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BW Businessworld

Dalmia Group: Sweet Path To Success

Under Dalmia, the group has taken a number of initiatives to drive sustainable growth, lasting competitive advantage and efficiencies in all aspects of operations. It has also taken on a proactive role at industry level and has been instrumental in driving many policy and regulatory changes in the sugar and renewable energy sector

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Dalmia Group’s foray into the sugar business was made in the mid-90s and the first unit of 2500 tonnes of cane per day (TCD) was set up at Village Ramgarh in Sitapur district of U.P. in 1994. During 2006-07, the company embarked on a major growth path by setting up two greenfield plants at Jawaharpur and Nigohi, both in UP and expanding existing facilities at the Ramgarh unit. The total cane crushing capacity of the company is now 22,500 TCD which makes them one of the leading sugar producers in the country. “We are now a fully integrated player with 79 MW of cogeneration capacity and a distillery of 80 KLPD. We also have facilities for processing of raw sugar,” says Puneet Dalmia, promoter Dalmia Group.

It is under his leadership that the sugar business has consistently been performing beyond expectations. He has been instrumental in driving Dalmia Sugar’s growth all across the country by taking the business at the forefront of technological and operational excellence.

The sugar sector holds immense potential in providing food and energy security for the country which is going to be one of the most important developmental pre-requisites in the next 5-10 years. The gain in the sector has been mostly due to the plans of debt restructuring by Finance Minister, Arun Jaitley. He is deliberating a proposal to restructure sugar mills’ debt, which is under severe pressure due to lack of capacity utilisation. While sugar crushing started two months ago, some mills in Maharashtra and Karnataka don’t have sufficient sugarcane to crush and are said to be closing operations. The sugar sector’s total debt is projected at Rs 50,000 crore.

Under Dalmia, the group has taken a number of initiatives to drive sustainable growth, lasting competitive advantage and efficiencies in all aspects of operations. It has also taken on a proactive role at industry level and has been instrumental in driving many policy and regulatory changes in the sugar and renewable energy sector.

Last year, Dalmia Bharat Sugar and Industries Ltd invested about Rs 150 crore on expansion of its existing sugar plant at Kolhapur in Maharashtra. The company has five sugar plants in Uttar Pradesh and Maharasthra with cane crushing capacity of 29,250 tonnes. The power co-generation and distilleries capacities at these plants are 94 MW and 120 kilo litre per day, respectively.

Dalmia Sugar had entered Maharashtra by acquiring the Kolhapur sugar mill in 2012 for about Rs 135 crore. Then, it invested another Rs 200 crore to double the cane crushing capacity of this plant to 5,000 tonnes per day. In 2015, the company acquired another sugar plant at Sangli, Maharashtra having a cane crushing capacity of 1,750 tonnes per day for Rs 24 crore.

These state-of-the-art facilities serve as a role model for the industry and have achieved excellence in plant operational metrics and also have a technological leadership position in the industry. “We have robust quality systems and have also embarked upon 5S & TPM initiatives to create world-class systems & processes,” says Dalmia.

He quips that the company produces sugar of quality which is a hit in markets in U.P. & eastern India and with institutional buyers such as Pepsi, Coke, Britannia, Bharati Wal-Mart, Parle etc. which have stringent quality norms.

The year 2016 was a great year for investors of sugar stocks, which surged up to 360 per cent. Rising prices of the sweetener in the domestic as well as international markets supported the sector throughout the year. Market experts see value in selected sugar companies and believe they can surge up to 50 per cent in 2017. On an average, sugar majors have surged over 75 per cent this year compared with 38 per cent and 32 per cent returns that they generated in 2015 and 2014, respectively. Dalmia Bharat’s share advanced between 75 per cent and 190 per cent in this period.