Pure sugar is sweet

Chennai: It is joint venture season at the Rs978.46 crore turnover sugar company EID Parry (India) Limited. In a span of four days, the company announced two major joint ventures.

The latest is the Rs140 crore equity Parry's Sugars Refineries Pvt Ltd venture with Cargill International. EID Parry will hold 51 per cent stake.

The joint venture company will set up a stand-alone sugar refinery in Kakinada, Andhra Pradesh with an outlay of Rs325 crore. "The refinery is expected to start operation by December 2007 with an initial capacity of 600,000 tonnes per annum (tpa) and the final capacity will be 1,000,000 tonnes tpa. It will be set up in a special economic zone (SEZ) or as an 100 per cent export-oriented unit," says vice chairman A Vellayan.

Three days ago EID Parry announced its 50:50 venture with the global bathroom products major Roca, Spain. (See: Roca buys into Parryware Glamourooms Private Limited for €50 million).

At a time when the company has announced an investment of Rs850 crore, and is also in the process of acquiring the New Horizon Sugar Mills, Pondicherry, the Cargill joint venture has taken industry watchers by surprise.

However, standalone sugar refineries near the markets are the current global industry trend. According to Daudi Lelijveld, project manager, Cargill Sugar, Geneva, the European Union's decision to cut export subsidies on sugar has resulted in a deficit of 6 million tonnes in other markets. The estimated shortfall in the markets that could be served from India is around three million tonnes.