BALRAMPUR CHINI MILLS

BALRAMPUR CHINI MILLS :Buy with Stoploss of Rs 82.

Highlights:

1.Approaching Sugar Season -October -December
2.Huge Sugar Demand due to Diwali ,in an already deficit market
3.First stage expansion of 7000 TCD to commence production in Nov 2005
4.Second stage expansion of 7000 TCD to commence production in Jan 2006
5.Ethanol (Byproduct) mixing in Petrol approved by Govt.Of India
6.Pakistan opens door for Imports to India
7.Govt policies in favour of Sugar Industry-BCML to get subsidy of Rs 1.5 /kg
8.Undervalued Scrip,High Liquidity
9.Good Monsoons resulting in Good Crop
10.Unaffected by Floods as company is in North India


Company background :

BCML is one of the largest sugar manufacturing companies in India, having four sugar mills located in eastern Uttar Pradesh with an aggregate capacity of 29,000TCD. The unit-wise capacities are: Balrampur 11,000TCD, Babhnan 8,000TCD, Tulsipur 6,000TCD and Haidergarh 4,000TCD. BCML was among the sugar companies that led the drive to transform the face of the domestic sugar industry from the one that just produced sugar to the one that has integrated sugar complexes. It was also one of the initial players in the business to set up integrated sugar complexes with distillery and cogeneration plants. BCML has the capacity to produce 100KLPD of alcohol and 39.55MW of power using bagasse as fuel.

With its integrated complexes Balrampur Chini Mills Ltd (BCML) is one of the largest producers of sugar and alcohol in the country.

BCML is expanding the capacity for all its products, ie sugar, alcohol and power.

The company is looking at expanding its cane crushing capacity by 14,000 tonne crushed per day (TCD), alcohol capacity by 60 kilolitre per day (KLPD) and power capacity by 34 megawatt (MW).

EXPANSION :

BCML has undertaken an expansion plan to increase its existing capacity by 60% over the next two years. The company is putting up two greenfield plants, at Akbarpur and Mankapur, with a capacity of 7,000TCD each. Additionally the company has also planned two

brownfield expansion projects of 4,000TCD capacity via de-bottlenecking at its existing plants.
BCML will also expand the capacity for the co-products with a 60KLPD distillery at Mankapur and power plants with capacities of 11MW and 23MW at Akbarpur and Mankapur respectively.
The contribution of by-products like alcohol and power to the total revenues is the highest for BCML in the industry, so much so that nearly 25% of its total revenue comes from these businesses. Looking at the high margins that businesses such as that of cogeneration power command, the management is expecting the by-products to contribute 50% to the company's profit before interest and tax. The high contribution by these businesses to the company's profit provides stability to the earnings, as even in the year of a bad monsoon BCML can buy molasses and bagasse from nearby stand-alone mills and run its distillery and power plants.

Company Info Complied from various reliable sources