Coromandel International Limited, part of the Murugappa Group, is planning to infuse additional money into Sabero Organics Gujarat Limited, which was acquired by the former recently. The proposed investment is part of a turnaround plan for Sabero to address its major constraints related to environment management systems.
Besides this investment in Sabero, Coromandel has lined up an investment of around Rs 200 crore during the current financial year.
Kapil Mehan, managing director, Coromandel International, said that Sabero had faced a lot of headwinds due to environmental issues whereby the plant was shut in the early part of the year. Later, they were given permission to operate at 25 per cent capacity and then at 50 per cent.
Currently, the company has the permission to operate the plant at 75 per cent. However, there were still some constraints on the environment management systems. Since the last three months, the company has been trying to put the systems in place and that work will be over in the next couple of months.
“Then, the company would see a ramp up in the capacity utilisation of the Sabero plant in Sarigam, which would really help in turning around the company,” he said while addressing the analysts.
At present, the company is operating at 40 per cent to 45 per cent capacity.
It may be noted that Coromandel International, in May 2011, had announced the acquisition of 42.22 per cent of the promoter and the promoter group’s stake in Sabero Organics in an all cash deal for Rs 284 crore. In April 2012, it further increased its stake to 73.23 per cent.
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“The additional investment will be purely into environment management issues. We have to put up additional facilities to treat effluents etc ... and that is under way. We will be investing around Rs 32 crore in these facilities,” Mehan said.
Sabero Organics is a crop protection and a producer and supplier of fungicides, herbicides and insecticides. With manufacturing facilities in India, the publicly-listed company, founded by the Chuganee Group, supplies its products to over 1,000 customers in 50 countries. Sabero is now on a high growth path to double its sales over the next three years.
Sabero has reported a net loss of around Rs 11 crore for the fourth quarter on a standalone basis, as compared to a loss of Rs 7.52 crore in the same quarter a year before. This is its sixth quarterly loss in a row. Sales, however, rose to Rs 94 crore from Rs 88 crore.