Oudh Sugar chairman C.S. Nopany in Mumbai on Wednesday. (Fotocorp)

Calcutta, Aug. 23: Sugar companies of the KK Birla group — Upper Ganges Sugar & Industries, Oudh Sugar Mills and Govind Sugar Mills — are chalking out expansion plans.

Upper Ganges and Oudh Sugar have announced capital expenditure plans aggregating to Rs 870 crore.

While Oudh Sugar will invest Rs 479 crore to expand capacity, Upper Ganges has lined up Rs 391 crore for capital investment during the current financial year.

A significant part of this capital expenditure will be used to increase the co-generation capacities of the two firms.

“After the projects are completed, the captive power generation capacity of Oudh Sugar will go up to 30 mw,” said company CMD C.S. Nopany while announcing the company’s financial results for the year ended June 30.

Nopany, who is also a director of Upper Ganges, earlier said the capital expenditure plan aimed at increasing the company’s (Upper Ganges) co-generation capacity to 42 mw.

“We expect sugarcane prices to go up this year, but to what extent can be ascertained only after the government announces its purchase price in November. Our profitability in the forthcoming quarters will be under pressure and that’s why we are diversifying into ethanol production and power generation to supplement the profits from sugar business,” Nopany said.

Besides, the two companies are also likely to earn carbon credits as the co-generation plants will largely run on bagasse. “We are selling 30 mw power to the Uttar Pradesh State Electricity Board at a price of Rs 2.76 a unit. We also plan to sell electricity to Bihar State Electricity Board from our expansion in the state at around the same price. The Bihar government is considering the Uttar Pradesh model to purchase power from sugar mills in the state,” Nopany said.

At present, the sugar industry generates about 600 mw of power.

Oudh Sugar results

Oudh Sugar has recorded a 306.48 per cent increase in net profit at Rs 45.37 crore for the financial year ended June 2006 compared with Rs 11.16 crore in the previous financial year. It clocked a turnover of Rs 528.65 crore, reflecting a year-on-year increase of 40.49 per cent. The board has declared a dividend of 45 per cent for its shareholders.