French company VIRBAC acquires majority stake in Suguna subsidiary Globion India

French company VIRBAC, which specialises in innovative solutions for veterinarians and animal owners in more than 100 countries, has acquired a majority stake in Globion India Private Limited, a 100 per cent subsidiary of Suguna Holdings Private Limited (SHPL).
Present in 18 states, SHPL focuses on the broiler industry value chain, from soybean processing to processed food.
Globion India, a joint venture between the Suguna Group and German poultry vaccine specialist Lohmann Animal Health, manufactures vaccines for animals.
With infections such as bird flu taking a toll on livestock, the vaccine industry has gained significance in recent years. Day-old chicks are vaccinated to increase their immunity.
The stake sale in Globion India was completed on November 1, but it is unclear why or how much stake was offloaded by Sugana.
Business model
The Rs 12,000-crore Suguna Group had said earlier this year that it was mulling an IPO. The poultry company rears egg-laying birds, operates hatcheries and supplies (vaccinated) chicks to about 40,000 farmers across the country who, in turn, rear the chicks and hand over the grown birds to Suguna for a fee.
SHPL is the holding company of the group, whose operational entity is Suguna Foods Private Limited (SFPL).
Cash reserves
In April, ratings agency ICRA had downgraded the company’s Rs 2,182-crore debt to ‘negative’ from ‘stable’, due to rising input costs and investments in the development of the pureline breed Sunpro. But on November 6, ICRA revised the rating back to ‘stable’ due to “expected improved performance”.
ICRA notes that the company, established in 2008, has strong liquidity. As of March 31, 2023, it holds unencumbered mutual funds worth ₹197 crore and has a free cash balance of Rs 10 crore. Additionally, it has an inventory worth over ₹124 crore, which can be sold, if needed.
“Further, on a consolidated level, it is expected to generate retained cash flows of over ₹400 crore in FY2024. This is adequate to meet repayment obligations of over Rs 135 crore and capex expectations of ₹100–120 crore,” says ICRA.
The ₹340-crore-rated company is “one of the largest integrated players in the Indian poultry industry, aided by its established relationship,” adds ICRA
Source:TheHinduBusinessLine