Mawana Sugars Limited (MSL), a prominent player in the sugar industry, has taken a significant step towards strengthening its position in the market with a strategic acquisition. In an announcement dated December 23, 2024, MSL revealed its decision to acquire Mawana Foods Private Limited (MFPL) and the MAWANA brand. This move is expected to have a significant impact on the company’s growth, expanding its operations and securing greater control over its brand and product portfolio.

Acquisition of Mawana Foods Private Limited

The acquisition of 1,32,77,049 fully paid-up equity shares in Mawana Foods Private Limited (MFPL) marks a major shift in MSL's business structure. MFPL, which was previously an associate company of MSL, will now become a wholly owned subsidiary following the completion of this acquisition. The acquisition price for the shares is Rs. 1.82 per share, totaling Rs. 2,41,64,229.18 (approximately Rs. 2.42 crores). This transaction will result in MSL owning 66.26% of MFPL's equity shares, making MFPL fully integrated into the MSL corporate structure.

MFPL is engaged in the sales and marketing of sugar and has built a solid reputation in the retail sugar market. With a turnover of Rs. 3443.23 lakhs as of March 31, 2024, MFPL is a key player in the sugar business. Its solid market presence and strategic operations complement MSL’s broader objectives in the retail sugar sector. The merger of these entities will provide MSL with enhanced control over its retail operations and expansion.

Acquisition of the MAWANA Brand

In addition to acquiring MFPL, Mawana Sugars has also acquired the MAWANA brand, along with all trademarks, related marks, and copyrights associated with it. The total consideration for this brand acquisition is Rs. 5.75 crores, further strengthening MSL’s grip on the sugar business in India. Previously, the MAWANA brand was licensed from Usha International Limited (UIL), but this acquisition will give MSL full ownership, making it the absolute controller of the brand. The MAWANA brand is deeply associated with the sugar business, and this acquisition secures MSL’s market position as it will no longer need to rely on external licensing agreements.

The brand has been generating substantial royalty income over the past few years, with income figures of Rs. 114 lakhs in FY 2021-22, Rs. 79 lakhs in FY 2022-23, and Rs. 82 lakhs in FY 2023-24. This consistent income stream highlights the brand's significance in the sugar market, making the acquisition a valuable asset for MSL’s long-term business strategy.

Nature of the Transaction and Regulatory Compliance

The acquisition is being conducted at arm's length, and the price of the acquisition has been fairly assessed by a SEBI-registered Category I Merchant Banker, ensuring transparency and compliance with regulatory standards. The transaction also falls within the category of related party transactions, as Usha International Limited (UIL), which holds the shares and the brand, is part of the promoter group of MSL. However, it is important to note that this does not affect the fairness of the deal, as it has been structured and evaluated independently.

Strategic Impact on MSL

The acquisition is expected to enhance MSL’s business operations in several ways. The full control of MFPL will enable MSL to streamline its operations, expand its reach in the retail sector, and potentially improve profitability. The control over the MAWANA brand will also offer MSL new avenues for marketing and brand development, contributing to future growth in the competitive sugar market.

This acquisition aligns with MSL’s broader goals of consolidating its presence in the sugar industry and furthering its retail business. The transaction is expected to be completed by December 31, 2024, following the execution of a Share Purchase Agreement and an Assignment Deed.

No Regulatory Hurdles Expected

As per the disclosure, no governmental or regulatory approvals are required for the acquisition, which simplifies the process and ensures a quicker transition. The company anticipates that the acquisition will be finalized smoothly within the stipulated timeframe.

Conclusion

This move by Mawana Sugars Limited is a strategic one, ensuring greater control over its operations and a stronger position in the sugar market. The acquisition of Mawana Foods and the MAWANA brand is a positive development for the company and its stakeholders. It highlights MSL’s commitment to strengthening its core business and ensuring sustainable growth in a competitive industry.

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