Mumbai: Bajaj Hindusthan Ltd, India’s largest sugar maker, expects to earn around 35-40% revenue from its non-sugar business — ethanol and power — over the next two years, a top official told Reuters.
“A lot of investments have been made where the products are value-added and non-cyclical,” chief executive officer Rakesh Bhartia said on Tuesday, 10 June.
“We are looking to increase our dependence on non-sugar business from 15% now, over the next couple of years.”
In the sugar season starting November 2008, the company expects exportable surplus from its co-generation units to cross 100 megawatt. It generated around 80 megawatts a year ago.
Sugar firms had reported losses in the financial year ended September 2007 as sugar prices crashed due to a supply glut. Bajaj, hence, felt a need to diversify into related non-cyclical sectors, he said.
Apart from sugar, the company makes medium density particle and fibre boards, has six distilleries with a capacity to produce around 200 million litres alcohol and co-generation units.
Shares in the company have fallen around 39.5% since the start of the year compared with the CNX Midcap Index’s 34.5% drop.
“Things have turned now,” Bhartia said. “The first quarter sugar prices have improved. India’s been a big exporter this year. I think, as far as the industry goes the worst is behind us.”
The company’s Jan-March profit had soared nearly 12 times on higher distillation capacity, income from power generation and lower cane procurement costs.
The company, which has a capacity to produce 200 million litres of alcohol, also plans to set up a speciality chemicals plant as part of its strategy to diversify into non-cyclical business.
“As part of our emphasis on value-addition, we are trying to look if we can add value to alcohol. We are in the process of speaking to technology suppliers,” Bhartia said. “We should make substantial progress over the next 6 months.”
Bhartia said “it would be too immature at this stage” to talk about the investments in the plant.
Bajaj Hindusthan has already supplied more than 100 million litres ethanol to oil companies since operations began in May 2007.
Shares in the company were trading up 0.2% at Rs173.20 after hitting a high of Rs174.40 in a weak Mumbai market.