FMCG Major Exiting Co It Bought In India's 1st PSU Selloff
Consumer products giant Hindustan Unilever (HUL) is selling the heritage bread brand `Modern' to private equity investor Everstone as part of a strategy to narrow the focus of its business.
Everstone, which has investments in several food and beverage brands, wants to expand the Modern line of products. The Indiaand South East Asia-focused investor said the Modern Foods business will remain as an independent unit.
While neither HUL nor Everstone disclosed the deal size, sources in the know peg the valuation at Rs 250 crore, which is also the annual turnover of Modern Foods, the country's No.1 bread brand which touches the lives of three million families.
The Rs 30,806-crore HUL entered the bread business through the buyout of Modern Foods from the government in 2000, making it the first privatization of a PSU in the country . HUL had ac quired 74% in the PSU for Rs 105 crore in 2000, and three years later, bought the remaining stake for Rs 44 crore.
The maker of Surf detergent and Lux soap turned around the fortunes of Modern Food, an ailing unit at the time it was bought, by stepping up investments and enhancing productivity .
HUL will continue to manage Modern Foods operations until the completion of the transaction, which is subject to statutory approvals and requisite clearances.
Describing Modern as an iconic brand, Sanjiv Mehta, CEO & MD of HUL, said: “Having turned around the business and built a sustainable growth model, we believe that the sale to Everstone will unlock the full potential of the Modern brand.“
“Everstone is committed to making significant investments in not only unlocking the Modern brand's true potential, but also managing it as an independent company ,'' said Sameer Sain, co-founder and MD, Everstone.
HUL's plans in foods are largely guided by the philosophy of driving value addition and premiumization.The company wants to grow through market development by increasing penetration in those categories which have huge potential, such as jams, sauces, soups and noodles.
For the full report, log on to http:www.timesofindia.com
