Corporate Feature

Published: Feb 15, 2022
Updated: Feb 15, 2022

Viswaraj Sugar Industries

Promoters hike stake as firm expands

In a move to increase promoter holdings in Karnataka’s highly successful Vishwaraj Sugar Industries, promoter Lava Ramesh Katti purchased 10 lakh shares through a bulk deal on the NSE on February 4 at a price of Rs 22 per share. According to NSE data, promoter Nikhil Katti and BNP Paribas Arbitrage purchased shares from the open market thorugh a bulk deal in the BSE and the NSE on January 20.

The Union Finance Minister’s announcement of an additional excise duty of Rs 2 on unblended fuel will give a boost to ethanol manufacturers and sugar companies, including Vishwaraj Sugar Industries (BSE 542852 and NSE-VISHWARAJ). This will encourage ethanol blending with fuel and will be a major positive for sugar companies engaged in ethanol manufacturing as more and more consumers will opt for blended fuel.

NOD FOR SUGAR UNIT

Meanwhile, the company has stated that the Commissioner for Cane Development and Director of Sugar, Karnataka, has issued a ‘Distance Certificate’ to the company for setting up a 5,000 tcd sugar plant at Navage village in Belagavi district.

The Chief Director (Sugar), Ministry of Consumer Affairs, Food and Public Distribution, has also approved the proposal of the company for setting up a 5,000 tcd sugar plant.

Vishwaraj Sugar has a sugarcane crushing capacity of 11,000 mt per day, a distillery capacity of 100,000 litres per day, a co-generation capacity of 36.4 MW and a vinegar manufacturing capacity of 70,000 litres per day. The process of reengineering implemented by the company results in bacteria- and pathogen-free superior grade sugar and ethanol. While the acceptance level for pure alcohol/ethanol is 99.6%, the company has already achieved and delivered 99.9%, benchmarking the best international standards.

UP THE VALUE CHAIN

“We plan to move up the value chain by targeting new clientele in pharmaceuticals, health supplements and nutraceuticals. A razor-sharp focus on high-value, high-margin products such as pharma-grade sugar and ethanol is expected to increase the revenue per tonne of sugarcane crushed over the next five years. Also, we plan to ramp up the capacity for ethanol, taking it to 500,000 litres per day,” says Mukesh Kumar, Executive Director, VSIL.

Going forard, VSIL plans to move up the value chain by targeting new geographies, sectors and clientele in the pharmaceuticals, health supplements and nutraceuticals, and beauty and personal care industries. These markets belong to the niche category and are characterised by enhanced price realisation and improved receivables management. In the normal course, price realisation per litre of ethanol stands at Rs 62.7 for ethanol produced from sugarcane syrup and Rs 57 for ethanol produced from molasses. In the case of pharma-grade ethanol, the price realisation goes up to Rs 67 per litre.

Thus, going forward, the company will prioritise selling a mix of pharma-grade sugar, pharma-grade ethanol and vinegar. The company has entered into contracts with oil marketing companies for supplying 25 million litres of ethanol and has already commenced supplies.

ETHANOL UNIT

Additionally, the company plans to set up a brownfield ethanol production with a capacity of 150,000 litres per day. This expansion is driven by technological upgradation and the company is filing a patent to that end. This will increase the overall ethanol production capacity to 250,000 litres per day. The expansion will happen in the existing premises by November 2023. Further, it is planning to set up a greenfield ethanol production facility, with a capacity of 250,000 litres per day, within 80 km of the existing factory in Belagavi district. VSIL has already acquired 110 acres of land for this project. The estimated project investment is Rs 250 crore and the first full year of operation of this facility is slated to be FY2024.