Financial Daily from THE HINDU group of publications
Wednesday, Aug 17, 2005
Financial Daily from THE HINDU group of publications Wednesday, Aug 17, 2005 |
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Corporate
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Restructuring Agri-Biz & Commodities - Sugar K.K. Birla group's sugar cos revamp plan suffers setback — Bihar Govt refuses reallocation of sugar unit to UP Our Bureau
Kolkata , Aug. 16 THE proposed restructuring of the two sugar companies of the K.K. Birla group has received a major jolt, as the Bihar Government has not allowed relocation of a sugar unit to Uttar Pradesh. According to the plan worked out by Ernst & Young, the K.K. Birla group was to shift its Samastipur-based sugar plant as floods were affecting it every year. The plant belonged to the group company, New India Sugar Mills Ltd. It was decided that the finances of the plant would also be shifted to Upper Ganges Sugar & Industries Ltd. According to Mr C.S. Nopany, Director of Upper Ganges Sugar, the group has decided to shelve its relocation plans but would carry out the corporate restructuring programme. "By shifting the finances of the unit from New India to Upper Ganges, the second company would save a lot of money on taxes. It would also consolidate our sugar business to some extent," Mr Nopany said. Regarding the physical relocation of the unit, he said, the Bihar Government had assured the management that it would create the necessary infrastructure in that region so that the unit is not troubled by the floods. "We had applied to the Bihar Government for the relocation of this unit but till now we have not received the necessary clearances," he said. As a part of the restructuring exercise, it was decided that Saran Trading Co Ltd, a wholly-owned subsidiary of New India, would first be merged with itself and then its sugar business would be taken out of it and merged with Upper Ganges. Apart from the sugar business, New India holds some important investments, which would remain with it. After the merger, New India would become just an investment company. It would continue with its existing retailing activities. As the restructuring exercise is yet to finish , Upper Ganges has failed to close its accounts for the financial year- July-June 2004-05. According to Mr Nopany, on a year-on-year basis, the company recorded net sales of Rs 329.64 crore against Rs 263.07 crore in the previous year. Profit after tax, after taking into account an exceptional item of Rs 32.28 crore, was Rs 16.81 crore from Rs 14.01 crore. Average price realisation of free sale sugar increased to Rs 1,572 per quintal from Rs 1,256 per quintal. Mr Nopany also ruled out a merger of all the sugar companies of the KK Birla Group in the near future.
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