Sivasankaran: Big plans

Mumbai, Aug. 13: He is often called the maverick who acquires ailing companies, turns them around and sells them for a neat profit; but C. Sivasankaran could soon be trying his hands at a new business. The NRI businessman is planning to venture into rectified spirit (industrial alcohol) to capture the potential of ethanol.

Industrial alcohol, used by chemical firms as a raw material, is de-hydrated in a distillery to produce ethanol, which has shot into eminence for its use as an automotive fuel.

Sources said, Siva, as he is popularly known, is planning to set up three distilleries using molasses as the feedstock. The distilleries, to be set up in different locations at an investment of around Rs 400 crore, will produce 600 kilolitres of alcohol daily. Although the sites could not be identified with certainty, sources did not rule out the possibility of one of them being in Tamil Nadu.

While molasses is a by-product of the sugar industry, Tamil Nadu is now witnessing an abundant supply of this commodity.

Reports said this trend is because of a rise in sugarcane production, which has gone up to 210 lakh tonnes in 2005-06 (October-September) from 115 lakh tonnes in the previous year. As a result of the abundant supply of molasses in the state, its prices have taken a severe beating.

This project could make Sivasankaran, who leads the Chennai-based Sterling Infotech group, one of the leading producers of industrial alcohol in the country.

Bajaj Hindustan Ltd (BHL) produces more than 300 kilolitres of rectified spirit per day. It plans to raise this to over 800 kilolitres per day in the next sugar season.

However, Sivasankaran’s industrial alcohol foray could not be confirmed, as he did not respond to a questionnaire sent to him on the subject.

Sivasankaran is not the only one who is betting on industrial alcohol or a commodity that is a part of the ethanol chain.

Vinod Khosla, the well-known venture capitalist, recently picked up an equity stake in the Pune-based Praj Industries, which sets up alcohol and ethanol plants. Khosla’s company, Kleiner, Perkins, Caufield & Buyers will acquire stakes in the company by subscribing to preferential shares and convertible warrants.