Long-term partnership with short-term capital infusion: Narendra Murkumbi

Interview with Managing Director, Shree Renuka Sugars

Debt-stressed Shree Renuka Sugars (SRS) has decided to sell 27.5 per cent stake in the company to Wilmar International. Narendra Murkumbi, managing director of SRS, speaks to Dilip Kumar Jha about the stake sale. Edited excerpts:

What is the rationale behind the stake sale?

Lots of synergies: Wilmar is a global giant and is 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 a short term of capital infusion.

How will it help improve SRS financials?

Currently, we have Rs 3,700 crore of debt. With this capital infusion, our debt will fall to Rs 2,500 crore. Our net worth will rise to Rs 2,650 crore from Rs 1,400 crore earlier. Also, the debt equity ratio will decline to less than one, compared with 2.6 earlier. We have brought capital equivalent to market value into the company. Therefore, it will improve our financials significantly.

Why did you opt for the stake sale at a time when the recently-acquired Brazilian units continued to make losses?

We have improved the financials of our Brazilian units. But our short-term aim was capital infusion; for the long term, it was focus on market access.

What about board representation?

The entire management is with us; half the board members are independent directors, and the other half is represented by promoters. Wilmar will only be a strategic partner on the board.