Supreme Court has passed an interim order fixing the cane price for Sugar Season (SS) 06-07 at Rs 123 / quintal for early maturing variety and Rs 118 / quintal for late maturing variety. The same stood at Rs 130 / quintal and Rs 125 / quintal as per the SAP declared by the UP state government earlier. The Supreme Court had indicated that the sugarcane dues, based on the above prices, have to be paid by the mills within six weeks.
This news is negative for Bajaj Hindustan, which had accounted for cane cost at ~Rs89 /
quintal (based on SMP). Assuming cane cost at ~Rs120 / quintal and 12.6 million tonne of
cane crushing in SS 06-07, Bajaj Hindustan will have to account for a write off of Rs 39
crore as per the higher cane costs. However, the order will have a positive financial
impact on companies like Balrampur Chini Mills (BCML), Triveni Engg, Dwarikesh, etc,
which had accounted for cane cost at SAP rate of Rs125 / quintal. BCML, which crushed
9.2 million tonne in SS 06-07 will be able to write back ~Rs 46.2 crore (9.2 X Rs
50/tonne).
Impact of revised cane prices on UP Based Sugar CompaniesThis news is negative for Bajaj Hindustan, which had accounted for cane cost at ~Rs89 /
quintal (based on SMP). Assuming cane cost at ~Rs120 / quintal and 12.6 million tonne of
cane crushing in SS 06-07, Bajaj Hindustan will have to account for a write off of Rs 39
crore as per the higher cane costs. However, the order will have a positive financial
impact on companies like Balrampur Chini Mills (BCML), Triveni Engg, Dwarikesh, etc,
which had accounted for cane cost at SAP rate of Rs125 / quintal. BCML, which crushed
9.2 million tonne in SS 06-07 will be able to write back ~Rs 46.2 crore (9.2 X Rs
50/tonne).
Company Name Cane Crushed in SS 06-07 Net Benefit (Rs crore)
(million tonne) (@ Rs120 / quintal)
Bajaj Hindustan* 12.6 -39.0
Balrampur Chini* 9.2 46.2
Triveni Eng. 6.3 31.6
Simbholi Sugars 2.5 12.3
Dwarikesh 1.7 8.6
* on standalone basis
BGR Energy bags BOP contract worth Rs 793 crore from APGENCO
BGR Energy Systems has won a BOP contract worth Rs 793 crore from the Andhra Pradesh Power Generation Corporation for a 500-MW coal-based project in Kothagudam. This order was at a bidding stage when the company came out with its initial public offering. With this, BGR Energy has four BOP projects in its portfolio taking the total order book to Rs 3,715 crore.
Two unique strategies of BGR Energy in its BOP contracts — backward integration and direct bids to generation companies — provide it an edge over others in the business. BOP contracts not only involve providing services but also supplying materials. Of the products required to execute a BOP contract, BGR can manufacture up to 40-50 per cent in-house, given its backward integration. Such in-house production facilitates cost reduction.
Alfa Laval consolidates gains
Alfa Laval is a leading global provider of specialized products and engineering solutions based on its key technologies in heat transfer, separation and fluid handling. The Sweden based group’s listed 76.7% Indian subsidiary Alfa Laval (India) reported 112% surge in net profit to Rs 23.5 crore on 25% rise in net sales to Rs 203.1 crore in the quarter ended December 2007.
The company’s margins have improved for the second year in succession from 16.7% in Calendar Year 2005 to 17.3% in 2006, which has further hardened to 18.1% in 2007. But on a sequential basis, its margins have eased by 50 basis points from 18.1% in the quarter ended September 2007 to 17.6% in the quarter ended December 2007. It has maintained dividend at 250% for the fifth year in succession (including interim dividend of 100% paid in November 2007) since 2003 to 2007.
The company’s margins have improved for the second year in succession from 16.7% in Calendar Year 2005 to 17.3% in 2006, which has further hardened to 18.1% in 2007. But on a sequential basis, its margins have eased by 50 basis points from 18.1% in the quarter ended September 2007 to 17.6% in the quarter ended December 2007. It has maintained dividend at 250% for the fifth year in succession (including interim dividend of 100% paid in November 2007) since 2003 to 2007.
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