BNP Paribas Arbitrage and Promoters pick up stake in Vishwaraj Sugar Industries

20 Jan 2022 , 12:05 PM

According to NSE bulk deals, Promoter Nikhil Katti and BNP Paribas Arbitrage has purchased shares from the open market through a bulk deal in BSE & NSE, Vishwaraj Sugar Industries Ltd. (VSIL), an integrated sugar and ethanol manufacturer.

Recently it has posted a 395.68 per cent rise in net profit at Rs 20.67 crore for the nine months ended December 31, 2021, compared to Rs 4.17 crore corresponding period in the previous year. Total Revenue during this period grew by Rs 27.62 per cent at Rs 337.86 crore compared to Rs 264.73 crore in the corresponding period the previous year.

Integrated sugar and ethanol manufacturer, Vishwaraj Sugar has a sugarcane crushing capacity of 11,000 MT per day, distillery capacity of 100,000 litres per day, co-generation capacity of 36.4MW, and vinegar manufacturing capacity of 70,000 litres per day. The process of re-engineering implemented by the company leads to a bacteria-and- pathogen-free superior grade sugar and ethanol.

While the acceptance level for pure alcohol/ethanol is 99.6%, the company has already achieved and delivered 99.9%, benchmarking the best international standards. Also, by implementing the process reengineering, VSIL has managed to bypass the capital investment for setting up a sugar refining facility, thereby saving a sizeable Rs 80 crore, thereby increasing the overall ROI.

Meanwhile, in the third quarter ended December 2021, Vishwaraj Sugar has posted a 61.06 per cent rise in total revenue at Rs 133.28 crore compared to Rs 82.75 crore in the corresponding quarter ended December 2020. While Net Profit stood at Rs 29.44 crore for the quarter ended December 2021 compared to Rs 30.46 crore in the corresponding period the previous year due to higher tax payments in the quarter.

“We plan to move up the value chain by targeting new clientele in the pharmaceuticals, health supplements & nutraceuticals. Razor-sharp focus on high-value high- margin products, such as pharma grade sugar and ethanol, is expected to increase the revenue per tonne of sugarcane crushed over the next five years. Also, we plan to ramp up the capacity by for ethanol taking total capacity to 500,000 litres per day, said Mukesh Kumar, Executive Director, Vishwaraj Sugar Industries Ltd.

Going forward, VSIL plans to move up the value chain by targeting new geographies, sectors, and clientele in the pharmaceuticals, health supplements and nutraceuticals, and beauty and personal care industries. These markets belong to the niche category and are characterised by enhanced price realisation and improved receivables management. In the normal course, price realisation per litre of ethanol stands at INR 62.7 for the ethanol produced from sugarcane syrup, and INR 57.0 for the ethanol produced from molasses. In the case of pharma-grade ethanol, the price realisation goes up to INR 67.0 per litre.

Thus, going forward, the company will prioritise selling a mix of pharma grade sugar, pharma grade ethanol, and vinegar. The company has entered contracts with oil marketing companies for supplying 25 mn litres of ethanol commencing from December 2021, as against the supply of 22.5 mn litres of ethanol during the twelve months ended on November 30, 2021. VSIL has already commenced a supply of ethanol for the current period.

Additionally, the company plans to set up a brownfield ethanol production, with a capacity of 150,000 litres per day. This expansion is driven by technological up-gradation and the company is filing a patent to that effect. This will increase the overall ethanol production capacity to 250,000 litres per day. The expansion will happen in the existing premises by November 2023.

Further, it company is planning to set up a greenfield ethanol production facility, having a capacity of 250,000 litres per day, within 80 kms from the existing factory in the Belagavi district. VSIL has already acquired 110 acres of land for this plant. The estimated project investment is Rs 250 crore and the first full year of operation of this facility shall be FY2024.