K P R Mill to expand its sugar cum ethanol business

The company will set up a new sugar mill with higher ethanol capacity to increase revenue and profitability.

Dec 19, 2020 01:12 IST capital market

The recent structural changes in sugar business like, minimum support price (MSP) for sugar, ethanol augmentation scheme for setting up of ethanol plant with 50% interest subsidy on interest paid for ethanol term loan availed from banks, increase in ethanol blending in petrol and revised ethanol prices, has encouraged K P R Mill to expand its sugar business.

K P R Mill has decided to establish a new sugar mill with sugar capacity of 10,000 tons of cane per day (TCD), power capacity of 47.50 megawatt (MW) and ethanol capacity of 230 kilo litre per day (KLPD).

In the new unit, K P R Mill will be producing higher ethanol capacity to increase revenue and profitability. The company proposes to convert 30% of sugarcane crushed into ethanol during season and during off-season. The firm plans to use molasses to produce ethanol so that entire plant runs on its own sugar juice and molasses.

We are confident that this fully integrated sugar plant will yield higher EBIDTA and profitability. We propose to implement the project in our wholly owned subsidiary company KPR Sugar and Apparels Limited to avail the new tax benefits announced by the government,? the company said in a statement after trading hours yesterday, 18 December 2020.

The project cost is estimated around Rs 500 crore, which will be funded by the combination of equity and debt. It is expected to be completed within a period of 10 to 12 months.

Shares of K P R Mill rose 0.96% to Rs 923.25.

K P R Mill is one of the largest vertically integrated company with diversified business focus spanning across yarn, fabrics, garments and white crystal sugar. It manufactures a range of textile varieties such as readymade knitted apparel; fabrics; compact, melange, carded, polyster and combed yarn.

Its consolidated net profit rose 3.1% to Rs 112.54 crore on 19.4% increase in net sales to Rs 905.85 crore in Q2 September 2020 over Q2 September 2019.

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