| As the company's promoters, Tilak Dhar and his brothers, hold 35.54 per cent (they will end with close to 42 per cent stake with full conversion of the recently issued warrants) in DSIL, Bhasin could well end up with the company. |
| In that case, he will get a company with assets worth Rs 241.14 crore, a large sugar mill in Uttar Pradesh, a tyre cord business (whose only Indian competitor is Century Rayon), a struggling joint venture company to make containers and foods business. |
| DSIL was established in 1990, following the three-way split of DCM. Sugar is DSIL's main business "� almost 50 per cent of its turnover comes from sugar. Its 11,000 tcd capacity is located at Daurala (Meerut) in Uttar Pradesh. It also makes pharmaceutical grade sugar and Indian made foreign liquor. |
| It set up Daurala Organics in 1994 to manufacture high-technology, high-value drug intermediates. It has a capacity to produce about 14,048 tonnes of chemicals annually. |
| Till not so long ago, DSIL was counted among the country's leading sugar producers. In the last few years, however, others have stolen a march over it. Companies such as Bajaj Hindusthan, Balrampur Chini and Triveni Engineering have expanded aggressively, leaving DSIL way behind in the sweepstakes. |
| The company's valuation, like other sugar mills in Uttar Pradesh, has taken a dip because of low sugar prices and rising arrears to farmers. DSIL's market capitalisation has fallen from Rs 244.71 crore on May 2, 2006, to Rs 194.31 crore now, making it an easy prey for acquisition. |
| Shriram Rayons (Kota) was set up in 1965 to produce rayon tyre cord. This business is primarily export oriented and supplies tyre cord yarn and fabric to international tyre producers such as Goodyear and Bridgestone. |
| It has a capacity of 16,200 tonnes. The revenue from this business declined from Rs 134.59 crore (2005-06) to Rs 109.88 crore (2006-07) due to a shutdown for modernisation. |
| In 2006-07, the company's turnover stood at Rs 622 crore, down nearly 12 per cent from the previous year's Rs 719 crore, thanks to the crash in sugar prices and the shut down at its rayon plant. Its net profit for the year stood at Rs 1.6 crore, down from Rs 29 crore in 2005-06. |
| DSIL has invested in two subsidiaries "� DCM Hyundai Ltd (DHL) and Daurala Foods & Beverages Ltd (DFBL). DHL was set up in 1995 as a joint venture with South Korea's Hyundai group to make shipping containers. |
| But the company ran into losses because of the economic slowdown of the late-1990s, which caused a slump in the demand for containers. Declared sick in 1998, the company has been under Board for Industrial and Financial Reconstruction (BIFR) fold since then. |
| As per a rehabilitation scheme approved by the BIFR in May this year, the existing equity capital of DHL has been reduced by 90 per cent. |
| Further, the company has been allotted Rs 0.86 crore equity capital and Rs 12.85 crore 5 per cent optionally convertible preference shares in DHL on conversion of part of the existing loans and advances. |
| DFBL is company's another joint venture with Scottish and French liquor firms, Highland Distilleries and Remy Cointreau, respectively, for the production of spirits. The company posted a turnover of Rs 22.98 crore in 2006-07, up over 17 per cent from the previous year. It also made profits of Rs 2.06 crore. |
| Rating agency Crisil expects the sluggish trend in sugar prices to continue for the next 12 months, negatively impacting DSIL's cash accruals. |
| Further, maturing debt obligations of more than Rs 30 crore per annum over the medium term would also put a strain on its liquidity position. |
| However, other divisions "� rayon tyre cord fabric and chemicals "� have shown a consistent performance. Crisil believes that stable cash flows from these divisions will partially mitigate the losses in the sugar division. |
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