GMR Industries to spin-off ferro alloys division; merge Bharat Sugars

14 August 2006

GMR Industries board has given a nod to demerger of Ferro Alloys division to a separate company as GMR Ferro Alloys.

Narayana Rao, MD, GMR Industries, says that for every 100 equity shares held in GMR Industries, post demerger shareholders will get 38 shares in GMR Ferro Alloys and the remaining 62 shares will be given in GMR Industries. CNBC - TV18 shares with domain-b its interview with Rao:

What is the reason to spin off these two divisions, your ferro alloys business and sugar business into two separate companies?
Basically business synergies, they are two different lines of industries. So we thought it is best and in the interest of the company to go for a demerger and run the ferro alloys business to a separate company namely GMR Ferro Alloys Limited. We would like to concentrate and focus on our core competence sugar industry and expand aggressively in sugar business.

In the light of your merger with Bharat Sugar Mills, what kind of expansion plans do you have for the combined entity?
Bharat Sugar Mills is a new Greenfield project sugar complex near Hubli in Karnataka. It has 5000 tonnes crushing capacity with 24-megawatt cogeneration and 45,000 litre ethanol distillery. It is a new sugar complex coming up at the cost of Rs275 crore and Bharat Sugar is getting merged with GMR Industries.

So this will be our second Greenfield sugar complex in Karnataka. One we already have in Andhra Pradesh, which has 3125 (tonnes) capacity. In this financial year by October 2006, we are expanding it to 5000 tonnes crushing capacity, 16-megawatt cogeneration and 40,000-litre distillery making ethanol.

When will the revenues start kicking in from these Greenfield projects?
The revenues will start coming from the next financial year starting from October 2007 onwards.