Balrampur pays Rs 182 cr for Dhampur unit in UP

Saraogi family to add 7,500 tonne crushing per day capacity

Balrampur Chini Mills, the country's largest integrated sugar company, today announced that it had signed a deal to acquire Rauzagaon unit of Dhampur Sugar for Rs 182 crore.

Kishor Shah, chief finance officer of Balrampur Chini Mills, said the proposed acquisition would add 7,500 tonnes crushing per day (TCD) to the company's capacity. The acquisition would also include a 12 MW power generation unit at Rauzagaon.

Shah added the takeover would help Balrampur Chini to have a capacity of 47,000 tcd by this weekend. The company was implementing an expansion plan of Rs 250 crore to scale up the capacity by 7,000 tcd by a year, he pointed out.

After the proposed divestment of the Rauzagaon unit in eastern Uttar Pradesh, the Delhi-based Goel family-promoted Dhampur Sugar will be left with two units in western Uttar Pradesh. ICICI Securities was the advisor to Dhampur Sugar for this deal. The decision to sell the unit, however, is subject to necessary approvals.

The Balrampur Chini stock closed at Rs 88.70 on BSE today, 5.22 per cent higher than the previous closing of Rs 84.30.

The Kolkata-based Saraogi family, promoters of Balrampur Chini, has been expanding the capacity of the company for the past few years through a combination of organic and inorganic growth. Its expansion programmes, so far, were financed by borrowing and internal accruals.

The company has lined up plans to raise funds from the overseas market through global depository receipt (GDR) and foreign currency convertible bonds (FCCB) to finance its expansion plans. It has decided to raised up $50 million from this route.

The company has set up a 7,000 tcd plant at Akbarpur, which is expected to start production this month. In the first instance of sugar industry receiving foreign direct investment, the company placed 19.33 lakh shares at Rs 585 to Citicorp International Finance Corporation to part finance the Akbarpur project.

Out of the total proceeds of over Rs 113 crore, the company has spent over Rs 79 crore for the Akbarpur project while the balance will be used for the Manakpur plant. The Manakpur project will also have a 24 MW power plant, and 60 kilolitre per day distillery.