Davangere Sugar Company Limited has informed the Exchange about Capacity addition in distillery production.

Major Capex Above 10pct NetworthCapex & Operations View source PDF

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AI summary

Davangere Sugar Company Limited's Board has approved a major expansion of its distillery production capacity. The company currently operates at 65 KLDP capacity with a high utilization rate of 96%, and plans to add 85 KLDP, effectively more than doubling its distillery output. The project will cost Rs. 127.50 Crores and is expected to be completed within 18 months. Funding will be raised through Foreign Currency Convertible Bonds (FCCBs). The expansion is aimed at capitalizing on rising ethanol demand in India and supportive government policies promoting ethanol blending.

Likely market impact

This is a growth-oriented capex announcement that signals the company's bullish outlook on ethanol demand. Shareholders should note the expansion will increase future revenue potential but also raises debt/equity dilution risk through FCCB funding. The 18-month execution timeline means benefits will accrue only over the medium term.