EID Parry India, part of the Rs 6,500-crore (Rs 65-billion) Murugappa group, has entered into an agreement with US-based Cargill International SA to set up a sugar refinery in Kakinada at Andhra Pradesh for an investment of Rs 325 crore (Rs 3.25 billion).
Addressing a press conference A Vellayan, vice-chairman, EID Parry, said the project will see import of raw sugar which will be processed in the refinery and exported.
The sugar refinery will have a capacity of 6 lakh tonne per annum and eventually be expanded to 1 million tonne per annum and is expected to be commissioned by December 2007.
The standalone refinery will have cogeneration unit and is expected to be set up in an export oriented unit or a special economic zone.
In the yet-to-be-named joint venture, EID Parry will hold 51 per cent and Cargill will hold 49 per cent. The project is expected to be funded by 50 per cent of equity and the remaining by debt and internal accruals.
Vellayan said the cash received from 50 per cent stake sell of Parryware Glamourooms for euro50 million (about Rs 2.75 billion) will be reinvested into EID Parry India.
Vellayan said Cargill was a dominant player in the world sugar market in sourcing, marketing and international trading besides extensive expertise and networks which will bring the technolgical expertise, while EID Parry has the ability to run the infrastructure operations at Kakinada.
Davdi Lelijveld, project manager, Cargill SA, said demand for refined sugar was about three million from neighbouring Bangladesh, Sri Lanka and others, which will be catered to by the new sugar refinery.
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