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Debt stressed Shree Renuka Sugars Ltd (SRS) finally decided to reduce its burden through 27.5% stake sale to Wilmar International at over Rs 1200 crore. Narendra Murkumbi, managing director of SRS speaks to Dilip Kumar Jha on the rationale behind stake sale. Excerpts:
What is the rationale behind this stake sale ?
Lots of synergies. Wilmar is a global giant and spread across all commodities. We are present only in sugar and its byproducts with market access only in India and Brazil. It is a long term partnership with short term of capital infusion.
How will it help improve financials of SRS ?
We have currently Rs 3700 crore of debt. With this capital infusion, our debt will reduce to Rs 2500 crore.
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Our networth will go up to Rs 2650 crore now from Rs 1400 crore earlier. Also, debt equity ratio will come down to less than one than 2.6 earlier. We have brought capital into the company equivalent to market value. Hence, it will improve our financials significantly.
Why stake sale from SRS when recently acquired Brazilian units continued to make losses ?
We have improved financials of our Brazilian units. But, our short term aim was for capital infusion and then focus on market access for long term. We focused on that.
With 50:50 board representation…
Entire management is with us with half of board members are independent directors with another half represented by promoters. Wilmar will be just a strategic partner in the board.
