Nestle Sa May Hike Stake In Indian Unit

Nestle SA, the Swiss parent of Nestle India, is planning to hike stake in the latter from the current 51 per cent to 54.62 per cent.

The deal involves Nestle SA purchasing 34,90,200 shares at Rs 235.50 each.

Five Mauritius-based overseas corporate bodies which are selling their stake in this regard are Burton Securities (784200 shares), Compton Investments (708000 shares), Richleigh Investments (711000 shares), Rockford Investments (711000 shares) and Windlesham Investments (576000 shares).

This deal is subject to FIPB approval and a Sebi exemption to Nestle from the requirement of making a public offer.

Nestle India paid a royalty of Rs 27 crore to parent this year. Analysts said the trend of increasing royalty payment will continue with the launch of more international brands.

Nestle's strategy for growth is to introduce new products coupled with aggressive promotional campaigns.

According to Nishid Shah of Inquire India Equity Research, a short-term upside can come from volume growth in Milo, Kit Kat and firming up of international coffee prices.

The company posted a 21 per cent growth in sales for 1996, with operating margins going down from 11.39 per cent in 1995 to 10.35 per cent in 1996.

Nestle India has factories at Faridkot, Nilgiris, Mysore, Panipat and Ponda.