Balarampur Chini ups borrowing limit

Balarampur Chini Mills Ltd, one of the leading sugar outfits in the country and the first to get FDI in the sector, is doubling the borrowing limit from Rs 500 crore to Rs 1,000 crore.

The proposal to raise the borrowing limit will be placed before shareholders in the annual general meeting slated for last week of this month. Incidentally, Balarampur Chini Mills approved the borrowing limit of Rs 500 in 1998.

The special resolution in this regard says that the borrowing limit is being doubled to Rs 1,000 crore keeping in mind the expansion and diversification plans of the company.

BCM has embarked on expansion and diversification projects. In a communique"� to shareholders, Vivek Saraogi, managing director, indicated that the company will continue to invest in the business.

"We will continue to play by the old rules. Invest in the business, grow our scale and will reduce our cost," he said.

This has assumed significance as it is now setting up a greenfield sugar plant at Akbarpur in Uttaranchal with an investment of Rs 190 crore.

The plant is financed by way of private placement of equity shares to Citicorp International Finance Corporation (CIFC) and New Vernon Bharat and internal accruals.

Saraogi indicated that Balrampur Chini would also explore the possibilities of setting up another greenfield sugar complex and the best possible means of financing the project.

However, he did not disclose the location for the second project. Describing the funding of Citi Corp and New vernon as the first instance of FDI in Indian sugar sector, Saraogi said that the plant will be operational by the end of November 2005.

The plant has a capacity of 7,000 ton crushed of sugar canes per day (TCD).

The capacity of BCM will increase from 29,000 TCD to 38,000 TCD after the expansion.

Incidentally, BCM issued 19.33 lakh shares at Rs 585 to CIFC and NVB on a preferential basis in February 2005.

Commenting on the deal, Saraogi said in the communique"�, "What is pleasing is that we received the proceeds from CIFC within 35 days of entering into discussions."

Incidentally, Citi Corp will have a representative in the board of BCM in the form of P R Srinivasan, the former HSBC and ICICI Venture investment manager.

Experts feel that the company's project was well timed as the industry was expecting a hand-to-mouth situation, which was expected to push prices up. The total sugar production had dropped to 13.6 million tonne in 2003-04 from 20 million tonne and was expected to drop further by 5-10 per cent, this year.

The net profit of BCM during the nine-month period of 2004-05 increased by 94.56 per cent to Rs 71.87 crore from Rs 36.94 crore in the corresponding period of 2003-04.

Gross turnover during the quarter increased by 23.43 per cent to Rs 299.21 crore from Rs 242.42 crore and by 9.99 per cent to Rs 740.10 crore during the nine-month period from Rs 672.83 crore in the same period previous fiscal.