Shree Renuka Sugars Ltd embarks on mega expansion

To raise Rs 100 crore through initial public offer

Shree Renuka Sugars Limited is embarking on a Rs 128.5 crore expansion plan which will utilise the proceeds of the present Rs 100 crore public offer, according to executive chairperson Vidya Murukumbi.

It proposes to expand cane crushing capacity at the Belgaum plant from 2,500 tonnes a day to 7,500 tonnes a day at a cost of Rs 63.50 crore and double distillery capacity to 120 kilo litres a day at an investment of Rs 15 crore, she said.

The company is also setting up a 15-MW co-generation power plant at a cost of Rs 20 crore and a 120 kilo litre a day distillery in Maharashtra at a cost of Rs 30 crore.

All these projects are slated to commence commercial production by December 2006, Murukumbi said. Further, the company will repay its existing debt of Rs 9.86 crore.

Renuka Sugars is a fully-integrated player and processes sugarcane into three co-products, viz. sugar, ethanol and power. It owns and operates a 2,500 TCD sugar mill in Munoli near Belgaum in north Karnataka with a 20.5 MW co-generation plant, a 60 KL ethanol distillery and a 1,000 TPD raw sugar processing refinery, the largest in India.

Shree Renuka Sugars Limited is entering the capital market with a maiden public issue of equity shares of face value of Rs 10 each for cash at a premium aggregating to Rs 100 crore. The issue opens on October 7 and closes on October 14.

There will also be a green shoe option aggregating to Rs 10 crore. The issue is being made through a 100 per cent book building process and the price band is Rs 250 to Rs 300 per equity share. The equity shares are proposed to be listed on the BSE and NSE.

In 2004, the company entered into a two-year lease agreement with the 2,500 TCD Ajara Cooperative Sugar factory in Maharashtra.

In July 2005, the company entered into a six-year agreement with Mohanrao Shinde Cooperative Sugar factory (Unit III) to operate its sugar mill and co-generation power plant, also in Maharashtra.

The company has a wholly-owned subsidiary, Renuka Commodities DMCC, incorporated in the free trade zone in Dubai, for third country trade of sugar.

The company exported 2,40,919 tonnes of sugar in the last five years and was ranked second in Indian sugar exports. It imported about three lakh tonnes of raw sugar last year.

Shree Renuka Sugars has nearly 9,000 farmers as its shareholders. For the nine-month period ended June 30, the company's sales grew 144.94 per cent to Rs 518.43 crore (Rs 211.65 crore) and profit after tax grew 224.31 per cent to Rs 32.05 crore (Rs 9.88 crore).