GMR Industries buy strengthens EID Parrys position in S India

Written by Sajan C Kumar | Chennai | Updated: Apr 28 2010, 04:35am hrs
The Murugappa group company EID Parry India Ltds acquisition of GMR Industries, the agri-based entity of the GMR group, has consolidated its position as one of the leading sugar manufacturers in South India.

Through the buyout the company is broadening its footprint in cane rich areas of North Karnataka and marks its entry into Andhra Pradesh. Late last year, EID Parry had also acquired Sadashiva Sugar with a crushing capacity of 2,500 tonne crushed per day (TCD) nd 15.5 mw of co-generation in North Karnataka. GMR Industries, owns and operates three fully integrated sugar complexes in Andhra Pradesh and Karnataka with a combined installed crushing capacity of 11,000 TCD, 46 mw co-generation and 95 KLPD of distillery. Dring the quarter ended March 31, 2010, EID Parry's sugar production was at 1,07,926 mt and the company exported 905 lakh units of power compared to 680 lakh units for the corresponding period of 2008-09.

EID Parry on Sunday entered into definitive agreement with GMR Holdings Private Ltd to acquire majority equity stake in GMR Industries Ltd the agri-business entity of GMR Group. The agreement for the deal is estimated to be close to Rs 120 crore. Under the share purchase agreement EID Parry would acquire up to 1,29,75,110 but not less than 1,01,80,471 equity shares of GMR Industries Ltd (GIL) at a price of up to Rs. 57.35 per equity share of Rs 10 each, constituting up to 65% but not less than 51% of the issued and paid up equity share capital of GIL. The company has also agreed to acquire the entire 1,28,31,880, 8% non-cumulative redeemable preference shares of Rs 11 each at par. Subsequently , the company will be making an open offer to the shareholders of GIL to acquire up to 39,92,342 equity shares of Rs 10 each of GIL representing in aggregate 20% of the fully paid up equity capital of the said company at a price of Rs 110.69 per fully paid equity share, in accordance with the Sebi requirement.

A Vellayan, chairman of EID Parry said, This acquisition strengthens our position as one of the leading sugar companies in India and increases the number of integrated complexes. It thus provides EID Parry a platform to tap the sugar markets other than Southern India." According to sources, the funding for the open offer would be done internally, and the debt portion of Rs 450 crore would not be get in to EID Parry's book.