Rajashree Sugars to buy Sical's sugar division

By Our Special Correspondent

CHENNAI, AUG. 28. Mr. Ashwin Muthiah-piloted South India Corporation (Agencies) Ltd. (Sical) has decided to sell its sugar division to the Coimbatore-based Rajshree Sugars and Chemicals. Both companies have already inked a memorandum of understanding (MoU) in this regard. The sale is, however, subject to the approval of the shareholders.

Sical sources have indicated that the sugar division will be spun off into a separate company before being sold to Rajshree Sugars.

A meeting of the shareholders is convened on September 27 to approve the sugar division hive-off into an independent entity and subsequent sale to the Coimbatore company.

Sources say the MoU provides for a minimum consideration of not less than Rs. 30 crores for the sale of the sugar division. These sources, however, are optimistic that the ultimate price will be significantly higher than the indicated floor payment.

The Mundiampakkam sugar facility of Sical has a crushing capacity of 4000 tonnes a day. In view of the `considerable work done in the past couple of years or so'', the factory has seen better recovery among the units in that region. Sical sources claim that the average recovery in the unit is around 10 per cent. The sugar division is contributing close to Rs. 150 crores to the turnover of Sical. The turnover of the company was Rs. 2174 crores during the last year.

The sale move is part of the strategy drawn up the management to make Sical focused on logistics business which is its core area of competence. Much of the non-logisitics businesses like sugar, distillery, auto components, plantation and acqua culture have all been the consequence of a series of mergers within the group.

It may be recalled that Sical had quit the 50:50 joint venture Toyo Engineering by selling its stake at a consideration of about Rs. 21 crores. Sical is also seriously looking at getting out of distillery business too. Since it has been a bottler for Shaw Wallace, industry sources aver that the Kolkata firm is better positioned for a favourable consideration by Sical.

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Section  : Business
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