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Investment in Brazil sugarcane Plantations delayed

Anurag Bhullar


Lack of Cash has caused Indian Oil, Bharat Petroleum and Hindustan Petroleum to postpone their plans of investing in sugarcane farms of Brazil. The investment of USD 600 million was to fetch ethanol for mixing it with petrol.


The three units had thought of buying or leasing sugarcane plantations in Brazil. Ethanol is a by-product in sugar making. It is added to petrol to decrease dependence on imported oil. However, due to the unfavourable cash flow positions, the plans have been put on hold.


These companies had to bear a massive net loss of Rs.14,700 crore in the first half of the current fiscal year in domestic retail fuel sales. On being compelled by Government, the three groups had to sell fuel at value that was much less than the cost of production. Consequently, they were managing on borrowed money. One of the officials informed that the decision to direct money in Brazil was found both viable and strategic. However, in the light of present slump, cash is not enough to continue with the plans.

 
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