KK Birla group to invest Rs 205 cr in sugar business

The KK Birla group has lined up an investment of Rs 205 crore in the sugar business. It is eyeing a combined sugar crushing capacity in excess of 44,000 tonne per day in the next two years.

The group will invest Rs 115 crore to double capacity at Upper Ganges Sugar & Industries. It will also invest Rs 90 crore in the second phase of expansion at Oudh Sugar Mills.

C S Nopany, chairman and managing of Oudh Sugar and one of the directors of Upper Ganges, said the group hopes to achieve economies of scale with this investment.

"Upper Ganges is doing quite well now. Earlier we were thinking about a greenfield project under Upper Ganges, but, following the merger of New India Sugar with it, we decided to enhance the capacity of the merged unit," he said.

New India Sugar was merged with Upper Ganges in October 2004. Nopany indicated that the expansion activity will be carried after relocating the New India's unit in Bihar to Uttar Pradesh.

"The area is too flood prone," he explained. According to Nopany, the capacity of the merged unit will be increased from 1,750 tonne per day to 5,000 tonne per day. New Ganges has another unit in Sidhwalia in Bihar.

Nopany said after the expansion, Upper Ganges will have a capacity of 17,500 tonne per day after the expansion from the present level of 13,500 tonne. Besides sugar, the company produces industrial alcohol and organic fertilisers.

Nopany said the KK Birla group will invest Rs 90 crore in phase 2 of the expansion of Oudh Sugar Mills that will commence soon. The company has already spend Rs 60 crore in phase 1.

Commenting on the funding of the expansion, Nopany stated that a portion is likely to come from internal accruals. The balance would come from borrowing.

"Availability of funds is not a problem for us. Upper Ganges is one of the few in the industry to have managed to tide over the turbulent times afflicting the Indian sugar industry in recent years," he said.

Incidentally, Upper Ganges made a turnaround in 2003-04 by booking a profit of Rs 36 crore from a loss of Rs 2.97 crore in 2002-03.