Dwarikesh Sugar to benefit from UP Govt's extended deadline for its 2004 incentive scheme

Dwarikesh Sugar Industries Ltd has announced that the Company, is now eligible to get advantage of various incentives enumerated in the Uttar Pradesh State government’s Sugar Industry Incentive Scheme, 2004. The UP Government recently extended the eligibility date of the scheme to March 31, 2007 from the earlier date of March 31, 2006.

Following the eligibility date extension by the UP State Government, the Company will stand to gain from undertaking the planned investments of Rs 500 crore-plus towards setting up of Greenfield plant at Dwarikesh Dham and capacity expansion at its existing plants. As the Incentive Scheme covers investments undertaken after the announcement of the scheme in 2004, the company would be eligible for its planned and ongoing investments. The planned investment is as under:

1. Plant Name : Dwarikesh Nagar
Activity : Expansion of Co-generation facilities
Cost : Rs 12 Cr.

2. Plant Name : Dwarikesh Nagar
Activity : New Distillery (30,000 lts / day; operational)
Cost : Rs 13 Cr.

3. Plant Name : Dwarikesh Puram
Activity : 2nd plant (7K TCD, expandable to 10K TCD operational in Jan 2006) + 9MW Power Plant
Cost : Rs 150 Cr.

4. Plant Name : Dwarikesh Puram
Activity : Expansion of Co-gen plant (in progress)
Cost : Rs 100 Cr.

5. Plant Name : Dwarikesh Dham
Activity : 3rd Greenfield plant of 7,500 TCD (expandable to 10K TCD - in progress)
Cost : Rs 250 Cr.

6. Plant Name : Dwarikesh Dham
Activity : 36 MW Power Plant
Cost : Rs 100 Cr.

With the eligibility of the UP State Govt’s incentive scheme the company is expected to gain approximately Rs 100 per quintal (Rs 1,000 per tonne). In turn, the overall cost of production too would be less accordingly.

With the commencement of its 2nd plant in September 2004, the Company's recovery rate during 2006-07 sugar season is expected to improve by 30 bsp to 10.40% from 10.10% last year.

In November 2006 the company has joined the government’s ethanol program and commenced the ethanol production. This activity would help the company with better realizations from molasses and rectified spirits. Currently, the company has a capacity of seven million liters of ethanol production which if utilized fully, can add up to around Rs 150 mn in revenues during 2006-07. Depending upon the success of the government's ethanol blending program, the company is well equipped to increase the ethanol production and meet the rising demand.

Source : Equity Bulls

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