Renuka recently acquired Brazilian grower and producer Vale Do Ivai SA. For how long had it been exploring overseas acquisitions?
We had been looking for investment overseas for the past three years. In Brazil, we started seriously in May this year. Earlier, the valuations were very high.
How does the acquisition add value? Will this have any direct impact on the Indian operations?
We have a very large sugar refining business, with refineries in Haldia and Karnataka, and a bigger one coming up in Gujarat. The deal is a backward integration for us. All our current raw material is sourced from South Brazil. Vale Do Ivai has shareholding in port terminals and this gives us competitive advantage in logistics’ cost.
What plans do you have for Vale Do Ivai? Will you look at more such opportunities?
We will revive the company, invest in additional cane plantation and expand the capacity organically. We are also open to more acquisitions in the region.
What is the status of Indian operations? Do you find it more suitable to expand overseas than augmenting domestic capacities?
In India, we have 35,000 tonnes of daily crushing capacity and 4,000 tonnes per day (tpd) of sugar refining capacity. We will expand globally wherever we see good and scalable opportunities but always prioritising on continuing leadership in India, which is the world’s largest market
Renuka also recently acquired a five per cent stake in NCDEX. What is the idea behind such a move?
Electronic marketplaces, especially in the agri-space, have a very bright future. We want to be a part of this space.
How much raw sugar did you process last season (October-September? How much is planned for the current season?
We processed 663,032 tonnes in 2008-09 and we hope to approximately double that in the current sugar season, with the expansion of total refining capacity from 4, 000 tonnes per day to 6,000 tpd by March next year.
Where do you see the current year’s output and prices?
With late rains, we were expecting an improvement in the current crop, compared to the last one of 14.7 million tonnes. However, the delay in crushing in North India is causing some uncertainty. Prices should remain in the range of Rs 3,000-3,500 a quintal (ex-mill).
How is ethanol blending going on?
We are happy to see the reiteration of the national ethanol program by the Cabinet. There is short-term supply disruption only because of the uncertainty caused by the drawn-out tender process by the oil marketing companies (OMCs) and their unwillingness to pay the best price. We are confident that at market prices the sugar industry will prioritise supplies of ethanol. We have already been offered a price of Rs 26 (a lire) but we believe prices should be discovered by a transparent tendering process and not mandated to us by the OMCs.