MNC food cos want a bite of Radhakrishna

MUMBAI/BANGALORE: Multinational food service majors such as Sodexho, Aramark and Sofra are in talks separately to pick up a majority stake in Radhakrishna Hospitality Services, India���s largest food service firm. If a deal materialises, it could be in the Rs 400-450 crore range, said people close to the development.

When contacted, Raju Shete, Radhakrishna Hospitality chairman, said: ���Many firms, including Sodexho, Aramark and Sofra, have approached us for a possible buyout. But currently, we don���t want to sell out. At an opportune time, if our needs are met, and if it���s the right fit, we���ll decide.���

Currently, Radhakrishna Hospitality is the only organised player in the domestic food service space with a 30% growth.
Several people in the banking industry confirmed to ET that the promoters of Radhakrishna Hospitality had agreed to sell a controlling stake in the company, for valuations of about Rs 400-450 crore, reflecting the current revenue size of the catering business.

Radhakrishna Hospitality has been talking to potential suitors for some time now. The company had earlier tried to rope in financial investors, but couldn���t do so due to differences with potential investors over pricing.

Currently, negotiations are on to buy Radhakrishna Hospitality���s core business of food catering. However, the talks don���t include other businesses such as supply chain and retail which are under its subsidiary RK Foodland.

Last year, Radhakrishna Hospitality purchased a stake owned by Compass, a US-based food service firm, in a joint venture and is in the process of building its international catering services.

���Radhakrishna Hospitality was very strong in international markets during 1989-99. We want to re-enter international markets and scale up the intrinsic value offered by our brand in the international arena,��� Mr Shete said.

It is learnt that Sodexho Pass Services India, a subsidiary of the E11.9-billion French multinational Sodexho Alliance, is keen to pick up equity in Radhakrishna Hospitality. The company is increasing its presence in India.

An industry analyst said after the government increased the tax exemption on meal vouchers for salaried employees ��� from Rs 35 to Rs 50 every day ��� business has been good for voucher lunches.

Under the existing tax laws, meal vouchers can be given to any staff by a company, as a tax-free incentive subject, to a limit of Rs 50 per day, or Rs 1,300, for 26 working days. A tax payer can save up to Rs 15,600 a year, on income tax, by using these vouchers.

Corporates without a canteen or lunch facility, subscribe to meal vouchers and give it to their employees. These vouchers are redeemed by employees in restaurants, cafes and pizzerias.