Bajaj Hindusthan sets up subsidiary in Brazil

Mumbai: Bajaj Hindusthan Ltd has set up a wholly owned subsidiary, called 'Bajaj Internacional Participators Ltd' in Brazil, to take up sugar and ethanol business in the world's largest sugar producing nation, the company said in a filing with the Bombay Stock Exchange (BSE).

Bajaj Hindusthan is learnt to have initiated the process for acquiring a sugar factory in Brazil. Its merchant bankers are actively scouting for a suitable target there. The company has earmarked an investment of around $500 million for inorganic growth in that country.

The Shishir Bajaj group flagship manufactures sugar and its allied products and cement. The company recently invested in a new sugar mill with an eye to emerging as the leader in sugar industry.

Incorporated in 1931 at Mumbai, Bajaj Hindustan is one of the largest producers of sugar in north India. The company is currently engaged in the production of sugar and industrial alcohol, with sugar plants at Gola (capacity 9,000 tcd) and Palia (5,000 tcd) in the cane-rich area of Wstern Uttar Pradesh. The alcohol division has an installed capacity of 25,000 kilolitres per annum.

BHL is planning to set up four sugar mills in the traditional Balrampur stronghold of Estern Uttar Pradesh. The fresh investment of almost Rs800 crore will be funnelled through its subsidiary Pratappur Sugar Mills. Future investment by the Bajaj Hindusthan group in eastern UP is also likely to be made through Pratappur Sugar.

Bajaj Hindustan will be setting up four new mills in Eastern UP, including one in Barabanki, one in Gonda and two in Basti district. All these mills will be ready for crushing sugarcane by October '07. Pratappur's existing factory of 3,500 tonnes crushed per day (tcd) is being expanded to 6,500 tcd. Together this will ensure that Pratappur has a total capacity of around 41,000 tcd, along with a 160 kilolitre distillery. BHL acquired Pratappur in September '05 from the Kanorias.

The company's foreign borrowings of $380 million raised through the GDR and FCCB route between May 2005 and January 2006 will fund the operations in Brazil. The company is awaiting the end of the current bearish trend in international sugar prices to firm up investment plans.