Date:07/10/2005 URL: http://www.thehindubusinessline.com/2005/10/07/stories/2005100701261900.htm

Back Shree Renuka Sugars keen to expand into coastal States

Our Bureau

Chennai , Oct. 6

KARNATAKA-based Shree Renuka Sugars Ltd is open to expanding into any of the coastal States - with a a mix of own and leased sugar milling capacities, with flexibility in operations, said the Managing Director, Mr Narendra Murkumbi.

Addressing presspersons here today to hawk its Rs 110-crore IPO, which opens on Friday, to fund its expansion programme, he said the company sees significant opportunities in overseas trading in sugar. It will expand into the coastal States, in areas with easy access to ports.

Between 2000 and 2005, the company exported 2.40 lakh tonnes of sugar - representing about 8 per cent of the country's sugar exports.

The company is open to leasing co-operative mills - an area in which it has gained expertise over the last few years, tying up with private mills and expanding its own facilities.

Shree Renuka Sugars has its own mill in Karnataka and has leased two co-operative mills in Maharashtra. Lease agreements give the company flexibility in capacity, including an easy exit option, said Mr Murkumbi.

In the next one year, the company will have a sugarcane crushing capacity of about 14,000 tonnes a day and will continue to expand. Its 2,500-tonne-a day mill in Munoli, Belgaum, is to be expanded to 7,500 tonnes and the 60-kilolitre-a day distillery there to 120 kilolitres.

It also has a 20.5-MW cogeneration facility and a 1,000-tonnes-a-day sugar refinery.

Its first lease agreement in Maharashtra at the 2,500-tonne-a-day Ajara Co-operative Sugar factory is for two years, since the company was just exploring this route to expand capacity. Its next lease is for six years at the Mohanrao Shinde Co-operative Sugar Factory, where it will complete a 15-MW cogeneration facility and a 120-kilolitre distillery.

The company is exploring more such leasing opportunities, said Mr Murkumbi, declining to give more details.

The company, which is on an expansion mode, is looking at integrated operations, with its sugar mills also generating power and distilling ethanol for industrial, potable and fuel use.

It is expanding its distillery in Maharashtra, which is one of the largest petrol-using States, to cater to the ethanol-fuel programme.

Maharastra is also the heartland of co-operative mills and sugar production with high sugar recovery rates of about 11.5 per cent.