Riddhi Siddhi to re-enter starch biz with Rs 250 cr Cargill buy

Mumbai, Jan 19 (PTI) Riddhi Siddhi Gluco Biols (RSGB) on Monday said it will purchase Cargill India's corn wet milling division to re-enter the starch business it divested in 2010.

The companies have signed an asset purchase agreement for the acquisition of the American company's plant Davangere, Karnataka, but declined to disclose the financial details of the deal.

According to informed sources who did not wish to be quoted, RSGB will pay approximately Rs 250 crore for the purchase.

RSGB's executive director Siddharth Chowdhary said the company is funding the acquisition through internal accruals. It is re-entering the starch business through the deal, which will boost its annual revenues by over Rs 800 crore.

The acquisition involves the asset buy of the plant, spread over 52 acres, having a 3 lakh MT capacity to manufacture maltodextrin, liquid glucose, and co-products like corn germ, corn gluten, and corn fiber, he said, adding that warehouses and corn silos will also be acquired.

Underlining that the buy presents significant business opportunities, he said Cargill wanted to exit India through the sale and chose RSGB given its experience in the field.

Post-acquisition, which is expected to take up to 45 days for mandatory clearances, RSGB will be competing against French company Roquette Freres, to which it had sold its unit in 2010, he said.

There was a non-compete clause as part of the 2010 sale, but it no longer exists, he added.

"We are banking big on our old customers and would want to be the top player in the segment," Chowdhary said.

The RSGB scrip gained 18.73 per cent to close the session at Rs 575.90 a piece on the BSE on Monday. PTI AA DRR