Kothari Sugars gains control of Pandavapura

Kothari Sugars & Chemicals (KSCL) has entered into a Rs 80 crore lease agreement with Pandavapura SSK, the Karnataka-based co-operative sugar mill. The lease is for a period of seven years.

Pandavapura was declared sick three years ago. A bid was invited for its revival and Kothari emerged as the highest bidder.

Kothari Sugars would be liable for no extra payment other than the bid amount but it will the operational cost of the plant. Trial runs on the 3,500 tcd plant has already started, with commercial production expected to begin next season, a company source said.

If the Pandavapura factory has a capacity of crushing 6 lakh tonne of cane per year. However, capacity expansion is not of the cards.

This deal is one of the "most significant industrial leases for us," said Jayachandran, KSCL president. He said the deal "could significantly help us improve operations over the next couple of years."

Company sources believe the deal would substantially improve the company's topline and bottomline with the sugar industry projecting good export potential.

Kothari Sugars has been going through a recovery phase after being declared a sick company in 1999-2000. The company is implementing a rehabilitation package sanctioned by AAIFR by an order passed in June 2004.

The company has brought down its losses considerably and is expected to get back in the balck in the near future.

Post-rehabilitation, Kothari has been performing to its maximum capacity both in its sugar and chemicals division.

For the nine months ended December 2005, the company posted profit before interest debt and tax (PBIDT) at Rs 1,759 lakh, compared with Rs 536 lakh last year. It is targeting PBIDT of Rs 30 crore in the current financial year as against Rs 17 crore last year.