujarat and Madhya Pradesh.

The company produces 20 million litres of ethanol per year, which is likely to go up to 30-35 million litres once the expansion plan is completed. Revenue-wise, the distillery and power divisions chips in about 55 per cent of the company's profit, while 45 per cent comes from sugar business.

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