To undertake a restructuring exercise to demerge non-core businesses and delist Upper Ganges and Oudh Sugar
The Nopany family, part of the K K Birla Group, may sell its non-core businesses of tea and processed foods to concentrate on its mainstay commodity sugar, at a time when the sweetener is enjoying one of its greatest bull runs.
And in order to disinvest or 'monetise' the Chandra Shekhar Nopany-headed tea estate in Cinnatolliah, Assam, and the processed foods business under the Morton brand, the group will undertake a restructuring exercise involving two listed entities – Upper Ganges Sugar and Oudh Sugar – the companies have disclose to its investors.
At present, the tea business is a part of Upper Ganges Sugar and Morton is housed under Oudh Sugar.
"With a view to explore the potential of these businesses to the fullest, provide focused leadership and management attention and explore the possibility of monetisation of these businesses, it is intended to house the food processing business and tea business in separate legal entities," the notice to the meeting of the shareholders needed to approve the restructuring scheme said.
The K K Birla Group of sugar companies is one of the leading players with a cane crushing capacity of around 47,000 tonne daily. These businesses, located in Uttar Pradesh and Bihar, generate an annual turnover of Rs 1,769 crore.
In comparison, the other two businesses, tea and processed foods, are rather small, having sales of Rs 22.46 crore and Rs 38.75 crore respectively in fiscal 2016.
The single tea garden, spread over 746 hectares in North Assam, produces the cheaper but widely used CTC variety of tea.
The food processing unit is located at Bamrauli on the outskirts of Allahabad and sells canned and processed foods, jams, jellies, marmalades, juices, tomato ketchup, baked beans, vegetables sauces and squashes.
Under the restructuring exercise, the sugar businesses are getting separated based on their location in Uttar Pradesh and Bihar, and would be re-listed into two new listed entities, Avadh Sugar & Energy and Magadh Sugar and Energy.
Following this, Upper Ganges and Oudh Sugar will be liquidated.
The tea business of Upper Ganges will be merged into Ganges Securities while the food processing arm of Oudh Sugar would come under Palash Securities. Both these companies would be eventually listed.
"Proposed business re-alignment will create enhanced value for all stakeholders as it would facilitate focused strategy, direction and business planning to optimise operational, managerial, financial, technical and marketing capabilities of each business," the notice convening the meeting said.
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