DCM Bullish Shriram on Sugar Trade; prepares an expansion plan of Rs 6.6 billion

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The diversified DCM Shriram group has contracted for around 40,000 tonnes of sugar exports so far and will begin shipping the entire 92,000 tonnes quota allocated to it by April-May. next year, said chairman Ajay Shriram.

He appreciated the various measures taken by the central government, especially on the ethanol side, over the past year to deal with the problems faced by the millers due to excess production and poor sales achievement.

Shriram demanded that the minimum selling price of sugar be increased from the current Rs 29 per kg to reduce losses incurred by millers, with the ex-factory rate being lower than the cost of production.

DCM Shriram is optimistic about the sugar trade and has drawn up a 6.6 billion rupee expansion plan, which includes the addition of a cane crushing capacity of 5,000 tons per day, the establishment of ” a distillery with a capacity of 200 kiloliters per day and the addition of a cogeneration capacity per 30 MW.

“We are soon adding 5,000 tonnes per day of cane crushing capacity to produce higher quality refined sugar. We are also setting up a 200 kiloliters (ethanol) distillery capacity which will be operational from the 2019-2020 sugar season from October next year, ”Shriram told PTI.

That aside, he said cogeneration power would also be added next year. The company would be able to sell 76 MW of excess electricity to the grid after the expansion.

Asked about sugar production, he said the company would likely produce 70-75 quintal lakh of sweetener in the 2018-19 marketing year (October-September) compared to 66 quintal lakh the year before.

Regarding exports, he said: “We have an export quota of 92,000 tonnes. We have already contracted around 40,000 tonnes for exports and we will soon complete the contracts for the entire quota. ‘here the end of the cane crushing season. “

The losses suffered in export companies would be compensated by financial assistance offered by the government.

The Center announced financial assistance of Rs 13.88 per quintal of cane crushed during the 2018-19 marketing year to offset the cost of the cane. That aside, it provides support to factories by offsetting expenses for internal transportation, freight, handling and other charges to facilitate the export of 5 million tonnes (MT) in 2018-2019.

An interest subsidy is also offered for the creation of an ethanol capacity.

In MY 2017-18, India had a record sugar production of 32.5 million tonnes and expects similar production this year or slightly less.

Regarding arrears, Shriram said the company owed farmers around 2.5 billion rupees for cane purchased in MY 2017-18 and the same would be settled soon.

Besides sugar, DCM Shriram deals with fertilizers, seeds, chemicals, cement and UPVC windows.

In the chemical sector, the company is increasing capacity by 560 tonnes per day in its factories in Bharuch and Kota with a project cost of Rs 3.5 billion. Another Rs 2.4 billion is spent on a captive 66 MW power plant at its Kota plant in Rajasthan.

In the plastics sector, Rs 320 million has been allocated to add a capacity of 40 tonnes per day.

“Our expansion plans in different companies are becoming operational in phases and will be fully completed over the next 12 months,” said Shriram.

Of the Rs 13 billion proposed in total investment for the expansion, he said the company has already invested around 5-6 billion and the rest will be invested over the next year. “The expansion will contribute to the future growth of the company”.

DCM Shriram is also strengthening its product portfolio in the areas of organic seeds, agricultural solutions and “Fenesta” windows to achieve sustained growth.

Last week, DCM Shriram announced a 2% drop in its consolidated net profit to Rs 1.68 billion for the second quarter of this fiscal year due to rising financial costs. Total income rose to Rs 17.17 billion during the period from July to September 2018-19, against Rs 16.20 billion during the corresponding period of the previous year.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)

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