Glycols buys Shakumbari

India Glycols, a leading manufacturer of monoethylene glycol, potable alcohol and other industrial chemicals has acquired Shakumbari Sugar and Allied Industries (SSAI), a company belonging to the Jagran Group (the owners of Dainik Jagran) for Rs 47 crore.

The company, which has acquired 96.56 per cent in SSAI, plans to invest Rs 150 crore to increase the sugar and distillery capacity.

With the acquisition, the company would be vertically integrated to produce additional ethanol.

SSAI, based in the Saharanpur district of Uttar Pradesh, has a capacity of 3,200 tonnes crushed daily (tcd), besides a distillery of 40 kilolitres per day (klpd).

The valuation of Rs 47 crore for a unit with such capacities is certainly low at present, primarily because the sugar industry is going through a tough time, with record production and declining prices, leading most mills to huge losses.

"We plan to invest Rs 150 crore in the next 6-8 months to increase the crushing capacity to 10,000 tcd and the distillery capacity to 200 klpd," said a company source.

The acquisition of a sugar-producing unit by the company makes sense due to its large consumption requirements of molasses for alcohol production at its Kashipur unit.

"This will guard the company against the fluctuation in the prices of molasses," he said.

The company's turnover for the year ended March 2007, stood at Rs 1,081.22 crore as against Rs 819.50 crore in the year before, while net profit was Rs 41.05 crore compared with Rs 58.57 crore in 2005-06 crore.

For the six months ended September 2007, the company saw a turnover of Rs 686.05 crore, up 32 per cent from Rs 520.75 crore, while net profit stood at Rs 83.90 crore, up 157 per cent from Rs 32.70 crore in the same period last year. The huge jump in profits was primarily due to drop in the price of molasses.