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Shree Renuka Sugars has received a lukewarm response to its open offer, as the offer price was much below the market rate on Friday. The open offer was triggered after the promoters sold 27.5 per cent stake in the company to agriculture company Wilmar International.
The offer was made by both the existing promoter of Shree Renuka Sugars and Wilmar at ₹21.89 a share. Shares of Renuka Sugars closed down one per cent at ₹26.90 on Friday, on the BSE.
In February, Renuka Sugars had announced that it was making a preferential allotment to Singapore-based Wilmar to raise ₹517 crore. While the company had offered to acquire 24.31 crore shares at ₹21.89/share, it received only 1,750 shares aggregating to a total investment of ₹38,307. Earlier, both the companies had envisaged an investment of ₹53 crore.
Equal stake Post the open offer, the joint stake holding of Shree Renuka Sugars and Wilmar stands at a little over 55 per cent in the company, with both partners holding equal stake.
According to the earlier proposal, Wilmar and the existing promoters of Renuka Sugars would acquire stake in the rights issue to raise ₹725 crore.
Renuka Sugars operates 11 sugar mills in India and Brazil with a total crushing capacity of 20.7 million tonnes a year, and two port-based refineries with sugar production capacity of 1.7 mt a year.
Wilmar has business interests in oil palm cultivation, oilseeds crushing, edible oils refining, sugar milling and refining, speciality fats, bio-diesel and fertiliser manufacturing and grains processing.
The government has recently hiked import duty on sugar to 40 per cent. This would discourage sugar companies importing raw sugar and selling it in the domestic market after refining it in their port-based refineries. Many sugar companies have piled up huge arrears to farmers who have sold sugar cane.
The high price for sugar cane fixed by the State Governments has been a burning issue and some of the sugar mills in Uttar Pradesh have threatened to stop crushing sugarcane for this year if the issue is not sorted out.
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