Karnataka-based Vishwaraj Sugar Industries (VSL) has drawn up Rs 425 crore expansion plans for doubling its production capacity.
The company plans to hit the capital market in February- March with initial public offer (IPO) to raise up to Rs 374 crore.
The company has an integrated plant at Belgaum district with a sugarcane crushing capacity of 5,500 tonnes per day, alongwith power and spirits (molasses, ethanol and Indian Made Foreign Liquor) manufacturing facility.
"Market regulator SEBI has cleared the Draft Red Herring Prospectus and we are planning to launch our IPO in February or March," VSL Executive Director Mukesh Kumar told reporters.
"We plan to raise up to Rs 374 crore. The company will use the proceeds of the IPO for expansion, which include doubling the cane crushing capacity to 11,000 tonnes crushing per day (TCD) from the present 5,500 TCD," Kumar said, adding that production from the expanded capacity is likely to commence in the 2014-15 sugar season.
The total expansion cost of the project is pegged at Rs 425 crore, for which the company is also raising Rs 70 crore of long-term debt from the Bank of India.
Karnataka has taken a lead in sugar production in the country recording a 17 per cent jump by December 2012 as against national growth of 2.5 per cent achieved by the industry.
The sugar production till end-December 2012 in UP recorded a fall of about 11 per cent and in Maharashtra it was about 4 per cent higher compared to the production during the same period last year, sugar production status report released by the Indian Sugar Mills Association said.
"Sugarcane cultivation is good in Karnataka and as against earlier fear of drought affecting cane and resultant sugar production has been removed with the state producing 1,550 lakh tonnes, recording a 17 per cent growth till end-December 2012," Kumar said.
VSL has association with farmers of 49 villages for assured supply of sugarcane. The company would also expand the distillery capacity to 1 lakh litre per day from the current 35,000 litres per day, which would lead to doubling of IMFL production capacity to 5,000 cases a day from the present 2,500 cases a day," Kumar added.
The company would also utilise part of IPO proceeds to expand its power co-generation capacity to 66 MW from current 36 MW. VSL has signed a power purchase agreement with Tata Power Trading Company to sell 23 MW from its proposed expansion