Chambal Fertilisers' exits food processing business
Chambal Fertilisers and Chemicals (CFCL) is exiting the food processing business.
By TNN |
KOLKATA: Chambal Fertilisers and Chemicals (CFCL) is exiting the food processing business. The company, which is the KK Birla Group flagship and India’s largest urea producer in the private sector, has received a ‘binding bid’ from Mumbai-based Temptation Foods for acquisition of the former’s food processing business.
The move comes on the heels of the group’s divestment of the potato seeds and supply chain management business in August this year. The Birlas had divested their controlling stake in group firm Technico to Russell Credit — a wholly-owned subsidiary and investment arm of ITC for Rs 120 crore approximately.
In a notice sent across to stock exchanges, Chambal Fertilisers and Chemicals has stated: “The binding bid has been accepted by the company. However, the transaction is subject to execution of definitive agreements by the two parties.” When contacted by ET, KK Birla Group top honchos confirmed the company’s decision to exit the food-processing activity “as it is not part of our core business”, but remained tightlipped on the deal size.
Industry analysts closely tracking the company claim the deal entails sale of the company’s Sonepat unit in Haryana as well as its brand ‘Everfresh’. “Since the unit is small and contributes only a miniscule sum to CFCL’s annual turnover of about Rs 2,700 crore, the move is unlikely to have a significant impact on CFCL’s turnover post-selloff,” analysts said.
The $1.25 billion KK Birla Group had forayed into the expanding food processing industry through its flagship Chambal Fertilisers. The company specialises in customised food processing, packaging and freezing of high quality fruits and vegetables like green peas, mixed vegetables, sweet corn, baby corn and mushrooms at its Haryana unit and markets them under the `Everfresh’ brand.
On the other hand, Temptation Foods also processes fruits and vegetables. According to its official website, the company underwent a complete financial restructuring in 2006 and became debt-free by raising approximately $3 million from international hedge funds and high netw orth individuals. It closed 2006-07 with a turnover of $9.6 million and a profit after tax of $1.42 million.
The move comes on the heels of the group’s divestment of the potato seeds and supply chain management business in August this year. The Birlas had divested their controlling stake in group firm Technico to Russell Credit — a wholly-owned subsidiary and investment arm of ITC for Rs 120 crore approximately.
In a notice sent across to stock exchanges, Chambal Fertilisers and Chemicals has stated: “The binding bid has been accepted by the company. However, the transaction is subject to execution of definitive agreements by the two parties.” When contacted by ET, KK Birla Group top honchos confirmed the company’s decision to exit the food-processing activity “as it is not part of our core business”, but remained tightlipped on the deal size.
Industry analysts closely tracking the company claim the deal entails sale of the company’s Sonepat unit in Haryana as well as its brand ‘Everfresh’. “Since the unit is small and contributes only a miniscule sum to CFCL’s annual turnover of about Rs 2,700 crore, the move is unlikely to have a significant impact on CFCL’s turnover post-selloff,” analysts said.
The $1.25 billion KK Birla Group had forayed into the expanding food processing industry through its flagship Chambal Fertilisers. The company specialises in customised food processing, packaging and freezing of high quality fruits and vegetables like green peas, mixed vegetables, sweet corn, baby corn and mushrooms at its Haryana unit and markets them under the `Everfresh’ brand.
On the other hand, Temptation Foods also processes fruits and vegetables. According to its official website, the company underwent a complete financial restructuring in 2006 and became debt-free by raising approximately $3 million from international hedge funds and high netw orth individuals. It closed 2006-07 with a turnover of $9.6 million and a profit after tax of $1.42 million.
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