EID Parry buys 76% stake in Sadashiva Sugars

E.I.D.-Parry (India) Ltd has acquired a 76 per cent stake in Sadashiva Sugars Ltd, a company promoted by the Ugar Group of Karnataka, for a consideration of about Rs 50 crore.

According to a press release from E.I.D.-Parry, the Murugappa Group company has taken the majority stake in the company which operates a sugar mill with a capacity to crush 2,500 tonnes of sugarcane a day (TCD) and has 15.5-MW cogeneration capacity. The unit is located at Bagalkot, northern Karnataka.

The acquisition gives E.I.D.-Parry a footing in the second largest sugarcane producing State, next only to Maharashtra, with annual yields of over 200 lakh tonnes.

Sadashiva Sugars is located in a prime sugarcane growing area in northern part of Karnataka known for high sugar recovery of 11-12 per cent.

According to a senior official in E.I.D.-Parry, North Karnataka, like its neighbour Maharashtra, is among the high sugar yielding belts while the southern part is more like Tamil Nadu which has an average yield of about 10 per cent.

The sugar season in northern Karnataka is also shorter, with duration of 180-200 days.

Saturation

E.I.D.-Parry has reached saturation in growth in Tamil Nadu where it is among the largest players.

Karnataka is an obvious choice; apart from the advantage of sugarcane availability, the location also gives it access to the sugar markets in Central India.

The acquisition also brings together two of the largest players in the sugar industry in the South.

Sadashiva Sugars is promoted by Ugar Sugars and a family of local investors as an equal joint venture.

TN mills venture

The acquisition by E.I.D.-Parry makes it the third by a Tamil Nadu-based sugar mill to venture into Karnataka.

Two other companies, Kothari Sugars and the Thiru Arooran Group, leased cooperative sugar mills in Karnataka. Kothari Sugars has decided to exit the arrangement.

E.I.D. Parry has opted to acquire a stake in the private sector as this route gives it a more control and a long-term relationship with farmers, a key factor in ensuring adequate sugarcane availability, the official said.

source: thehindubusinessline