Simbhaoli Sugars Ltd to set up 1,000 metric tonne-a-day sugar refinery at Kandla

Simbhaoli Sugars Limited (SSL), one of the country's largest sugar refiners, will set up a green field sugar refinery at Kandla, Gujarat. Its expected capacity is about 1,000 metric tonnes per day.

For this project, it has entered a joint venture with E D & F Man Holdings (E D & F Man), a 229-year-old business group comprising a sugar trading house. SSL has completed the ground-breaking and commenced the construction of the refinery.

The project is being implemented through their joint venture company, Uniworld Sugars Private Limited (USL). This new raw processing facility is being set up in proximity to the Kandla port (approximately 21km) for eliminating the transportation charges; importing raw sugar, and exporting white sugar. This sugar refinery is believed to have among the lowest outlays in the region.

The estimated cost of the project, Rs 2,350 million, is being financed by way of long-term loans and promoters' equity. The debt finance for the project has been secured from banks. SSL and E D & F Man, along with their affiliates, are contributing to the share capital of USL in an equal ratio; and the first installment of capitalisation (about Rs 689.5 million) is already in place.

USL is governed by a board of directors, comprising representatives from SSL and E D & F Man. Gurmit Singh Mann, chairman and managing director, SSL, will be its founder chairman. By combining SSL's expertise in refining, raw procurement and marketing and the international trading expertise of E D & F Man, the business will benefit from the sugar production and trading processes.

SSL shall provide the expert services of management and day to day operations, based upon its refining experience. E D & F Man will provide the advisory services on all aspects of the international market for raw and white sugar and issues related to the hedging of USL's market risks in connection therewith.

On this occasion, Mann said, "The joint venture shall bring in the expertise of both operational management and international marketing. The refinery is intended to be commissioned within 15 months, i.e. alongside the expected change in the current sugar cycle, to reap the maximum benefits from the changing sugar cycles. The joint venture brings together two of the leading entities in the sugar industry and some of the most experienced professionals in the industry. With the addition of this port-based refinery, the company will be able to integrate into global raw refining markets."

Speaking at the event, Philip de Pass, director, operations, E D & F Man Sugar, said, "The facility can be an ideal raw processing and export destination because of proximity to deficit markets around India, keeping in view the consistent increase of the rate of growth of sugar consumption in India and the neighbouring countries. The refinery model can be modified as per the sugar demand and supply situation in the market. In times of domestic deficits, it can import raw and sell it in local markets; whereas in times of surpluses, it can import raw and either market locally or export it back to the international markets after refining and creating value addition."

The civil and structural designing work for the factory, including equipment foundation, has already been started. The refinery will be built with technical support from Integrated Casetech Consultants Pvt Ltd, a technology and operation maintenance company engaged in the technical consultancy in sugar, alcohol and related energy areas.

At full capacity, the refinery will be producing 3,00,000 metric tonnes of high quality white sugar (45 icumsa or other qualities) having a current market value of approximately Rs 8,700 million annually. The refinery will not only be producing imported raw sugar, but will be also processing domestic raw sugar, to take care of the surplus inventory within the country.

source: fnbnews