The Hindu Business Line : KCP Sugars plans to invest Rs 30 cr to strengthen operations

AFTER a turnaround in 2003-04 due to buoyant sugar and alcohol prices, KCP Sugar and Industries Corporation Ltd expects to better its performance in the current year.

Pepped up by the performance, the company is planning to make capital investments of about Rs 30 crore in 2004-05.

Speaking to shareholders, the company's Executive Chairman, Ms Rajeswary Ramakrishnan, said that with the sugar prices expected to remain buoyant during the current year, the company would turn in a record performance.

In 2003-04, the company reported a profit after tax of Rs 19.11 crore on sales of Rs 226.60 crore, compared to the previous year's net loss of Rs 4.22 crore on sales of Rs 166.43 crore.

Thanks to availability of sugarcane against the general backdrop of a lower production due to drought, both its sugar mills crushed over 13.28 lakh tonnes of sugarcane.

Cost of production was low and margins high, she said.

While sugarcane availability in general is expected to be low in 2004-05, KCP Sugars expects to crush about 13.5 lakh tonnes; if there is a sprinkling of rain in September, it will crush more than 14 lakh tonnes.

"This augurs well for the company for sugar prices will continue their upswing."

Encouraged by the optimistic outlook, the company is planning capital and revenue expenditure of about Rs 30 crore.

This would involve an expansion of its distillery to 50 kl per day and setting up an incidental cogeneration plant at one of its sugar mills. The company will also strengthen and modernise some of its facilities.

The expansion of the distillery is aimed at taking advantage of the increase in price of rectified spirit prices - due to the shortage of molasses - and the assured market available for anhydrous alcohol under the ethanol blended fuel programme.

The ethanol blended fuel programme is dormant for now because the sugar mills, acting on instructions from the State Government, are diverting their alcohol production to supplying rectified spirit to liquor manufacturers.

However, the company plans to import additional alcohol to supply the oil companies because there is an assured market with stable prices.