Heinz To Go Public To Fund Expansion

The US parent, Pittsburgh-based H J Heinz and Company, is ready to lower its stake from the current 100 per cent but will retain management control with either 51 or 75 per cent stake.

Under Sebi rules, a company can make an initial public offering only after three years of profitable, dividend-paying performance. Heinz India has completed one year of operations as Heinz subsidiary after it bought over Glaxo's food division in late 1994. The three-year period will end in March 1998.

David R Williams, executive vice-president of H J Heinz, said all options are being explored and equity is one of them. "We have not made any plans as yet. There will be a need for equity, but we will decide only after three years," he said.

 

Williams, who oversees Indian operations along with Africa, South and Central America said the company's turnover has grown from around Rs 150 crore before Heinz came in to over Rs 200 crore in 1995-96.

"We have doubled volume and profits in one year. Market shares have also grown. We hope to reach Rs 1,000 crore turnover by 2,000 AD," he added. Growth will come from existing brands and new launches in other categories.

On anvil is the launch of Heinz's global flagship brand, Heinz tomato ketchup. Williams said the launch could happen in the next 12 to 18 months. Before that Heinz will need to invest in a tomato paste processing plant. New launches are also expected in the baby food segment under the Farex brand name.

Revealing the company's plans for India, Williams said Heinz wants to use India as a major export base not only to Asia, but to other parts of the world.

"India has major advantages like producing a large number of fruit and vegetables, and cheap labour. Plus, the Indian government promotes exports through zero-tax on export profits," he said.

Heinz India has four major brands, Complan, Farex, Nycil and Glucon-D. Worldwide, the company operates six major categories, food service, ketchup and condiments, pet food, tuna and weight-control food products.

Pradeep Poddar, managing director of Heinz India, said volumes and market share have jumped since 1994. In Complan, the health beverage has shown a 20 per cent volume and 30 per cent value growth.

Farex, the baby food brand, had fallen behind Nestle's Cerelac in the early 1990s under Glaxo. Under Heinz, the brand has posted a 50 per cent volume growth and a 70 per cent value growth.

"Our growth has fuelled market growth. As category leaders, our brands have ignited the market and also pushed up our volumes," Poddar explained.

In ketchup, the company has been planning to launch its brand for the last one year. Talks with local partners for a joint venture did not materialise.