Godrej Industries to sell foods division to associate company

Godrej Industries will sell its foods division to an associate company, Godrej Tea Limited, for Rs 70 crore. In addition to this amount, Godrej Tea will also pay the net working capital of the foods division at the time of transfer, over and above Rs 15 crore. The board of directors of Godrej Industries approved the deal today.

Godrej Tea will pay Rs 40 crore in cash at the conclusion of the deal along with net working capital above Rs 15 crore. The balance amount of Rs 30 crore will be settled by issuing equity shares of Godrej Tea to Godrej Industries.

The company will seek shareholder approval for investing in the share capital of Godrej Tea.

The foods division of Godrej Industries manufactures and markets products like fruit juices and soya products. The company's brand Sofit for soya products is among the best known in its category, though total sales is miniscule at less than Rs 4 crore per year.

Godrej Industries also has 2 retail networks, one in the urban areas selling fresh fruits and vegetables, and another super market retail chain in rural areas. The company has major plans to expand these retail networks.

Godrej Industries had last year acquired 4 per cent each in 2 US based companies engaged in biotechnology and business research at a cost of Rs 12 crore each. The company also holds around 14 per cent of Godrej Consumer Products, another listed company from the Godrej Group.

Godrej Industries reported a net profit of Rs 22.58 crore or Rs 4.64 per share, including an exceptional profit of Rs 19.6 crore, for the quarter ended December 2005, as compared to Rs 12.57 crore or Rs 2.58 per share, including an exceptional profit of Rs 5.53 crore, for the September 2005 quarter. Total revenues decreased to Rs 190.5 crore for the quarter as against Rs 207.01 crore for the previous quarter.