DJ UPDATE: Shree Renuka Sugars Eyes More Acquisitions In Brazil

India's Shree Renuka Sugars Ltd. (532670.BY) expects to make more acquisitions in Brazil following its takeover of Vale Do Ivai SA Acucar E Alcool on Wednesday for about $82 million.

"This [acquisition] is the first," Shree Renuka Sugars Managing Director Narendra Murkumbi said in a telephone interview. "It's a start in Brazil and reflects our seriousness."

"We will be a serious player in Brazil," he said without giving a timeframe for more acquisitions.

Murkumbi refused to comment whether his company is in talks with mills such as Brazilian sugar milling group Equipav. But he said the Indian company is "most interested in sugar and ethanol mills in Sao Paulo and Parana state."

Local newspaper Valor Economico recently reported major international companies such as Bunge Ltd. (BG), Shree Renuka Sugars and Noble Group Ltd. (N21.SG) and Brazil's largest sugar and ethanol group, Cosan SA (CSAN3.BR), are among the companies interested in Equipav's assets.

Many of Brazil's ethanol mills were hit by the global credit crisis and racked up large debts. As a result, global and local sugar companies that have taken advantage of the skyrocketing sugar prices have been eyeing acquisition possibilities.

The Brazilian sugar and ethanol sector has already witnessed a spate of acquisitions this year.

Cosan Ltd. acquired local milling group Nova America in March while Louis Dreyfus in October acquired SantelisaVale SA, Brazil's second-largest sugar and ethanol group.

India, which has transformed from an exporter into an importer of sugar, has been aggressively buying the sweetener mainly from Brazil. The acquisition will help Shree to secure a steady supply of raw sugar.

Shree Renuka Sugars' acquisition of VDI gives the company an entry into the world's largest sugar-producing and -exporting country. Murkumbi said VDI is attractive because of its good logistics and port access to Brazil's southern Parana state.

Shree Renuka Sugars, which will also take over the Brazilian sugar and ethanol producer's debt, said the buyout has received approval from VDI's leading creditors and that the acquisition will be completed over the next 45 days.

Murkumbi said that with more than $1 billion in revenue, his company has the capacity to make acquisitions where they make sense.

Shree Renuka Sugars has shipped 1.1 million tons of raw sugar since September 2008 from the south of Brazil. and the company plans to ship 1.3 million tons in the next 12 months.

As well as looking at other acquisitions in Brazil, VDI provides opportunities to expand organically, he said.

The step into Brazil will help Shree Renuka Sugars cover India's sugar deficit as well as supply other countries in the surrounding region, he said.

A trader at an international sugar exporter said the deal could open the way for new acquisitions by other Indian companies.

"They have discovered that Parana is paradise for sugar production," he said. "More acquisitions will take place."

Parana, in the south of Brazil, has good, flat land that is cheaper to lease or buy than Sao Paulo state, he said.

The trader said that sugar and ethanol mills in the vicinity of Maringa city can transport their product easily to nearby storage and send it by rail to the port in Paranagua.

A manager at an international trading company said Shree Renuka Sugars' acquisition is positive.

"The consolidation is healthy and will bring more professionalism to the market," he said.

Brazil is the world's No. 1 sugar producer.

-By Tony Danby; Dow Jones Newswires; 55-11-2847-4523; Anthony.Danby@dowjones.com

(END) Dow Jones Newswires

11-11-09 1519ET

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