Empee Distilleries may source grain from FCI

Empee Distilleries, a subsidiary of Empee Sugars, is planning to tie-up with the Food Corporation of India (FCI) to procure broken and spoiled rice from the central agency to feed its proposed 60 KLPD grain-based distillery unit in Andhra Pradesh.

"Although talks are yet to start, we are hopeful that FCI would not turn down our request," said Nisha Purushothaman, joint managing director of Empee Distilleries, at the announcement of the company's initial public offer in Mumbai last week.

The first grain-based distillery unit in India to be fed with waste grains including rice, maize and corn is being set up at an investment of Rs 61.15 crore.

The company will keep its options open to import corn and maize from global markets if the domestic procurement is not enough. "Spoiled rice, not suitable for human and animal consumption, is abundantly available in FCI godowns in Andhra Pradesh. Hence, locally available raw material would be best suited for transportation and competitive pricing," said Nisha.

Empee's grain-based distillery will utilise spoiled grain, which was being dumped until now resulting in a financial loss. Sale of this unused rice and other grains would shore up revenues for FCI while fetch a premium for the company's spirit products.

The company presently engaged in manufacturing Indian Made Foreign Liquor (IMFL) products under its own brand portfolio as well as under tie-ups with other companies. The company's issue opened on November 1 for a total 48 lakh equity shares of Rs 10 each. The price band has been fixed at Rs 350 to Rs 400 per equity share.

Empee Distilleries proposes to part finance its expansion and diversification plan with the net proceeds from this issue. In order to diversify and expand its business activities and to achieve economies of scale in its existing business activities, the company has decided to expand its operations by implementing various projects.

India is the third-largest market for alcoholic beverages in the world. The demand for spirits and beer is estimated to be around 373 million cases. There are around 12 joint venture companies having a licensed capacity of 33919 kilo litres per annum for production of grain-based alcoholic beverages.