Godrej sells Indonesian food business to PE firm

Decision to divest food business in line with strategic intent to focus on home, personal care

Godrej Consumer Products Ltd (GCPL) has entered into an agreement with private equity firm Creador to divest its non-core foods business in Indonesia. The business was part of PT Megasari Makmur - the company that was acquired by GCPL in 2010.

While GCPL did not give the deal size, analysts estimate it to be in the region of about Rs 200-230 crore. The sales of the foods division, which includes cereals, snacks and instant foods, has been pegged at nearly Rs 120 crore. GCPL will continue to distribute the products for another two years.

Commenting on the divestment, Adi Godrej, chairman, GCPL said, “Our decision to divest the foods business is very much in line with our strategic intent to focus on home and personal care. The divestiture of this business will improve the margin profile of our Indonesian business and help the team to take the household and personal care platforms to their full potential."

The proceeds from the sale are expected to be used to service GCPL's debt, which is pegged at around Rs 1,800 crore. GCPL is also expected to strengthen its focus on home and personal care post the transaction. In the last two years, the Indonesian business has grown at over 20% per annum, generating revenues of Rs 1,000 crore.

 

HSBC was the advisor to GCPL on the sale of the Indonesian arm.