Renuka Holdings in Rs. 1 b foray into FMCG import and distribution biz

* Pays Rs. 368 m to acquire 62% stake of Shaw Wallace Marketing Ltd.

* Group firms advance Rs. 600 m to acquire BOI approved warehouse venture.

Agribusiness and food industry specialist Renuka Holdings Plc yesterday effected a near Rs. 1 billion deal as part of its foray into import and distribution of Fast Moving Consumer Goods (FMCG) business.

Deals included acquiring 62% stake in Shaw Wallace Marketing Ltd., for Rs. 368 million and taking over a Board of Investment (BOI) approved Pioneer Warehousing Ltd., which owns and operates a warehouse complex in Peliyagoda. For the latter Renuka Group companies have advanced Rs. 600 million. Shaw Wallace Marketing is engaged in the distribution of consumer goods and automotive products. It acts as importers and agents. Among the company’s own brands are Captain, Angler, Plaza canned fish, Ranposha Cereal Mix, Sun Gold instant drink mixes, Rainer’s essences, whilst Shaw Wallace is also distributors for Ajinomoto, Supermax, Lockheed among others.

It also has three subsidiaries – Healthcare Products Ltd. engaged in manufacturing of food products, Shaw Wallace Services Ltd – engaged in management services and Shaw Wallace Tours Ltd, which functions as a travel agent.

The purchase does not include Shaw Wallace and Hedges Plc which is an investment company. In Shaw Wallace’s books, the investment in the affiliate Shaw Wallace Marketing amounting to 10% stake or 0.5 million shares has been stated at Rs. 7.9 million (cost). Shaw Wallace Hedges as at 31 March, 2010 owed Rs. 295 million to the affiliate.

The deals were announced after the market was closed but as part of overall rebound in the market Renuka Holdings saw its voting share price increase by Rs. 3.60 to Rs. 68.10 yesterday after hitting a peak of Rs. 69. Non-voting rose by Rs. 2.60 to close Rs. 47.  Shaw Wallace’s share price rose by Rs. 1.90 to Rs. 253 whilst it hit an intra-day high of Rs. 255.

In the first nine months of 2010/11, Renuka Holdings profit after tax grew to Rs. 347.7 million compared to Rs 236.1 million in the corresponding nine months of last year while group profit after tax was Rs. 649.2 million profit attributable to shareholders of Renuka Holdings Plc was Rs. 475.0 million. This was a growth of 61% compared to the corresponding period. Consolidated Turnover for the period under review grew to Rs 2.26 billion while total assets of the Group increased to Rs 3.3 billion as at 31 December 2010.