Stock to Watch: High Promoter Holding Sugar Stock Announces Major Expansion

Davangere Sugar Company Limited (DSCL) was incorporated in 1970 and acquired by current promoters in 1995. Ganesh S S takes care of the day-to-day functioning of the company. The company commenced operation with an installed capacity of 1250TCD sugar, subsequently, its sugar crushing capacity was enhanced to 4750TCD. DSCL also operates a multi-fuel co-generation unit of 24.45 MW. The company commenced operations of its distillery unit of 65 KLPD capacity in Q1FY23.

DSCL has recently announced several key developments that are set to enhance its production capabilities and contribute to the local economy. These updates reflect the company’s commitment to innovation, sustainability, and community support.

Expansion of Ethanol Production Capacity

DSCL has embarked on a significant expansion of its distillery operations by adding a 45 KLPD grain-based unit at a project cost of Rs. 54 crore. This expansion is a major milestone, allowing the company to operate independently for 330 days a year, ensuring a robust production cycle. The financial arrangements with banks have been finalized, and Rs. 2 crore have already been invested in civil works, with negotiations completed with machinery suppliers.

This growth is underpinned by increased procurement of maize, rice, and other feedstocks directly from local farmers. By sourcing these essential ingredients from nearby agricultural partners, DSCL strengthens its commitment to supporting the local economy and promoting sustainable farming practices. Mr. Ganesh, MD of DSCL, stated, “We are thrilled to deepen and further strengthen our collaboration with local farmers. Their quality crops are the cornerstone to produce ethanol, and this expansion allows us to create more jobs, boost local income, and maintain our high standards year-round.”

Commitment to Sugarcane Cultivation

DSCL is also focused on revolutionizing sugarcane cultivation. The company aims to expand sugarcane crops up to 15,000 acres in both existing cane cultivation areas and regions not traditionally associated with cane cultivation. This initiative will secure a sustainable raw material supply for the company and bring socio-economic benefits to local farmers.

DSCL plans to provide farmers with assured and timely returns on their produce, offering financial assistance and loans to empower them. These resources will enable farmers to invest in modern agricultural practices, procure quality seeds, and access essential equipment. Through collaborative efforts, DSCL aims to enhance productivity, optimize resource utilization, and ensure sustainable agricultural practices.

Commissioning of CO2 Processing Plant

In a move towards environmental sustainability, DSCL has established a state-of-the-art 35-ton Carbon Dioxide (CO2) processing plant. This facility is designed to drastically reduce environmental emissions and create additional revenue streams for the company. The CO2 plant will capture and repurpose carbon dioxide emissions, transforming them into valuable products such as food-grade CO2 and dry ice for industrial applications.

This initiative reflects DSCL’s commitment to innovation and sustainability, aligning with global efforts to combat climate change while enhancing operational efficiency. By converting emissions into useful products, DSCL not only minimizes its environmental footprint but also diversifies its revenue sources.

Conclusion

These developments mark a significant stride for DSCL, highlighting its dedication to sustainable growth and community support. By expanding its ethanol production capacity, revolutionizing sugarcane cultivation, and establishing a CO2 processing plant, DSCL is set to enhance its production capabilities and contribute positively to the local economy. These initiatives underscore the company’s vision for fostering inclusive growth, empowering communities, and pioneering sustainable agricultural practices.

Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.