Looking at expansion, Sanwaria Agro Oils Ltd is all set to explore avenues to raise funds. “We plan to raise Rs 2 billion in the next 2 years for our expansion / diversification projects. However, due to market volatility, we are a bit cautious in fund raising,” said Anil Agrawal, whole-time director, Sanwaria Agro Oils.
“We will be setting up factories at our existing locations in Madhya Pradesh. We will also focus on our captive power plants with the pace of capacity expansion,” Agrawal added.
The company plans to raise funds through a combination of QIB, ECBs, GDR or private placement. In the first phase, it will raise Rs 50 crore.
The expansion will increase its current capacity of 2,650 mtn of soy seeds crushing to 4,000 mtn.
In an effort to strengthen its pan-India presence with strong distribution channels, Sanwaria Agro is tying up with Reliance Retail and Vishal Retail.
“By September 30, we will sign agreement with Vishal Retail, and by October end, we will ink an agreement with Reliance Retail. Both the agreements will be on long term basis,” revealed Agrawal.
The company is targeting branded as well as private label segment through various big retailers to reach maximum consumers in next 2-3 years. It has acquired three solvent units in Madhya Pradesh and will continue such acquisitions. According to Agrawal, this move will result in an additional 1,000 mtn capacity expansion.
Sanwaria Agro is joining a consortium of corporate farming which will help the company grow special quality soy in Uruguay and Paraguay under the guidance of the Solvent Extractors' Association of India.
Commenting on this move, Agrawal said, “at first, we will buy land there and then will cultivate special soy seeds. We will bring those seeds to our Indian facilities to extract oil. It will help us develop variant products.”
On the financial front, net sales and net profit of the company have grown from a CAGR of 85 per cent to phenomenal 286 per cent between FY 2006-05 and FY 2008-07. “In terms of EBIDTA, we expect 10-11 per cent growth by the end of the current quarter,” said Agrawal.
Sanwaria Agro Oils posted 2.39 times growth in net profit of Rs 208.14 million for the quarter ended June 2008 against a profit of Rs 86.98 million for the quarter ended June 2007. Net sales rose 84.89 per cent to Rs 2,743.35 million for the quarter ended June 2008 from Rs 1,483.77 million for the same quarter in 2007.
Source: Economic Times