Balrampur Chini Mills Limited is a leading producer of sugar, molasses, and industrial alcohol in India. The factories of the company are located at Balrampur, Bhabnan, Tulsipur and Haidergarh both in Uttar Pradesh. The company is making growth through acquisition and expansion of sugar capacities. It is one of India's premier sugar companies keeping its position ahead through sustained expansion of its sugar manufacturing operations - an area where it hold competence - at global efficiencies of cost & quality standards of customer service.

Products & Services-

Balrampur Chini Mills Ltd is one of the largest integrated sugar manufacturing companies in India. Its allied business consists of manufacturing and marketing of Ethyl Alcohol & Ethanol, generation and selling of power and manufacturing and marketing of organic manure. Company has nine sugar factories located in Eastern U. P. having an aggregate crushing capacity of 73,500 tons per day. BCML has taken over the management of Indo Gulf Industries Ltd (IGIL). This has since become the subsidiary of the company. IGIL has a sugar cane crushing capacity of 3000 TCD and it is located at Maizapur.

The 'bagasse' produced as a by-product enables the company to generate power for its captive consumption and also sell it to other user industries, thereby adding to the topline. Further, the company has a capacity to produce industrial alcohol for value addition of its product molasses.

SUGAR- This is widely used as a sweetener in food and beverages. Interestingly, in a country like India, sugar is also emerging as an index of upward mobility. For instance, as incomes rise in rural India, consumers migrate from the consumption of are alternative sweeteners, towards sugar. The principal portion of sugar sold within India is loose and packaged. That's why Balrampur Chini Mills Ltd. has launched their branded packed sugar "Balrampur Chini" on a national level. Balrampur Chini Mills Ltd. has installed a separate unit for the above process which is almost non-existent anywhere in the country.

MOLASSES- Molasses is a byproduct generated from the manufacture of sugar. It can be sold untreated on one hand. On the other, it can be used as the principal feedstock for the manufacture of alcohol and a host of downstream chemicals. Molasses is distilled to produce rectified sprit, extra neutral alcohol, denatured spirit, potable alcohol and ethanol.

ETHANOL- Ethanol is one of the most exciting things to happen to the sugar industry across the world. Ethanol has been established as an alternative fuel from international experience. Indian government permitted an ethanol-gasoline blend of up to five percent within India. Ethanol is a relatively clean fuel and replaces MTBE, which can potentially contaminate the ground water. Ethanol is an effective oxygenate as much oxygen as other widely used oxygenates such as MTBE. Besides, ethanol has near-zero sulphur content. The blend (ethanol plus gasoline) helps fuel combust more completely and reduces vehicle monoxide emissions by 15 to 20 percent. The result is a substantial net reduction in CO2/CO/particulate/hydrocarbon emissions, reducing the damage to the ozone layer. Increased use of ethanol is a renewable and environmentally friendly alternative to the consumption of the earth's limited resources.

Bagasse, generated as a by-product, can be used profitably in two ways, as paper and the generation of electricity. The manufacture of paper from Bagasse is an environment-friendly alternative over the conventional route of extracting pulp from trees. Since bagasse has a high heat factor, it is also used in the generation of electricity, which substitutes the conventional thermal alternative and eliminates the emission of greenhouse gases. Presently, sugar mills generate their power requirements from bagasse-fired boilers.

ORGANIC MANURE- Spent wash, an effluent generated from the processed molasses, is used with press mud for the production of organic manure. This is gaining popularity at the expense of fertilizers with a high chemical content. This bio-fertilizer is manufactured by spraying the non-disposable spent wash over the press mud. The product is best suited for tea cultivation also.

Valuation

At CMP of 77 stock is trading at 6.45 P/E multiple of its FY2010 estimated earnings. We recommend Investors "Strong BUY" on "Balrampur chini" with price target of 170 Rs. for medium to long term investment Prospective.