Friday, December 7, 2012

HERITAGE FOODS TO HIVE-OFF RETAIL BUSINESS TO ROPE IN PARNERS - ET REPORT


 

HYDERABAD: Heritage Foods IndiaBSE 4.99 % (HFIL), the Rs 1,400-crore retail and dairy products company promoted by the family of Andhra Pradesh's former chief minister N Chandrababu Naidu, will hive-off its retail business into a separate arm to rope in strategic or financial partners, said a top official.

The move assumes significance in the backdrop of the government's move to allow foreign direct investment into the retail sector, allowing foreign companies to buy a controlling interest in Indian retailers.

"The board has approved a proposal to hive off the retail business into a wholly-owned subsidiary and to rope strategic or financial partners in a bid to accelerate the pace of growth in retail business," HFIL president M Sambasiva Rao told ET.

A separate entity, Heritage Foods Retail, was registered for the purpose and the transferring of the retail business to the subsidiary will take place along with the firming up of new partners, said Rao.

He ruled out promoters divesting stake at the parent company level. Heritage Foods, founded by Chandrababu Naidu in 1992, had in 2006 forayed into food and grocery retail. It currently operates in Andhra Pradesh, Tamil Nadu and Karnataka.

The retail division now has 72 'Heritage Fresh' branded retail stores with a total retail trading space of 2.1 lakh square feet. "It is a volume business and we want to at least double the retail trading space over the next two-three years with the help of partners in these three southern states," said Rao.

For the year to March 2012, the retail business reported sales of .`299 crore but had negative EBITDA (earnings before interest, taxes, depreciation and amortisation) of Rs 18.3 crore.

"We are open to roping in both domestic and foreign partners," he said. "There are some pure investment players who may be interested to invest and allow us to manage the business and some domestic and foreign retailers keen on active role in running the business".

7 comments :

  1. Dear Sir,
    Do you track SNL bearing?
    Do you advise buying at current rate?
    Regards,
    saj

    ReplyDelete
  2. value getting unlocked, Patiance paid off!

    thanks,
    Tom.

    ReplyDelete
  3. Dear Sir,
    I have been following your blog since the past six months and am impressed by your picks, and have made money on them (Kaveri).
    However my portfolio size is quiet small 25lakhs. My question is ideally how many scrips should one have in such portfolio.

    Rgs.
    Anmol

    ReplyDelete
    Replies
    1. Hi,
      depends on average liquidity and better to keep it less than 20% for a single stock, otherwise you need to be really convinced (jhunjunwala did so earlier). always make sure your stocks can sell off in 10 days, so keep the numbers accordingly.

      Thanks,
      Tom.

      Delete
    2. Depends on your conviction .I don't like excess diversification and recommending maximum 10 stocks .

      Delete
  4. Sir,
    DO you expect RBI to cut interest rate and do you see value in HDIL for long term investment as the stock is down from earlier 1000.

    Sir pls do give your valuable thoughts.

    Thanking you.
    Roshini

    ReplyDelete
    Replies
    1. Expecting a rate cut in another 3 months .Rate sensitive may show some firmness on this expectation.

      Delete

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