Bajaj Hindusthan Sugar to raise funds, commences production

Bajaj Hindusthan Sugar & Industries Ltd has announced that, the Board of Directors of the Company at its meeting held on December 06, 2006, inter alia, has approved / recommended / noted the following:

1. Commencement of production at the existing plant at Pratappur, Dist. Deoria (UP) for the sugar season 2006-07 with enhanced capacity of 6000 TCD as against 3200 TCD up to last sugar season. The Company has incurred a capital cost of Rs 60 crore (approx.) for the said enhancement in capacity.

2. Raising of funds up to Rs 300 crores by way of issue of equity shares / convertible securities as under:

(i) An aggregate Sum of USD 61.8 million to be subscribed by J P Morgan Securities (Asia Pacific) Ltd and/or its affiliates towards (a) preferential issue of equity shares upto an aggregate value of USD 9 million, priced at Rs 50 per share; and (b) issue of FCCBs upto an aggregate value of USD 52.8 million.

(ii) A sum of Rs 25 crore to be subscribed by Bennett, Coleman & Co. Ltd towards preferential issue of equity shares, priced at Rs 50 per share.

The above fund is proposed to be utilized for the purpose of ongoing project of setting up following three greenfield sugar plants and one distillery:

Unit - Kunderki Sugar Plant
Location - Tehsil: Kunderki Dist: Moradabad (UP)
Capacity - 15000 TCD

Unit - Rudauli Sugar Plant
Location - Tehsil: Rudauli, Dist: Basti (UP)
Capacity - 7000 TCD

Unit - Utraula Sugar Plant
Location - Tehsil: Utraula, Dist: Balrampur (UP)
Capacity - 12000 TCD

Unit - Rudauli Distillery
Location - Tehsil: Rudauli, Dist: Basti (UP)

Capacity - 160 KL per day

The estimated project cost for the above mentioned increase in sugar capacity from 3200 TCD to 40000 TCD and one distillery of 160 KL per day capacity of approx Rs 1230 crore is proposed to be funded as under:

a. Equity Contribution by Holding Company - Rs 330 Crore
b. Proposed Preferential Issue referred to above - Rs 65 Crore
c. Proposed GDR/ADR/FCCB or Debt or a combination thereof - Rs 835 Crore

The project work at all the sites is in progress as per the schedule. The sugar plants are scheduled to be commissioned by around November 2007 and the distillery is expected to be commissioned in February 2007. Post completion of these projects, the Company will have an asset base of around Rs 1300 crores and the Company is likely to crush an aggregate of 58 million quintal of sugarcane and produce 58 lakh bags of sugar. The annual turnover of the Company is expected to increase from Rs 70.30 crores for the last financial year ended on March 31, 2006 to Rs 1100 crores during the financial year ended September 30, 2008 and the EBIDTA margin is expected to be in the region of 17%. However, turnover and margin would be subject to the then prevailing product prices.

The proposed Investments in above three sugar plants in Uttar Pradesh by the Company would fulfill the requisite criteria of the minimum required investment in setting up new sugar plants under the "New Sugar Industry Promotion Policy 2004" framed by the State Got of Utter Pradesh to promote new investments in sugar industry in the State. Accordingly, the Company will qualify for availing all the benefits and concessions available under the said Policy in respect of all the above three plants for a period of 10 years.

3. Convening of an Extra-ordinary General Meeting of the Shareholders of the Company to be held on December 29, 2006, inter alia, for obtaining the following requisite approvals:

a) Proposed preferential Issue of equity shares to (i) J P Morgan Securities (Asia Pacific) Ltd and/or its affiliates and (ii) Bonnet, Coleman & Co. Ltd;

b) In-principle approval under section 81(1A) to enable Board of Directors for raising up to Rs 1500 crores in form of issue of further shares in domestic/international markets by way of private placement/public issue/issue of GDRs/ADRs/FCCBs, etc. or a combination thereof subject to compliance with the requisite SEBI guidelines and other legal statutory requirements;

c) Increase in authorised equity share capital of the Company to Rs 40 Crore.

Source : Equity Bulls

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