KCP Sugar - Rs.208.00

KCP Sugar Ltd is a Chennai based well focused, fully integrated sugar manufacturer with a total crushing capacity of 11,500 TCD at its two plants located at Vuyyuru and Lakshmipuram. The unit at Vuyuru has a capacity of 7500 TCD and the second unit at Lakshmipuram has a capacity of 4000 TCD. It also has the capacity to produce 60,000 tonnes of molasses, 25,000 litres per day of industrial alcohol and 12,000 tonnes of bio fertilisers. Though in the South, KCP sells around 85 to 90 per cent of its sugar in the eastern region where the price realisation is much higher. Hence the company has the best of times as sugar prices are ruling high due to shortage in sugarcane production all over India and are expected to rule high in future too due to the demand supply scenario.

The South has additional advantages as Andhra Pradesh does not have administered price (SAP) for sugarcane. Hence KCP pays only as per central advised price (statutory minimum price) for sugarcane which is lower than what UP based manufacturers pay as per their SAP. Secondly, the company is cashing on its huge carryover stock, which will boost its topline as well as bottomline. Moreover, due to decent rainfall in the south this year, it will have enough sugarcane for crushing in 2005.Infact the management expects the production to rise marginally. To further capitalise on the emerging opportunities, the company is installing a 50 kilolitre per day distillery cum ethanol plant at Vuyyuru, which is likely to be commissioned shortly. The Company has also initiated steps to set up a co-generation unit at Lakshmipuram, which will enable it to sell about 2 to 3 MW of power to State grid in 2005. The company is also actively considering setting up 20 MW co-generation powerplant at the Vuyyuru unit as well. For FY05 it is expected to post an EPS of Rs. 30.