Shree Renuka Sugars on Tuesday said its Brazilian subsidiaries — saddled with a debt of about $800 million (₹5,200 crore) — have filed for bankruptcy.
The company, in a BSE filing, said its Brazilian subsidiary Shree Renuka do Brasil Participacoes (SRDBP) together with all of its subsidiaries (collectively Renuka Brazil) has filed for protection under judicial recovery in the designated court in Sao Paulo.
SRDBP has two subsidiaries in Brazil, Renuka do Brasil SA located in Sao Paulo and Renuka Vale do Ivai SA in Parana, Brazil.
On acceptance of bankruptcy request under the judicial recovery law, Renuka Brazil will be under the judicial protection for 180 days during which period it has to present a plan to the court for approval with the creditors, including banks.
“Renuka Brazil expects that the court will authorise it to continue to conduct its business as usual while it devotes efforts to find a long-term sustainable solution for its capital structure,” it said in a statement on Tuesday.
Underlying operating business has been quite steady this year in Brazilian companies with combined cane crushing of 5.7 million tonnes till September, it said.
Earlier this month, Standard & Poor's downgraded Brazil’s credit rating to junk grade for the first time since 2008 on the mounting political problems that have muddled economic policy.
Drought-hit operations Post its acquisition in 2010, the operations of Renuka do Brasil were severely hit by drought and frost in 2011 and another drought in 2014.
The weather vagaries coupled with low sugar prices for the last two years hampered the cash generation capability of Renuka do Brasil.
The consolidated debt on Shree Renuka Sugars’ balance-sheet was ₹8,897 crore in FY15. In the June quarter, the company posted a net loss of ₹227 crore on a revenue of ₹1,550 crore.
Shares of the company closed 3.10 per cent down at ₹7.49 a share on the BSE on Tuesday.