Shree Renuka buys sugar maker Equipav in second Brazilian deal
22 Feb 2010
Shree Renuka Sugars, India's biggest refiner, on Sunday said it had bought Brazilian company Equipav SA Acucar e Alcool for Rs1,530 crore to strengthen its presence in Brazil, the world's largest producer of sugarcane and sugar.
Equipav is Brazil's seventh-largest sugar maker with a cane crushing capacity of 10.5 million tonnes a year at two plants in Sao Paolo. The Belgaum, Karnataka-based Shree Renuka was has been keen to buy the sugar and alcohol businesses of Equipav for some time now to improve access to supply of raw material at a time when availability of sugar in the Indian market has fallen short of demand, leading to higher prices and more imports.
In an interview with CNBC-TV18, company managing director Narendra Murukumbi said, ''We are done with mergers and acquisitions for the moment.'' In November, Shree Renuka had bought Brazil's sugar and ethanol producer Vale Do Ivai for Rs1,112 crore. (See: Shree Renuka Sugars to acquire Brazilian Vale Do Ivai Rs1,112 crore)
Murukumbi said the company had not taken any debt for the Brazilian acquisition and expected help from banks to restructure company's debt. Post acquisition, ''the total cane crushing capacity is expected to go up to 70,000 tonne crush per day (TCD),'' he said, adding that the promoters would excise warrants next week.
The company paid Equipav less than replacement value, he said.
Shree Renuka would fund the deal using money it had raised last year by selling shares to institutional investors and convertible warrants to promoters as well as internal accruals, said Gautam Watve, head of strategy and planning. The company had raised Rs500 crore through a qualified institutional placement in July last year.
