Watch out for this sugar company where promoters have increased their stake

Mutual funds and promoters pick up a stake in Vishwaraj Sugar Industries shown in recent bulk deals.

According to NSE bulk deals, promoter Nikhil Katti and BNP Paribas Arbitrage has purchased shares from the open market through a bulk deal in Vishwaraj Sugar Industries (VSIL) (BSE 542852 & NSE(VISHWARAJ) ), an integrated sugar and ethanol manufacturer. 

Integrated sugar and ethanol manufacturer, Vishwaraj Sugar has a sugarcane crushing capacity of 11,000 MT per day, distillery capacity of 100,000 litres per day, co-generation capacity of 36.4 MW, and vinegar manufacturing capacity of 70,000 litres per day. The process of re-engineering implemented by the company leads to a bacteria-and-pathogen-free superior grade sugar and ethanol. The company has already achieved and delivered 99.9 per cent, benchmarking the best international standards. Also, by implementing the process reengineering, VSIL has managed to bypass the capital investment for setting up a sugar refining facility, thereby saving a sizeable Rs 80 crore, thereby increasing the overall return on equity.

Recently company has posted a 395.68 per cent rise in net profit at Rs 20.67 crore for the nine months ended December 31, 2021, compared to Rs 4.17 crore corresponding period in the previous year. Total Revenue during this period grew by 27.62 per cent at Rs 337.86 crore compared to Rs 264.73 crore in the corresponding period the previous year. 

Meanwhile, in the third quarter ended December 2021, Vishwaraj Sugar has posted a 61.06 per cent rise in total revenue at Rs 133.28 crore compared to Rs 82.75 crore in the corresponding quarter ended December 2020. While Net Profit stood at Rs 29.44 crore for the quarter ended December 2021 compared to Rs 30.46 crore in the corresponding period the previous year due to higher tax payments in the quarter. 

Going forward, VSIL plans to move up the value chain by targeting new geographies, sectors, and clientele in the pharmaceuticals, health supplements and nutraceuticals, and beauty and personal care industries. These markets belong to the niche category and are characterised by enhanced price realisation and improved receivables management. In the normal course, price realisation per litre of ethanol stands at Rs 62.7 for the ethanol produced from sugarcane syrup, and Rs 57.0 for the ethanol produced from molasses. In the case of pharma-grade ethanol, the price realisation goes up to Rs 67.0 per litre. Thus, going forward, the company will prioritise selling a mix of pharma grade sugar, pharma grade ethanol, and vinegar. The company has entered contracts with oil marketing companies for supplying 25 mn litres of ethanol commencing from December 2021, as against the supply of 22.5 mn litres of ethanol during the twelve months ended on November 30, 2021. VSIL has already commenced a supply of ethanol for the current period.