Equity Research Report: Shree Renuka Sugar

Summary

Shree Renuka Sugars is a global agribusiness and bio-energy corporation. The Company is one of the largest sugar producers in the world, the leading manufacturer of sugar in India, and one of the largest sugar refineries in the world.

ABOUT

Shree Renuka Sugars is a global agribusiness and bio-energy corporation. The Company is one of the largest sugar producers in the world, the leading manufacturer of sugar in India, and one of the largest sugar refineries in the world. The company has its Corporate office in Mumbai (Maharashtra, India) and Head Office in Belgaum (Karnataka, India). Shree Renuka Sugars operates eleven mills globally (four in Centre-South Brazil and seven in India) with integrated ethanol and power cogeneration capacity. The company also has two large port based sugar refineries in India.

SHAREHOLDING PATTERN:

• In DII's Axis Bank Limited has decreased its shareholding from 1.83% to 1.44%,
• FII's have increased their shareholding from 0.68% to 0.74%.

FINANCIALS:

• The Company’s operating revenue stood at H 55,434 Mn vis-à-vis H 45,679 Mn in FY 2019-20. This was mainly driven by increased sugar sales of H 7,157 Mn with a value growth rate of 18% and increased ethanol sales of H 2,302 mn with a value growth of 49% over last year.
• Operating expenses for the year stood at H 5,814 Mn as against H 5,195 Mn in FY 2019-20 majorly due to increase in expenses in line with the increase in volumes.
• Company generated an EBITDA of H 5,606 Mn visà-vis H 2,077 Mn last year. The increase is largely on account of improved realisation in the sugar and ethanol segment.
• After consecutive seven years of negative PAT, the Company recorded a positive PAT of H 556 Mn for the year, driven mainly by improved operational performance and savings in interest costs.

• Net worth: Net worth increased to H 2,156 Mn in FY 2020-21 from negative Rs. (1,201) Mn in FY 2019- 20. This was due to improved profitability and equity infusion by the promoters during the year.
• Current assets: Current assets as on 31st March 2021 stood at H 30,344 Mn. Current ratio is 0.72 as on 31st March 2021.
• Inventories: Inventories increased by 42% from H 16,544 Mn in FY 2019-20 to H 23,544 Mn in FY 2020-21, mainly due to increase in refinery stocks

SEGMENTS:

^{SUGAR AND REFINERY BUSINESS}

The refinery business of Renuka Sugars is an export oriented business. The company imports raw sugar and exports white sugar to different parts of the world. In the year 2020-21, the company relied on procuring raw sugar from the domestic market to substitute its imports. They have 2 refineries in the state of Gujarat and West Bengal & 6 in the state of the art sugar plants in the states of Karnataka (4) & Maharashtra (2).

TPD - Tonnes Per Day & TCD- Tonnes of Cane Per Day

Key Highlights for FY 2020-21

• The revenue from the sugar segment amounted to Rs. 53,137 Mn, accounting to 80.01% share of the total revenue mix in comparison to Rs. 42,223 Mn in the previous year
• The refinery in Haldia restarted after a gap of 2.5 years. Total raw sugar melted at the Kandla refinery stood at 1,201,447 MT and 116,927 MT in the Haldia refinery.
• RENUKA occupied 22% market share in the branded sugar segment.

POWER

• Shree Renuka Sugars produces power from bagasse (sugarcane by product) for captive consumption and sale to the state grids in India. The Bio energy produced from burning bagasse is a renewable energy that provides a significant reduction to greenhouse gas emissions.
• Renuka has 262 Cogeneration power plants located in the states of Karnataka, Maharashtra, Gujarat & West Bengal.

Key Highlights for FY 2020-21

• 77% of our cogeneration process is based on renewable energy ensuring significant reduction in GHG emissions.
• The revenue from the segment amounted to Rs. 4,301 Mn, registering 6.4% share in the total revenue mix in comparison to Rs. 3,722 Mn in the previous year.
• During the year, (2021) the Company’s Power Generation was at 529 Million Kwh (of which the Company exported 248 Million Kwh to the Grid) as compared to 478 million Kwh in FY 2019-20.

ETHANOL

Renuka is one of the largest suppliers of ethanol to oil marketing companies in India. Through distilleries, they manufacture 3 grades of Ethanol i.e. Rectified Spirit (RS), Extra Neutral Alcohol (ENA) and Absolute Alcohol (AA) or Ethanol (used for fuel blending). Further, through subsidiary - KBK Chem-Engineering Pvt. Ltd., they provide turnkey distillery, ethanol, certain sugar process equipment and biofuel plant solutions. 

KLPD - Kilo Litres Per Day

Key Highlights for FY 2020-21

• The revenue from the segment amounted to Rs. 7,014 Mn, accounting for 10.56% share of the total revenue mix, as compared to Rs. 4,712 Mn in the previous year.
• 136 Mn litres of ethanol produced – highest ever production, as compared to 110 Mn litres in the previous year, registering a growth of 23% YoY.
• The plants are running at 100% capacity utilisation.
• Renuka has also operated with expanded capacities and used incineration boilers to burn spent wash, enabling them to save a large amount of external fuel.
• Increase in ethanol supply also rose 90 Mn litres to 120 Mn litres, an increase of 34%.