Another IPO - Vishwanath Sugar

Vishwanath Sugar (V-Sugar) is another company to have come up with an IPO. The number of equity shares is undisclosed so far with an aggregating amount of Rs 374 crore. The equity shares under this IPO have a face value of Rs 10 per share. Currently, the company has 3,45,56,000 outstanding equity shares with a face value of Rs 10 per share.

V-Sugar is involved in the production of sugar, alcoholic distillation including ethanol, liquor production and power generation. The company has an integrated sugar plant in Karnataka. It started its sugar manufacturing and power generation in 2006. The initial capacity for sugar production is 2500 TCD and power generating capacity of 14MW. At present, the sugar production capacity has increased to 5500 TCD and generates 36.4 MW power. Initially, it started its distillation process with a capacity of 35 KLPD in 2001. Further, the company has some exposure in manufacturing reinforced steel by using surplus power from its power business.

The production process of sugar releases two by-products – molasses and bagasse. These are used as raw material for the production of liquor and to generate power. For power generation, the company has an installed capacity of 36.4 MW. 7 MW of it is used for its own consumption and the rest is sold to others. The liquor (Whisky and Rum) is produced from molasses and sold under the brand name “Our Choice” and “Your Choice Whisky” in Karnataka. V-Sugar also manufactures industrial ethanol and sells it to companies like Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum.

V-Sugar proposes to utilise the fund raised through this IPO in its expansion plans. The company is planning to expand the sugarcane crushing capacity from the existing 5500 TCD to 11000 TCD. It wants to augment the power generation capacity from 36.4 MW to 66.4 MW. It also proposes to expand the distillery capacity to 100 KLPD by establishing a greenfield distillation plant of 65 KPDL. The company wants to enhance its liquor production capacity to 5000 boxes per day from 2500 boxes per day. Through this fund it also wants to meet the working capital requirements post its capacity expansion.

However, the proposed plans will depend upon the amount of fund the company manages to raise through this IPO. V-Sugar has not yet announced the price band and number of equity shares it would offer. We need to wait till the company announces the price band and bid lot size, so keep watching this space for more information on the same.