Dwarikesh Sugar invests Rs 500 crore on expansion, co-generation

Bijnore, Uttar Pradesh, Dec 21: Dwarikesh Sugar Industries Ltd (DSIL) has embarked on a planned investment of more than Rs 500 crore for setting up of a new Greenfield integrated sugar plant at Dwarikesh Dham in Bareilly and capacity expansion in two of its existing units in Dwarikesh Nagar and Dwarikesh Puram here.

The investment, to be completed over a period of two years, will include setting up of a new sugar unit at Dwarikesh Dham with co-generation plant and proposed setting up of a distillery, enhancement of co-generation units at its two other existing plants, Mr G P Morarka, CMD, DSIL told reporters at a plant visit here.

The expansion process will be completed before October 2008 to gain advantage from Uttar Pradesh government's extended deadline for its Sugar Industry Incentive Scheme, 2004, he added.

The state government had recently extended the eligibility date of the Scheme to March 31, 2008 from the earlier date of March 31, 2007.

''With the eligibility of the state government's incentive scheme the company is expected to gain approximately Rs 100-125 per quintal (Rs 1,000-1,250 per tonne). In turn, the overall cost of production too would be less accordingly,'' Mr Morarka informed.

DSIL, a BSE and NSE listed company, derives its income from manufacture and sale of sugar, industrial alcohol, generation and distribution of power. It has three divisions such as sugar, power co-generation, and distillery (for industrial alcohol and ethanol production). It also sells its by-products.

Mr Morarka said ''we are looking towards opportunity to acquire at least one sugar plant in the next year as the talks are going with at least three companies within the state and one in Maharashtra.'' DSIL Chief further said the company has also applied for acquiring about 1000-acre land in the state to set up a Cane Development Institute to help the farmers of the area in getting them better seeds and methods to have higher yields from their crops.

The company, presently, has two units with total cane crushing capacity of 14,000 TCD (tonnes crushed per day) and co-generation capacity of 26 MW. Besides, it has also installed a 30,000 litre per day (KLPD) distillery for manufacture of ethanol, which has been operational since February, 2005.

Dwarikesh Nagar plant involved expansion of its co-generation facilities (operational) costing Rs 12 crore and setting up of a new distillery of 30,000 litres per day (operational) at a cost of Rs 13 crore. Currently, the plant has a capacity of 6,500 TCD. Dwarikesh Puram plant's estimated investment of Rs 250 crore covered expansion from 7,500 TCD to 10,000 TCD and 9 MW power plant which became operation in January 2006, and further expansion of co-generation plan of 24MW is in progress.

The 3rd greenfield plant at Dwarikesh Dham's capacity is expandable from 7,500 TCD to 10,000 TCD which is in progress costing Rs 150 crore and setting up of a 36 MW plant at a cost of Rs 100 crore (total investment of Rs 250 crore).

The company's total crushing capacity has risen to 14,000 TCD and is all set to increase to 21,500 TCD after the commissioning of its Dwarikesh Dham (Bareilly) unit in sugar season 2007-08.

DSIL produced a total of 1,70,000 tonnes of sugar during sugar season 2005-06, against the production of 1,05,000 tonnes in the previous year.

Apart from sugar sold in open market, the company also has two brands - 'Bundki' and 'Dwarikesh' - which are sold at malls in UP, Delhi and Gurgaon.

DSIL's total co-generation capacity, after commissioning of Dwarikesh Dham plant (Bareilly), will be 86 MW of which 30 MW will be for captive consumption and 56 MW will be sold to state power grid at the agreed price of Rs 3.12 per unit. This arrangement will contribute substantially to the bottom-line during FY08.

As the mixing of ethanol with petrol has been made mandatory in all states from November 1, 2006, the company has already contracted to sell more than 2 million litres of ethanol to petroleum companies in the state by March 2007 at a price of Rs 21.50 per litre. It has a capacity to produce 7 million litres of ethanol in a year.

The government is likely to increase the mixing percentage from 5 per cent to 10 per cent from October 2007.

The company is also planning to sell accumulated carbon credits to developed countries to generate more revenue. It is in talks with United Nations Framework Convention on Climate Changes to get the registration for carbon trading.

DSIL plans to enter this market by 2007-08 and this new avenue is expected to add revenues of Rs 100 million to its bottomline.

During 2005-06, DSIL has raised funds amounting to about Rs 54 crore through 3 million Global Depository Receipts (GDR) representing 3 million Equity Shares of face value of Rs 10 each at the rate of 4 dollar per GDR.

The GDRs have been listed on Luxembourg stock exchange. Out of 3 million GDRs issued and allotted 29,37,500 GDR investors have opted for conversion into equity shares and balance 62,500 GDRs underlying equity shares are pending for conversion till September 30, 2006.

The company clocked a 52 per cent jump in its turnover at Rs 234 crore in fiscal year 2006 with a net profit of Rs 21 crore as against Rs 155 crore in 2005.

UNI