Delay in Kakinada sugar refinery costs Rs 200 cr

The Murugappa Group has incurred around Rs 200-crore loss as it could not commence production from its Silk Road Refinery in Kakinada. The group has attributed the delay in commencing the sugar refinery to to non-availability of gas.

The Silk Road Refinery is a joint venture between Murugappa Group’s EID Parry and multinational company Cargill. The refinery is coming up at Kakinada with a capacity of 600,000 tonne, with scope to expand it to one million tonne.

A Vellayan, executive chairman, Murugappa Group, said that the project was getting delayed for about seven months now, since gas was not allocated to the plant as promised by the government. “Now, we are in the process of moving to a coal-fired model after having received statutory approvals,” he said.

On the financial impact due to the delay, Vellayan said the impact was around Rs 200 crore and that the company now had to invest another Rs 60-70 crore, which was over and above Rs 500 crore already invested in the refinery.

N Srinivasan, director (finance), Murugappa Group, said, “Earlier, we had planned to produce 35 mega watt of power at the refinery. Now, that revenue is also lost.” The company expected the refinery to bring in Rs 60-70 crore additional revenue by selling power.

According to Vellayan, once the coal-fired model is ready, the company will commence the commercial production, which would be in 2014-15.