Godrej sells 43.5% stake, exits Pillsbury JV

Our Marketing Bureau

Mumbai, Oct 17: The Godrej Group has finally announced that it is pulling out of Godrej Pillsbury Ltd, a joint venture with Selviac Nederland BV (Pillsbury), by divesting 43.5 per cent to the Pillsbury company. The company would then become a wholly-owned subsidiary of the Pillsbury company.

The Godrej Group informed the Bombay Stock Exchange that an agreement to this effect was signed on Wednesday and the divestment would be subject to the necessary approvals like the Foreign Investment Promotion Board, the Reserve Bank of India, among others.

Godrej Group companies — Godrej Industries and Godrej & Boyce Manufacturing Co. - together hold 43.4 per cent in the joint venture. The balance 56.5 per cent stake in held by Pillsbury.

Earlier, Godrej Foods had a distribution and selling arrangement with Godrej Pillsbury, which was terminated with effect from October 31, 2000. Prior to this, the erstwhile Godrej Soaps (now demerged into Godrej Industries and Godrej Consumer Products) and Godrej Foods held the Group stake in the joint venture. Last year, Godrej Foods divested its 29 per cent stake in the joint venture to holding company Godrej & Boyce Manufacturing Company, so as to retire its high cost debts. The stake was picked up for a consideration of Rs 31.13 crore.

The distribution agreement was signed along with the joint venture agreement between the Godrej Group and Selviac Nederland BV (Pillsbury) in 1995. The joint venture entailed that Pillsbury would distribute the products of Godrej Foods. Pillsbury had acquired the distribution network of Godrej Foods which manufactures and markets a range of edible oils and fruit drinks under the brand names of Jumpin, Godrej Sunflower and Cooklite. Equity in the JV was together pumped in by Godrej Foods and Godrej Soaps to the extent of 49 per cent, with the latter holding 20 per cent.

However, last year the Godrej Group holding got diluted from 49 per cent to 43.5 per cent as the Group did not pump in the requisite equity into the JV, while Pillsbury made the required investment.

Pillsbury’s interest in the JV was to gain a foothold in the Indian market with its global brands of cake mixes and other frozen food products. Pillsbury has already garnered a significant presence in the branded atta business with Pillsbury Chakki Fresh Atta.