Shree Renuka Sugars' Brazilian operations drag company's financials

MUMBAI: Shree Renuka Sugars' Brazilian operations continue to be a drag on the company's financials. Subdued international sugar prices have resulted in delay in turnaround in its Brazilian operations.

Shree Renuka Sugars recently reported the December quarter results of its Brazilian subsidiaries. Despite increase in sugarcane production, weak sugar prices have led to lacklustre results. Its two Brazilian subsidiaries reported a combined loss of Rs 61 crore.

At present, international raw sugar prices have been hovering at 18 cents per pound, which is near the cost of production of 16 cents per pound. In the near term, sugar prices are likely to remain at this level due to higher production levels in Brazil and Thailand and stable production level in India.

This, in turn, would result in lower operating profits for Shree Renuka Sugars and would delay reduction in debt levels. At present, the company has a consolidated debt of Rs 8000 crore with a debt-to-equity of 3.5.

At current market price of Rs 25, the company's stock is trading at a price-to-book value of 0.8.