Financial Daily from THE HINDU group of publications
Wednesday, Jan 05, 2005
Financial Daily from THE HINDU group of publications Wednesday, Jan 05, 2005 |
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Corporate
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Mergers & Acquisitions Agri-Biz & Commodities - Sugar Birla Group to merge two sugar mills Kohinoor Mandal
Kolkata , Jan. 4 ERNST & Young is helping the KK Birla Group in its move to consolidate two out of its existing four sugar companies. The four sugar companies of the group are New India Sugar Mills Ltd, Upper Ganges Sugar & Industries Ltd, Oudh Sugar Mills Ltd and Govind Sugar Mills Ltd. The group is in the process of merging the Bihar-based New India Sugar Mills Ltd with Upper Ganges Sugar & Industries Ltd. The consolidation is taking place both in terms of geographical relocation and financial integration. A senior official of the KK Birla Group said Ernst & Young is helping them in finalising the valuation report of these companies. Once the valuation report is ready, the merger ratio would be worked upon. Thereafter, merchant bankers would be appointed and the amalgamation had to be approved by the designated high courts. He, however, ruled out an overall merger of all the sugar companies. "Nothing of that sort is being contemplated for the time being," he said. At present, New India's sugar factory is located at the Samastipur district of Bihar and it would be shifted over to Uttar Pradesh. The capacity of this plant would also be expanded to 5,000 tonnes crushed per day from the existing level of 1,750 tonnes crushed per day. The group was forced to take this decision because the Samastipur region of Bihar is prone to floods, which destroys the sugar crop regularly. As on March 31, 2004, New India had brought forward tax losses of Rs 22 crore. The KK Birla Group also decided that Saran Trading Co Ltd, an existing wholly-owned subsidiary of New India would first be merged with itself and then the sugar business would be taken out of it and merged with Upper Ganges. Apart from the sugar business, New India holds some important investments, which would remain with it. So, post-merger New India would become just an investment company. According to the official, the KK Birla Group has not fixed any time frame for the completion of the whole process. "It is difficult to fix up a time frame because lot of technicalities are involved," he said. At present, the total sugar crushing capacity of the KK Birla Group is a little over 36,000 tonnes per day. With the capacity expansion of New India's relocated unit, the group crushing capacity would touch almost 40,000 tonnes per day. The capacity of Oudh Sugar is 17,500 tonnes crushed per day. It has one unit in Bihar and two in UP. Govind Sugar's capacity is 5,000 tonnes crushed per day. It has just one unit in Uttar Pradesh. Upper Ganges owns two sugar units, one in Uttar Pradesh and the other in Bihar. It also owns a tea estate in Assam.
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