The transaction is part of Olam’s strategic decision to exit from Sugar business globally, multiple sources with knowledge of the matter told ET, as per their reports.
“Both the companies are known to each other for sometime. 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 said.
The plant, situated 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 including a cash payment of $8 million and assumption of around $66 million debt.
When contacted, Wilmar spokesperson decided to comment while mail sent to Olam did not elicit any responses till the press time.
Olam International is a global integrated supply chain manager and processor of agricultural products and food ingredients. However, in 2020, it sold its stake in Indonesian sugar joint venture Far East Agri to Mitr Phol Sugar Corporation to exit from Sugar business. In 2019, Olam had announced that it will 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 will enhance 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 enhancing 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, according to rating agency ICRA.
Limited (SRSL) mainly manufactures fuel-grade ethanol that can be blended with petrol. SRSL’s distillery capacity stands at 720 KLPD spreads across three locations in Karnataka. The company has a total co-generation capacity of 567 MW, with a total exportable surplus of 268 MW.