The Hindu Business Line : Beeyu plans fridge-dried coffee plant in Bangalore

WITH tea prices remaining depressed in the export market, Beeyu Overseas Ltd has decided to shelve its plans of setting up a bought leaf factory at Siliguri in North Bengal. Instead, it has decided to set up the country's first fridge dried coffee plant in Bangalore.

According to Mr A.R. Basu, Managing Director of Beeyu Overseas, the plant will be an 100 per cent EOU (export oriented unit) with a manufacturing capacity of 3,000 tonnes per annum but will have facilities to manufacture powder and agglomerated coffee too.

The total cost of the plant has been worked out to be Rs 50 crore but the company will start with fridge-dried coffee facilities only. The capacity of this facility will be 1,200-1,500 tonnes per annum and it will cost around Rs 30 crore. The total project cost will be financed through a mixture of debt, equity and internal accruals.

"We are planning to come out with a rights-cum-public issue worth Rs 10 crore sometime around September or October. We have already initiated dialogues with a couple of merchant bankers", Mr Basu told Business Line.

According to him, fridge-dried coffee is a highly sophisticated item and it hardly has any market in India. In fact, except Japan, no other Asian country produces this type of coffee. However, it fetches a premium of 30-40 per cent over powder coffee.

"We have also started talking with machinery manufacturers. They are based in Germany and Denmark. We will source the coffee beans from the auction house. A major part of the production will be exported to European countries", he said.

It may be noted that Beeyu Overseas is a major exporter of rice, coffee, foodgrains and other items. As a first step toward backward integration, the company is setting up its own coffee plant to ensure smooth supply of the product.

The company is also exporting Hindustan Lever's Bond branded coffee. About three to four containers have been exported to Poland and Ukraine. It is talking to HLL for exporting it to other countries also.

The proposed bought leaf factory at Siliguri was supposed to have an initial capacity of 5,000 tonnes, but it could have been expanded to 15,000 tonnes per annum. The initial cost of the project was worked out to be Rs 5 crore.

It may be noted that two years ago Beeyu Overseas had entered into a joint venture with Tata Coffee Ltd and Trading House Grand for setting up another instant coffee producing plant in Russia. The company's stake in this venture is 15 per cent.

Mr Basu clarified Beeyu Overseas was not moving out of the project and added that Ernst & Young had been appointed to prepare a report on this project. All the three partners are currently waiting for the consultant's report.

For the year ended March 31, 2003, Beeyu Overseas registered a turnover of Rs 50.95 crore and a net profit of Rs 1.21 crore.