Simbhaoli Sugars has decided to hive off its power business into a separate company Simbhaoli Power. The move will help the company enhance power generation capacity at all three locations at Simbhaoli, Chilwaria and Brijnathpur in Uttar Pradesh. The three sugar mills have an aggregate crushing capacity of 20,100 tonnes of cane crush per day.
The plan, which is part of a business restructuring with lenders, was approved by the board on Friday, Simbhaoli Sugars said in a statement on Friday.
The company also proposes to invest Rs 300 crore for enhancing the power generation capacity in the new company, subject to shareholders approval, it said.
Biomass power generation
The company plans to double the biomass power generation facility at the three sugar plants from 60 MW. It expects the surplus power generation to increase from 30 MW to 80 MW. Since the power generation is from biomass it will be eligible for benefits under Clean Development Mechanism and Renewable Energy Certificate, said an analyst. Unlike thermal power, the fluctuations and increase in raw material cost will not have an impact, said an analyst.
The sugar industry, which is suffering because of surplus production and tight control on pricing by the Government, has impressed on the Government to decontrol the sector.
Sugar output in India
Sugar output in India, the world's second largest producer and consumer, is estimated at 24.2 million tonnes in the 2010-11 season (October-September), as against 18.8 million tonnes in the previous season. The country's total consumption stands at 22 million tonnes. With sugar pricing under the Government control, various mills are exploring the possibility of enhancing their revenues from other sources such as power and ethanol. Many corporate houses have spun of their ancillary business into separate units for delivering value for the investors.
Dalmia cement
Early this year, Dalmia Cement Bharat demerged its cement and power business into a separate company, Dalmia Bharat Enterprises and Dalmia Sugar and Industries.
The company draws majority of its revenues from the cement business which has an annual capacity of 9 million tonne in units located at Tamil Nadu and Kerala.
It plans 10 million tonnes of additional cement capacity by 2013.