HLL Acquires Balance 26% Stake In MFIL

Mumbai, November 28: | Updated: Nov 29 2002, 05:30am hrs
Hindustan Lever Ltd (HLL) has acquired the balance 25.99 per cent of equity in Modern Food Industries Ltd (MFIL) from the Government of India. The fast moving consumer goods (FMCG) giant has acquired the balance stake at a consideration of Rs 44.07 crore, thereby completing the disinvestment of government equity in MFIL. In January 2000, HLL had acquired 74 per cent of MFIL equity from the government. MFIL was the first company to be disinvested by the government.

MFIL, the maker of Modern bread, registered a strong growth of 52 per cent in sales under HLLs management in 2001. It has continued on the path of growth and revival in H1 of 2002, showing a 20 per cent increase in sales over the corresponding period of 2001. The operating profit before interest and restructuring costs of Rs 1.07 crore as against a loss of Rs 7.78 crore during the corresponding period of the previous year. This was achieved despite a 40 per cent increase in the market development costs.

Modern Foods fits into HLLs major thrust in the area of foods. The acquisition of MFIL has led to HLLs entry into bread-making, which is a strategic extension of the companys wheat business. The acquisition has provided HLL control over 14 bread manufacturing units and a distribution network with 22 franchise units. The companys branded flour business (under the Annapurna brand) has been showing a handsome growth. In this context, MFIL has a strategic fit with the HLLs business plans. Annapurna atta has attained a very strong brand equity. It is now the largest selling packaged atta brand in India in the organised sector.