Riddhi Siddhi lines up Rs 120 crore capex

Ahmedabad-based Riddhi Siddhi Gluco Biols Ltd (RSGBL), maker of starch and its derivatives, announced a capital expenditure plan of over Rs 120 crore to upgrade its existing plants and set up a new project for maize processing in Pant Nagar, Uttaranchal.

The new plant will have a capacity to process 1,65,000 tonne of maize per annum. The company plans to fund the expenditure through equity, internal accruals and term loans.

After the completion of the project, the company's sales are likely to double resulting in increased profits. The company has adopted both - organic and inorganic - strategies to fuel this projected growth.

The country's largest corn flake manufacturer, at present, produces 30 products from three locations with a total capacity of 850 metric tonne per day.

"The Uttaranchal project is in line with the company's corporate philosophy of providing effective service to its customers and would cater to the domestic as well international markets," Ganpatraj Chowdhary, managing director of the company, said.

The company has recently signed an equity partnership with Roquette Freres, a world major and the largest wet corn miller in France, who recently bought 14.95 per cent equity in the Indian firm at an investment of Rs 31.73 crore.

Roquette, the largest producer of polyols in the world, has presence in five subcontinents across the world with turnover exceeding ¤2 billion.

Employing 6,000 people, it derives over 600 products from 6 million tonne of agricultural produce.

Riddhi Siddhi has entered into a comprehensive long-term technical co-operation deal with Roquette for its Uttaranchal plant, which would provide know-how for product and process upgrade and technology for new products.

The company in association with Roquette plans to introduce value-added products to cater to the specific needs of the food, pharmaceutical, textile and paper industries.

"The booming Indian economy will create plentiful opportunities within the starch sector. It is our endeavour to further strengthen our existing relationship with Riddhi Siddhi. In the near future, many products from the Roquette's stable will be manufactured in India. Our technical know-how, coupled with their understanding of the Indian market would help create tremendous value for all our stakeholders," Marc Roquette, chairman, Roquette Freres, France.

With the completion of its expansion plans, sales were expected to double by 2009-10 to Rs 500 crore from Rs 250 crore now. The company's net profit would also improve substantially to Rs 34 crore by 2009-10 from Rs 5.5 crore now, Chowdhary said.

RSGBL has a market share of 18 per cent in the organised starch and starch derivatives sector. With projected annual growth rate of over 20 per cent, the company is confident to garner 30 per cent market share by 2009-10.

The company exports its products to Kuwait, Saudi Arabia, Bahrain, Egypt, Bangladesh, Japan, Thailand, Indonesia, Vietnam and to the various Middle East and Southeast Asian countries.