Godrej Soaps To Hold 51% In Food Arm

Godrej Soaps (GSL) plans to hike its stake in Godrej Foods (GFL) from the current 13 per cent to more than 50 per cent. Godrej Foods will thus become a subsidiary of GSL.

According to company sources, Godrej Soaps' subsidiaries will transfer their shareholdings in Godrej Foods to GSL.

As GFL is a listed company, an open offer will be have to be made for more than nine per cent of GFL's Rs 16.21-crore equity.

GSL has set a limit of Rs 22 crore for acquiring the additional shares in Godrej Foods. A resolution enabling the transfer of the subsidiaries' stakes to GSL will be placed before Godrej Soaps' shareholders at the AGM on September 15.

Godrej sources say that GSL's stake is being increased so that GFL's accounts can be consolidated with GSL's accounts when the new Companies Act comes into force.

The board of directors at Godrej Soaps have decided that shares in Godrej Foods should be held directly by the company and not through subsidiaries so that `benefits of yields on investments' are maximised.

While GSL directly holds a 13 per cent stake in GFL, Godrej Capital Ltd, a wholly owned subsidiary of GSL, holds around 19 per cent.

Another GSL subsidiary, Ensemble Holdings & Finance Ltd has a 9 per cent stake in Godrej Foods. After the subsidiaries' stakes are transferred to GSL, the latter's stake in GFL will go up to 41.16 per cent.

Godrej Foods' activities include manufacture of vanaspati refined oil, extractions, solvent oils and in the area of processing of liquid foods like fruit drinks and soya milk.

Its plants are at Mandideep in Madhya Pradesh and Mumbai. Godrej Foods has tie-ups with two US companies -- Blue Diamond Almonds and Pilsbury -- for distribution of its products.

Godrej-Pillsbury is the tie-up with Pillsbury the foods arm of Grand Metropolitan. The joint venture will be launching its products in the country shortly.