GMR plans Rs 40cr capacity expansion

To up capacity of Srikakulam sugar factory to 5,000 tonnes per day

GMR Industries Limited, part of the diversified GMR group, is planning to expand the cane-crushing capacity of its sugar factory in Srikakulam district from the existing 3,125 tonnes per day (tpd) to 5,000 tpd at a cost of Rs 40 crore.

K Narayana Rao, managing director of GMR industries, told Business Standard that the expansion programme would be completed by September 2006 and commercial production would commence two months later when the sugarcane harvesting season starts.

While 50 per cent of the expansion project would be funded through internal accruals, the remaining amount would be raised through bank loans.

Rao said that the company invited IPRO of Germany to suggest erection of a fully-automated and modern plant at the sugar factory so as to produce international quality sugar. The objective of the company was to go in for cost-effective manufacturing equipment.

Ever since the establishment of the sugar factory in 1997, GMR has strived to improve cane production in the area. In this regard, it has started working with 25,000 sugarcane growers spread over 500 villages surrounding the factory premises.

According to Rao, the company's efforts have resulted in increasing sugarcane yield from 18 tonnes per acre to 28 tonnes per acre in the past eight years.

The company has adopted a four-pronged strategy of supplying quality seeds, providing timely fertilisers, encouraging installation of drip irrigation systems and introducing appropriate agricultural practices for raising the crop yield as well as the income of farmers.

He said that the company has also targeted to bring 5,000 acres of sugarcane fields under drip irrigation in a span of three years. Last year, farmers installed the systems in 300 acres, and this year the target was to cover 1,500 acres.

While 50 per cent of the cost of installation of drip irrigation systems is borne by the state government as subsidy, Andhra Bank is extending a loan up to 40 per cent of the cost. The remaining 10 per cent of the amount is being given as loan by GMR so that farmers need not shell out any amount at the time of installation.

This apart, Rao said, GMR is encouraging farmers to go in for inter-cropping of groundnut and other suitable commercial crops to enhance their income levels.

The company, which got the best management award from the state government this year, has also set up a revolving fund of Rs 5 lakh to help farmers in purchasing cows and setting up small dairy units to supplement their income from agricultural activity.

GMR has also taken up downstream projects like setting up a 16-mw co-generation power plant. The plant's capacity is said to be more than sufficient to meet the power requirements of the expanded sugar plant.

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Sweet spread

• Expansion programme to be completed by September 2006
• Commercial production to start two months later
• 50 per cent of the expansion project to be funded through internal accruals, while the rest would be raised through bank loans