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Failed bets in Brazil and mounting debt have finally caught up with Naredra Murkumbi, the man who until today was known as the promoter of Shree Renuka Sugars.
On Friday, Murukambi ceded control of one of India’s largest sugar making company to Singapore-based agricultural commodity company Wilmar International. A subsidiary — Wilmar Sugar Holding — has taken a controlling stake in the Indian company with the allotment of fresh shares.
Following the deal Renuka Sugars’ Promoter, Vice-Chairman and Managing Director Murkumbi has resigned.
However, Murkumbi will continue to hold his position for 90 days or until completion of the open offer being made by Wilmar Sugar Holdings, whichever is later, said the company in a statement.
The move is part of a debt restructuring exercise, which began last year when Renuka Sugars allotted the preferential shares at ₹16.27 each to Wilmar Sugar Holdings.
The company's debt, which stood at ₹1,343 crore in September 2009, had grown to ₹6,500 crore in 2017. This affected its profitability.
Failed bet in Brazil
The real trouble started in 2010, when Renuka Sugars decided to invest in the South American sugar market. But this bet did not work out. The company is hoping to bring down its overall debt to ₹1,500-2,000 crore post the ongoing restructuring.
Renuka Sugars said that it has allotted 481,843,884 equity shares to Wilmar Sugar Holdings on conversion of its compulsory convertible preference shares. Post-issuance of fresh shares, Wilmar’s holding will increase to 39 per cent from 27 per cent, triggering an open offer. Murkumbi will own 13 per cent in the company post-restructuring of debt.
Wilmar Sugar has announced an open offer to acquire 26 per cent in Renuka Sugars at ₹16.29 a share. The offer will lead to an outgo of ₹812 crore. Renuka Sugars has also issued 489,728,828 shares at ₹16.28 on a preferential basis and another 74,388,207 redeemable preference shares of ₹100 each to eight banks led by IDBI Bank and ICICI Bank for conversion of debt into equity.
It has also issued 5,521 convertible debentures of ₹10 lakh each to eight banks as part of debt restructuring.
According to the last financial details available, Renuka Sugars reported a net loss of ₹120 crore in the September quarter against a net profit of ₹2.50 crore in the same period of the previous year. Net sales fell 33 per cent to ₹1,365 crore.
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