Temasek-owned Olam to trade Maharashtra Sugar plant to Wilmar-Renuka for Rs 350-500 crore

Industry Outlook Team | Thursday, 01 July 2021

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Olam International, controlled by Singaporean state investor, Temasek Holdings is in advance discussions with Indian sugar maker Renuka-Wilmar to sell its plant in Maharshtra for around Rs 350-400 crore as part of existing from non-core business verticals.

The transaction is part of Olam’s strategic decision to exit from Sugar business internationally, multiple sources with knowledge of the matter updated.

“Both the companies are known to each other for some time. The bilateral negotiations are at an advanced stage now. From the part of Olam, the deal is more of strategic in nature as part of its announced plan last year,” the source stated.

The plant, located in Kohlapur, has a crushing capacity of more than 6000 tonnes per day. Olam bought this plant in 2011 from Hemarus Industries for about $74 million together with a cash payment of $8 million and assumption of around $66 million debt.

Olam International is a global united supply chain manager and processor of agricultural products and food ingredients. Though, in 2020, it sold its stake in Indonesian sugar joint enterprise Far East Agri to Mitr Phol Sugar Corporation to exit from Sugar business. In 2019, Olam had proclaimed that it would exit from sugar, fertilizers, rubber and wood products within a span of six years. Olam has two sugar mills in India with a capacity to crush 1 million tonnes per annum.

For Renuka-Wilmar, the transaction would boost their sugar crushing capacity from the current 37000 tonnes to 43000 tonnes per day. After Wilmar took over the controlling shareholding, Renuka-Wilmar has been cleaning up their balance sheet and boosting capacity. Renukas’ is one of the first mills in the country to be fully forward integrated into distillery (using molasses, a by-product of sugar) and co-generation (based on bagasse) operations, as per rating agency ICRA.

Shree Renuka Sugars NSE 4.96 % Limited (SRSL) mainly manufactures fuel-grade ethanol that can be merged with petrol. SRSL’s distillery capacity stands at 720 KLPD spreads across three locations in Karnataka. The firm has a total co-generation capacity of 567 MW, with a total exportable surplus of 268 MW.