Dwarikesh to buy UP firm for Rs 200 cr

Dwarikesh Sugar Industries is all set to buy a profitable company in Uttar Pradesh for Rs 200 crore.

"This will increase our capacity to 20,000 tcd (tonne cane crushed per day) from current 14,000 tcd. The acquired unit will start operating after November," said J R Banka, chief general manager (corporate affairs), Dwarikesh Sugar.

He, however, did not disclose any details about the company proposed to be acquired.

The investment will be funded by Rs 100 crore bank loans, Rs 50 crore from internal accruals and about Rs 54 crore from the company's GDR proceeds.

At present, Dwarikesh has two units in Bijnor (UP). The first unit's capacity is 6,500 tcd and the second unit, commissioned on January 1, 2006, is of 7,500 tcd. Also, the company has 30 klpd (kilo litres per day) distillery and 26 mega-watt cogeneration unit.

After the acquisition, Dwarikesh expects its output to touch 11 lakh quintal in the financial year 2005-06 (October-September) against 8.40 lakh quintal in the corresponding period last year. It estimates 25 lakh quintal in the year 2006-07.

In the current financial year, the company expects a turnover of Rs 225 crore against Rs 165 crore in the corresponding period last year. Net profit in 2005-06 is expected to be Rs 45 crore compared with Rs 27 crore last year.

At present, Dwarikesh is facing bad sugar recovery from cane. "This year our cane recovery is likely to be about 9.35 per cent, down 0.5 per cent from last year. Following the tight availability of the cane this year the recovery season in the state is likely to be short that is about 150-155 days compared with 180-186 days on a higher side," said Banka.

This may limit UP's sugar output to 5- 5.5 million tonne compared with the previous estimates of 6 million tonne plus, he added.