Godrej Soaps To Hive Off Oil Palm Business To Arm

Godrej Soaps is hiving off its oil palm plantation business to its 100 per cent subsidiary, Godrej Agrovet Ltd.

The company has called an extraordinary general meeting on March 28 to seek shareholder permission under Section 293 (1)(a) of the Companies Act for the sale.

In a notice to all shareholders, Godrej Soaps has said value of the sale will not be less than Rs 3 crore. The company has said it is interested in selling the business and has received several enquiries, including one from Godrej Agrovet.

Last year, a joint venture with Siat s.a. of Belgium for developing oil palm plantations fell through when Siat pulled out. Godrej had stated then that it is "actively promoting its operations in the existing areas of palm business".

 

A 100 per cent subsidiary, Godrej Agrovet posted a turnover of Rs 162 crore for 1995-96, a 6.5 per cent jump over previous year's figure of Rs 152 crore. Net profit has slid to Rs 4.89 crore from Rs 5.08 crore, thanks to higher interest and depreciation charges.

In 1995-96, Godrej Soaps hived off Translektra Domestic Products Ltd, (TDPL), now renamed Godrej Hicare to a loss-making 100 per cent subsidiary, Puran Plastics and Chemicals Ltd. Godrej helped finance the deal by susbscribing to Puran's rights issue at an astronomical premium of Rs 83, 240 per share.

Top Godrej group sources said the sale is aimed at ensuring a proper realignment of businesses. Agrovet is a speciality agro-product company with interests in animal feed and speciality agro items.

Godrej Soaps is the flagship of the Godrej group companies, makers of soaps, detergents, household insecticides, steel bureaus, refrigerators and washing machines.

Last year, Godrej Soaps broke its three-year-old relationship with Procter & Gamble. It got back its soaps, and since been marketing them under its own brand name.

The sale of oil palm plantation may help the company focus more sharply on its core business of building and marketing soap brands. It could also provide much-need cash to finance the company's war chest in its battle with Hindustan Lever and Procter & Gamble.