For selling extra neutral alcohol
Kolkata, May 4
The Bihar-based Riga Sugar Ltd, promoted by Mr O.P Dhanuka, has started talking with the spirits major, McDowell & Co, for selling extra neutral alcohol (ENA).
Riga Sugar has currently undertaken an expansion-cum-diversification programme at its plant located at the Sitamarhi district of Bihar. Capacity of the sugar unit is being increased to 5,000 tonnes crushed per day (tcd) from 3,500 tcd.
The company is setting up ethanol and ENA plants with capacities of 45 and 25 klpd (kilolitres per day), respectively. A new co-generation power plant of 12 MW is also planned.
Riga Sugar is banking heavily on the Union Government, which is likely to announce a mandatory 10 per cent blending of ethanol in petrol for all the states, for marketing its ethanol production.
For ENA, the company is talking to the Vijay Mallya outfit. "At present, McDowell is buying ENA for its plants in West Bengal and Bihar from Maharashtra and Karnataka," Mr Dhanuka told newspersons at a press conference.
McDowell to gain
According to him, McDowell would gain immensely on the transportation cost by buying ENA from a Bihar-based sugar unit. While the ethanol is expected to be commissioned in December 2006, the ENA plant would take another four to six months.
The capacity expansion programme of Riga Sugar was further boosted by the incentive scheme announced by the Bihar Government. Mr Dhanuka said the company would be benefited to the extent of Rs 17 crore.
Total cost of the expansion-cum-diversification project has been pegged at Rs 40 crore and to fund it, the company is contemplating floating either a GDR or ADR or FCCB issue.
Eyeing other units
Riga Sugar is also interested in acquiring some of the sick sugar units of Bihar. At present, there are 20 such units, of which 7-8 can be revived. However, Mr Dhanuka said, these are mired with several court cases.
As a part of its re-export obligations, it is exporting 7,000 tonnes of sugar to Bangladesh. Riga Sugar, he said, is willing to export more sugar provided Union Government allows it.
For the six-month period ended March 31, 2006, Riga Sugar's net profit jumped by 157 per cent and ended at Rs 9.03 crore against Rs 3.81 crore in the corresponding period of 2004-05. Sales increased by 26 per cent and ended at Rs 60 crore.