Vishwaraj Sugar Industries plans to set up a greenfield sugar factory and expand its existing distillery facility at Belgaum in Karnataka with an investment of ₹400 crore.
The company will be setting up a ₹250 crore-greenfield sugar plant along with a distillery of 100 kilo litres per day, exclusively for producing ethanol. It will invest another ₹150 crore to expand existing distillery capacity by 150 klpd.
Mukesh Kumar, Executive Director, VSIL said the projects will be funded through both equity and debt. The expanded facilities are expected to operate at full capacity over the next couple of years.
The board of the company earlier decided to split its shares from existing face value of ₹10 into ₹2. It will decide the record date at the board meeting to be held on Thursday. Shareholders have already approved the proposal at the annual general meeting held on September 25.
The company manufactures distillery products such as rectified spirit, anhydrous ethanol from molasses and sugar syrup. Incidentally, Belgaum in Karnataka is designated as one of the “high recovery zones” for sugar production by the government.
The company has reduced its dependence on sugar and in the financial year-ending March, the sugar sales accounted for 66 per cent of the total revenue. However, ethanol revenue is expected to go up from 30-35 per cent to 50 per cent following the government’s initiative, Kumar said.
Both sugar and ethanol prices are expected to remain firm. The sugar prices have firmed up due to market forces in the local market and prices will remain higher in the international market due to crop failure in Brazil, he said.
Sugar makers are in a sweet spot as producers have seen a significant reversal in their fortunes helped by exports and the government’s boost to promote ethanol production. This is expected to help the sector tide over the surplus sugar situation to a large extent.
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