KK Birla not to shift sugar plants from Bihar now

The K K Birla group has deferred its decision to shift its three sugar plants in Bihar to Uttar Pradesh, said Chandra Shekhar Nopany, chairman and managing director of Oudh Sugar Mills.

"Our proposal to shift our sugar mills to UP has been rejected by the state government. Further, we have got assurance from the new government for better prospects in Bihar itself and it is now even considering some kind of revival packages," said Nopany on the sidelines of the annual general meeting of Indian Sugar Mills Association (Isma). He will be the new president of Isma in the coming year.

Government sources suggest that Bihar Chief Minister Nitish Kumar has met Union Agriculture Minister Sharad Pawar to seek the government's help on revival of the private sector sugar mills in the state to help resurrect the industry in the state.

The state government has also finalised five to seven locations for new sugar plants in the state, which will also include power cogeneration units feeding the grid after internal consumption.

In Bihar, besides various public sector sugar mills, there are about nine private sugar mills in poor health, including three owned by the K K Birla group located at Samastipur, west Champaran and Gopalganj.

In addition to the three in Bihar, the group owns four sugar mills in UP-Moradabad, Sitapur, Shahjahanpur and Lakhimpur. The seven mills under two companies - Oudh Sugar Mills and Upper Ganges Sugar Mills. And in total, the group's crushing capacity is about 40,000 tonne per day (tcd).

Nopany said the group is working on a Rs 190 crore expansion plan, laying more stress on power cogeneration prospects rather than an incremental rise in sugar output.

"We will invest about Rs 100 crore in a 25 megawatt power cogeneration facility at our plant in Siona, Moradabad (UP). The rest of Rs 90 crore will be pumped into increasing the cane crushing capacity in the current sugar year to 43,000 tcd," he said.

The company will finance its expansion via a combination of internal accruals, debt and captive raising, Nopany said, adding that Upper Ganges will shortly come out with a rights issue to raise funds.