Rajshree Sugars to set up three plants

In order to ramp up its production capacity, Rajshree Sugars & Chemicals Limited (RSCL) has drawn up plans to set up three new sugar plants in three years. The Coimbatore-based company increased its capacity to 10,000 tonnes a day by acquiring Trident Sugars recently.

Of the three new greenfield projects, two would be set up in Bihar and one in Mundiampakkam, Tamil Nadu.

The company already has a unit in Mundiampakkam, which it acquired from South India Sugar Mills Limited, in 2002. RSCL plant in Theni and Mundiampakkam have a combined capacity to mill over 7,500 TCD (tonnes crushed per day).

These factories handle nearly 2 million tonnes of sugarcane in a sugar season, producing around 2,00,000 tons of sugar. With its recent acquisition of Andhra Pradesh-based Trident, a 2,500 TCD mill, the company plans to crush more in the current sugar year (October 2005 - September 2006).

RSCL plans to have its presence in Bihar eyeing the incentives offered by the state. The determination of Bihar government to improve policies for the sugar sector has acted as a catalyst behind RSCL's decision to choose the state for their new operations.

On the sidelines of the company's extraordinary general meeting, Rajshree Pathy, chairman and managing director, RSCL, told Business Standard that the company has plans to issue either american depository receipts (ADRs) or global depository receipts (GDRs) to fund these expansion projects.

RSCL had convened the meeting to get the approval of its members to borrow upto Rs 600 crore for business expansions and operations. However, af inal decision on how much the company will be borrowing for its current operations, is yet to be taken.

At the company's EGM that was convened here on Thursday, Pathy said, "We are not sure about which way to choose. Since, the market is now on a swing, we prefer a wait-and-watch policy before taking any beneficial decision in this regard. A period of atleast six months would be required to take a final decision in this regard," Pathy added.

RSCL is bullish on the carbon trading front with its co-generation plant at Munidampakkam set to get additional revenue from trading in carbon credits within the next 6 to 8 months.

"With the project that has been registered under the clean development mechanism (CDM) project activity with the United Nations Framework Convention on Climate Change (UNFCCC), we are entitled to sell 80,157 certified emission reductions (CERs) in a year," P K Viswanathan, chief financial officer and company secretary of RSCL, told Business Standard.

Moreover, the company's plan to set up a 12-mega watt co-generation plant in the recently-acquired Trident unit would also be eligible for carbon credit. "We will have to get it registered with UNFCCC. The unit is likely to become fully operational by the end of September 2006," Viswanathan added.

At the current price of Euro 13 to 15 per CER, this is expected to add over Rs 4 crore to the bottom line this fiscal.

The company, which has a paid-up capital of Rs 22.5 crore, has interests across integrated fields such as sugar, distillery, power and bio-technology.

The distillery unit has a capacity of 45 KLPD (Kilo liters per day), enabling production of 12 million litres of alcohol per year. The plant can produce rectified spirit, extra neutral alcohol (ENA) and fuel grade anhydrous alcohol (AA) - popularly kniown as ethanol or fuel alcohol.

The bagasse-based cogeneration plants generate 34 mw of green power. After captive consumption, the plants supply surplus power (estimated to be around 18 mega watt) to the state electricity grid.