Mumbai-based Temptation Foods (TFL), a frozen food marketer, is understood to be inking a deal with HLL to acquire its marine product business division for around Rs 100-120 crore. The deal would also include transfer of the people managing the marine business in HLL to TFL. HLL’s marine division exports products like crabsticks, shrimps and fish fillets among others. The company had earlier short-listed four bidders for the sale.
When contacted, an HLL spokesperson said, “As a policy, we do not comment on market speculation. We have no comments to offer.” While the deal has already been sealed, TFL is believed to be raising fresh funds either through a qualified institutional placement or by any other equity-related instrument.
While reports of HLL looking to sell its marine product business have been in the air for quite some time now. Apart from TFL, it is believed that a private equity player was also in the fray for acquiring the business that generated a turnover of nearly Rs 250 crore for the FMCG behemoth.
HLL got into several non-core businesses at a time when the Indian government encouraged private sector participation to push the sectors and forex earnings. One of the biggest seafood exporter, HLL earlier operated mainly as a merchant exporter in the seafood market and scaled up as an active value-add player after it took over the seafood processing plants of the Kochi-based Amalgam group.
However, with growing competition, the business was seen as non-core and the FMCG company sold its seafood processing plant in Andhra Pradesh and shut down its operations in Gujarat. Marine exports from India stand at $2.5 billion and the government expects to double it in the coming years. The organised processed foods segment currently amounts to around $3.5 billion and it has been growing at the rate of over 10% per annum.
TFL is looking at aggressively pushing the products in the domestic market where the business margins are quite high. An email query sent to TFL remained unanswered. TFL currently offers frozen products like peas, drumsticks, chillies, capsicum and beans among other vegetables. The firm also deals in frozen fruits like apple, guava, pineapple, mango and strawberry. On BSE, the stock of TFL gained 3% on Wednesday to end the day at Rs 115. The stock has gained more than 12% in the last one week.
Last month, HLL sold its retail operations Sangam Direct to Wadhawan Food Retail, a part of Delhi-based housing finance company, Dewan Housing Finance Ltd (DHFL). The stock of HLL gained a little over 2% to close at Rs 198.45.
TFL had recently bought a 26% stake in Karen’s Gourmet Kitchen for an undisclosed sum. It had also recently announced its entry into the private label business through the launch of its own brand, Delica. The company has a production capacity of 10,000 tonnes per annum and has posted a topline and bottomline of Rs 38.90 crore and Rs 5.82 crore respectively for the fiscal ended March 2007.
Source : Economic Times