Detailed SWOT Analysis of Shree Renuka Sugars – India’s Largest Sugar Refiner

Quick Stats on Shree Renuka Sugars

Founder	Narendra M Murkumbi & Vidya M Murkumbi
Year Founded	1995
Origin	Mumbai, Maharashtra, India
No. of Employees	10,000+
Company Type	Public
Market Cap	Rs 12,824.15 Crore (2022)
Annual Revenue	Rs 5,611.62 Crore (2021)
Net Income/ Profit	Rs 55.64 Crore (2021)

 

 

Products by Shree Renuka Sugars

• Sugar
• Ethanol
• Power
• Organic Manure

Competitors of Shree Renuka Sugars

• Raizen
• Mumias Sugar
• Gujarat State Fertilizers & Chemicals
• Südzucker
• E.I.D. Parry

As now we have a better understanding of Shree Renuka Sugars, let’s look into the SWOT Analysis of Shree Renuka Sugars.

SWOT Analysis of Shree Renuka Sugars

A SWOT analysis identifies a company’s strengths, weaknesses, opportunities, and threats. A proven and true management paradigm that allows Shree Renuka Sugars to compare its business and performance with competitors and the industry as a whole.

So let us go ahead and first have a glance at the strengths of Shree Renuka Sugars from the SWOT analysis of Shree Renuka Sugars.

Strengths of Shree Renuka Sugars

Your organisation’s strength is something that makes it stand out from the rest. It can be a competitive advantage that sets it apart from its competitors. Some of the strengths of Shree Renuka Sugars are as follows –

• Integrated Sugar Mills: The Company operates seven sugar mills in India located in the states of Karnataka and Maharashtra. The mills are optimised to process sugarcane and produce sugar and its by-products ethanol, power, and organic manures.
• Strong Revenue Growth: Shree Renuka Sugars has witnessed a strong Revenue CAGR of 55% and EBITDA CAGR of 58% from FY2006 to FY2012. The strong financial performance has ensured consistent returns for shareholders with an average Return on Equity of approx. 20% from FY 2006 to FY 2012. Shree Renuka Sugars’s strong Management team has delivered consistently to ensure growth through the successful completion of strategic acquisitions.
• Sugar Refineries: The Company operates two port-based sugar refineries, one at Haldia in the State of West Bengal, and the other at Kandla in the State of Gujarat. The rated capacity of both refineries is 3,000 tons per day and 2,000 tons per day, respectively.
• Product Madhur: Shree Renuka Sugars launched in 2007 & is leading the Indian sugar market today. Supported and backed by strong marketing & sales support, product Madhur Sugar is a proven leader in the distribution of packed refined sugar to household customers across the country.
• KBK Chem-Engineering: KBK is a process-engineering company that provides one-of-a-kind services in the sugar industry across the globe. KBK serves its customers through effective technologies, quality products, and technical support. It has a reputation for providing the best solutions for the fermentation & distillation industries.
• Geographical Locations: Shree Renuka Sugars mills, distillery, and refineries are majorly located in coastal areas, which reduces the cost of waste management. Also, the transportation of raw materials is easy & cheap from fields to coastal areas.
• Product Reach: Since this company produces basic goods, it is demanded & purchased by every citizen, the company doesn’t have to worry about its target audience because all citizens are the target audience & have access to this commodity.

Weaknesses of Shree Renuka Sugars

Strategy is all about choices and weaknesses are areas where companies can improve through SWOT analysis and leverage their competitive advantage and strategic positioning.

• Workforce Diversity: With Wilmar as a parent company, Shree Renuka Sugars have diversity in the upper-level management which has contributed to its growth but it also requires diversity in lower-level of the companies to maintain a level of understanding.
• Low Current Ratio: The market price of Shree Renuka Sugars is lower than its usual price for the past 3 years & this has hurt its growth. Fall in its stock prices influences its market prices, production & sale negatively.
• Extensive govt. Rules: Operating mills, refineries, the distillery is never easy as there is a lot of govt. restrictions, which one has to deal with. Changing governments & their rules affect the company’s production & sale, often in a negative manner.
• Climatic Limitations: Being majorly operating from coastal lines, Shree Renuka Sugars is bound to face extreme climatic conditions. Extreme climatic conditions negatively affect production & transportation.
• Increasing Pollution: Any mill or refinery (especially sugar) generates a huge amount of pollution, hence currently it is contributing to environmental degradation. Environmental issues can be severe & can sometimes result in the closing of a factory, mills, etc. 
• Business Model: The product which Shree Renuka Sugars produces is not hard to find in the market. Today, every local grocery store keeps open sugar and local sugar producers with small plants are leading the inner local markets because the overall production cost is cheaper at local small plants than what is incurred at Shree Renuka Sugars units.
• Not a Global Brand: Shree has been doing great in India but one thing that lacks in the Shree Renuka Sugars is that it is not worldwide. Shree has been in India for a major period and now it should plan to expand further.

Opportunities for Shree Renuka Sugars

Opportunities are potential areas for companies to focus on to improve results, increase sales, and ultimately profit.

• Low Competition: Due to complicated govt. rules & regulations, it is not easy to enter this industry & operate it. Hence, few people even think about entering this industry & even fewer get success & make it to the top list of companies.
• E-commerce: The products like sugar, ethanol (Alcohol) & organic manures can be sold via e-commerce stores which will cater to the company’s growth. E-commerce sales in today’s era can drive the sales & revenue of the company higher.
• Business Expansion: Shree Renuka Sugars’ businesses are rising due to its strategies & diligence, they are off to achieve higher levels of production & are looking forward to expanding its business more in the southern region & eastern coastal region. This expansion would lead to more revenue & profit for the company. Although, at the same time they have to be aware of their competitors & their strategies to be ahead of them.
• New Environmental Policy: New opportunities will create a level playing field for everyone in the industry. This is a great opportunity for Shree Renuka Sugars, Inc. to realise the benefits of new technologies and gain market share in new product categories.
• Population: The population has been growing and is expected to grow at a positive rate in the upcoming years. This is beneficial for Shree Renuka Sugars as there will be an increase in the number of potential customers that it can target.

Threats to Shree Renuka Sugars

Threats are environmental factors that can harm a company’s development. Here are some of Shree Renuka Sugars’s threats:

• Climate Change: The end products of the company are entirely based on the major crop they use. Climate changes can negatively affect their production on a large scale. If crops are spoiled it can result in less production, sale & high prices.
• Political Uncertainty: Shree Renuka Sugars is an agri-based business that requires ample land areas, the state rules & regulations affect the decisions directly for businesses like these. Govt. can often leave a great impact on its production & operations.
• Contest in Price: Several little new sugar companies in India are evaluating their sugar items in reasonable choices. Individuals are regularly floating toward them.
• Fierce Competition: Strong profitability has increased the number of small players in the industry over the past two years, putting downward pressure on overall revenue as well as profitability.
• Consumer Buying Behaviour: Changing one buying behaviour from online minute delivery stores where a range of options are available in front of individuals to any other mode can be a threat to the company.
• Negative Effect on Resources: This could jeopardise Shree Renuka Sugars’s profitability. A shortage of skilled labour and farmers or some sudden uneven events at sugar farms such as fire, heavy rains, effect on crops due to uncertain environment etc threatens Shree Renuka Sugars’s continued earnings growth in the market.

This ends our elaborative SWOT analysis of Shree Renuka Sugars. Let us conclude our learning below.