Know why this small-cap sugar stock could be in a sweet spot today!
Incorporate in 1995, Vishwaraj Sugar Industries Limited has an integrated sugar and ethanol manufacturing plant in Bellad-Bagewadi (Karnataka).
The company is present in the largest sugarcane growing belt of Karnataka in Belagavi district. This district alone contributes to more than 50 per cent of the state's annual output of sugarcane, sugar & ethanol. On average, 2 lakh MT of sugarcane is crushed per day in Belagavi district across 24 factories. During the season, the factories in the region crush on an average of 8,000 MT of sugarcane per day.
The company is looking towards capitalising on the opportunity of the Indian target of attaining 20 per cent of the ethanol blending by 2025. The government is encouraging the production of ethanol from sugar producers, making ethanol production more commercially viable and attractive. To take this opportunity, the company has plans to expand distillery capacity from 100 KLPD to 250 KLPD and steps have already been taken to get environmental clearance, which is expected by March 2022.
On greenfield expansion, the company has applied to the competent authority for a grant of distance certificate for setting up a sugar manufacturing unit at village Navage taluka in Belagavi district. The entire cane crushed will be used for ethanol production only, initially with a 100 KLPD capacity expansion to 300 KLPD. This would enable the company to take benefit from the government’s policy of 20 per cent ethanol blending. Furthermore, the company has innovated processes to manufacture pharmaceutical-grade sugar.
Interestingly, the company made an application to the competent authority to patent the process for the manufacture of the pharmaceutical grade of sugar by registering the process. The company mentioned that the patented process will be used in the coming sugar season to make pharmaceutical-grade sugar, which will be a product and not a commodity.
The stock went up by 44.53 per cent in the last one year while in the last one month, it delivered negative returns as it dropped by 7.37 per cent.