The Hindu Business Line : GMR Industries taking over sugar factory from co-op society

GMR Industries Ltd (GIDL) is taking over the sugar factory of Shri Dhanalaxmi Sahakari Sakkare Kharkhana Niyamit, a co-operative society registered under the Karnataka Cooperative Societies Act, 1959, in Belgaum district, on a build, own, operate and transfer (BOOT) basis.

GMR has signed a 25-year lease with the co-operative society to take over the sugar factory that has a capacity of 2,500 tonne crushed per day (TCD) and a co-generation plant, located at Khanapeth in Ramdurg taluk of Belgaum, a cane-rich zone with high recovery potential.

The lease rental is estimated to be between Rs 6 crore and Rs 7 crore, a year from 2008 onwards, said Mr V. Raghunathan, Managing Director, GIDL.

GMR hopes to realise returns of at least 18 per cent per annum, he said. The company has taken this hedge on the basis that sugar prices would go up over the next two years. Besides, the sugar recovery in the region is as high as 12 per cent, ranking among the highest in the country, and the cane availability for the factory is pegged at nine lakh tonnes.

While about 80 per cent of the work is complete, GMR is expected to complete the balance work of supply and erection as per the lease agreement.

“We plan to invest Rs 30 crore in completing the remaining work and expect to start crushing operations in the second half of 2008,” Mr Raghunathan said.

“We plan to expand the plant capacity from 2,500 TCD to 4,000 TCD and the Cogen capacity from 6 MW to 14 MW in a phased manner and are looking at setting up a distillery in about two years’ time,” he added.

Further, Mr Raghunathan said the company’s 3,500 TCD integrated greenfield plant with 24 MW Cogen facility at Haliyal in Karnataka would commence operation from January 2008. GIDL has invested Rs 300 crore in the Haliyal plant.

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