Shree Renuka Sugars Ltd, one of India's largest producers of the sweetener, said on Tuesday its Brazilian subsidiaries have filed for bankruptcy protection.
In a stock market disclosure, the Mumbai-based sugar maker said Shree Renuka do Brasil Participacoes Ltd (SRDBPL) and its units filed for protection in a Sao Paulo court.
If the court accepts the company's plea, SRDBPL will be under judicial protection for 180 days during which it will have to present a plan to the court to repay its creditors.
The company said it is also making efforts to find a long-term solution for its capital structure.
SRDBPL has two major subsidiaries – Renuka do Brasil SA and Renuka Vale do Ivai SA. The two units have a total cane crushing capacity of 59,520 tonnes a day. They crushed 5.7 million tonnes of cane till September 27 this year, compared with 6.7 million tonnes a year earlier.
The Indian company acquired Renuka Vale in March 2010 for Rs 452.5 crore. It then bought a 59.4 per cent stake in Renuka do Brasil in July 2010 from Grupo Equipav for Rs 1,312.6 crore.
The acquisitions were hailed as a pioneering move at the time. But weather-related problems in Brazil, a global sugar glut and interest costs on the massive debt the company took on for the twin acquisitions changed Shree Renuka's fortunes for the worse. The company had consolidated debt of Rs 8,896.72 crore as of March 2015.
In a bid to cut its debt, Shree Renuka sold a 27.5 per cent stake to Singapore-based agri-commodity giant Wilmar International for Rs 517 crore in February 2014.
Shares of Shree Renuka fell 3.10 per cent to Rs 7.49 each on the BSE in a strong Mumbai market on Tuesday.