19 January 2004
The news of Murugappa group''s decision to exit its confectionery
business was announced on 16 January 2003 the eve
of the group''s 50th anniversary and a day after
the Pongal festival celebrations in South India.
a shareholder agreement with Lotte Confectionery Company
of Korea, the Muruguppa group has parted with 60.39 per
cent holding of the Rs.3.77 crore equity in Parry''s Confectionery
Ltd for Rs.64.47 crore. This works out to Rs.283.12 per
Parry''s Confectionery was controlled through Muruguppa
group companies EID Parry (28.57 per cent shareholding),
Santhanalakshmi Investments (15.04 per cent shareholding)
with other group entities and the promoter''s family holding
13.66 per cent and 3.12 per cent respectively.
is a good move for the shareholders and the group that
it is consolidating its business portfolio," remarks
M V Subbiah, chairman, Parry''s Confectionery.
a changed market environment, the group found it difficult
to pump in money continuously to build and sustain the
confectionery brands and hence decided to exit the business.
However, EID Parry as the owner of the various popular
brands Lacto King, Coffee Bite, Coconut Punch,
Madras Café ,etc, will get a royalty for five years
from Parry''s Confectionery and a board membership.
Confectionery closed the first six months of this fiscal
with sales of Rs.46.81 crore and a net loss of Rs.4 lakh.
Last fiscal, the company posted a turnover of Rs.95.13
crore and a net loss of Rs.1.18 crore.
to Ardeshir Contractor, managing director-corporate finance,
KPMG India, advisors to the deal, the confectionery brands
and the four plants were not valued separately while arriving
at the sale price.
offer lots of sweet things
Confectionery will soon make an open offer, as required
by law, to acquire 20 per cent stake (7, 54,258 shares
of Rs.10 each) in Parry''s Confectionery at Rs.283.25 per
share. The total outside holdings in the company is 39.61
per cent (14, 93,900 shares).
all the legal formalities are concluded, Parry''s Confectionery
will continue with its existing name. Subsequently, it
may acquire a new name reflecting the Korean ownership.
about their foray into the Indian market Soo Kil Han,
president, Lotte Confectionery says: "We have been
pursuing opportunities overseas including India. Sometime
last year we started talking to Murugappa group and now
we have finalised the deal."
years ago the $ 900 million Lotte Confectionery had established
a liaison office in Mumbai.
Korean company has a large portfolio of, candies, chocolates,
biscuits, snacks, ice cream and health care products and
commands a hefty 71 per cent share of the Korean chewing
gum market. Its brand Xylitol alone earns around $150
million in sales.
Confectionery has over 500 products, which are manufactured
at its five plants in Korea and exported to 70 countries.
Outside Korea, Lotte Confectionery has plants in China,
Vietnam and the Philippines. With its latest acquisition,
India will be added to the Korean company''s production
Lotte group has a presence in food and beverages, distribution,
tourism, heavy chemicals, construction and machinery,
information communication and electronics and trading.
to the Korean company officials, the company will leverage
Parry''s Confectionery''s existing distribution network.