Shree Renuka Sugars acquires Gokak Sugars for Rs 69.3 crore; stock dips 8%

In a bid to access more refining capacity at a cheaper rates, Shree Renuka Sugars Ltd, India's biggest sugar refiner, has bought 87% stake in Gokak Sugars for Rs 69.3 crore, including debt of Rs 65 crore.

Karnataka-based Gokak Sugars has a capacity to crush 2,500 tonnes cane per day and has a 14 megawatt co-generation power plant. The company’s capacity is assumed to be equivalent to 7% of Shree Renuka's total crushing capacity.

According to official sources, the latest acquired mill is fully operational, and will add more income to Shree Renuka's business.

As per an estimate, the acquisition is expected to add Rs 12 crore in revenue annually.

Apart from this acquisition, the firm has also leased a Raibag-based sugar cooperative named ‘Raibag Sahakari Sakhar Karkhana Niyamit’ which has a capacity of 2,500 tonnes crushed a day, from the Karnataka government for 30 years.

Last month, Shree Renuka Sugars signed a MoU with state-run refiner Hindustan Petroleum Corp Ltd to set up a sugar plant with facilities to produce ethanol in Maharashtra.

During Today’s session, Shree Renuka Sugars scrip touched a 52-week-low of Rs 55 on BSE and ended the day just marginally above its low figure at Rs 56, down 8% compared to its previous day close.

Technical Analyst, Ashwani Gujral is of the view that Shree Renuka Sugars are looking quite weak and has support at Rs 46-47.

Initially it did seem that the scrip had bottomed out but now the sugar stocks are weakening again and probably making fresh lows, Gujral added.