In a bid to expand backward integration and get a strategic hold on ethanol costs, the Rs 1,400-crore India Glycols Ltd (IGL), a leading petrochemicals and specialty chemical player controlled by the Bhartia group, has acquired a 96.6 per cent stake in UP-based Shakumbari Sugar & Allied Industries Ltd for Rs 47 crore.
India Glycols will invest Rs 180 crore in the acquired company to enhance its distillery, power generation and crushing capacities, the company said in a statement on Sunday.
Shakumbari Sugar has a crushing capacity of 3,200 tonnes per day (TCD) along with a modern distillery of 40 kilo-litres per day, which will be increased to 7000 TCD and 250 kilo-litres per day, respectively.
Shakumbari Sugar has a captive cogeneration power capacity of 8 megawatts, which would be increased to 40-50 MW. The company intends to sell the surplus power after meeting its captive requirements.
The expanded distillery will have the flexibility to use both molasses and sugarcane juice to produce ethanol, which is becoming more valuable as an alternative to fossil fuels like diesel and petrol in the wake of an international drive to combat global warming and climate change.
“This acquisition is a first step towards attaining a complete backward integration for the company. This would greatly strengthen our position to enable us to operate at an optimum capacity required for a robust growth strategy of ours,” the company said in statement.
The acquisition would further help in meeting the company’s requirement for the supply of ethanol to oil companies for blending with crude-based fuels, besides giving a cost advantage for captive consumption, a company official said.
India Glycols is engaged in the manufacture of MEG (monoethylene glycol), ethoxylates and performance chemicals, glycol ethers and acetates, ethyl alcohol (potable) and industrial gases.