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May 29, 2001
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Money > Business Headlines > Report May 29, 2001 |
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HLL keeps option open to exit fragrances JVReeba Zachariah Consumer products major Hindustan Lever, which recently hived off its flavours, fragrances and food ingredients business into a joint venture with the ICI group, has kept its option open on exiting from the Rs 3-billion venture. HLL will hold a 49 per cent stake in the company, while the balance will lie with ICI India and Quest International BV, the former subsidiary of Unilever. Under the scheme of arrangements worked out between the two partners, both HLL and ICI will have a call and put option on the 49 per cent stake held by HLL after a period of 5 years. That is, HLL can sell its entire stake, or ICI can use its option to buy the HLL pie. HLL said its 49 per cent stake would be valued on the basis of a pre-determined pricing formula which will be proportionate to the joint venture's earnings before interest tax depreciation and amortisation (Ebdita) sales turnover in the interim period. The venture, however, is not taking over the suburban Bombay unit, which employs 40 workers, and will only undertake toll manufacturing for the venture. HLL officials said they were no specific reasons for not transferring the Bombay unit. The 51 per cent equity to be picked up by ICI has been valued at Rs 1.55 billion, including a premium for management control, taking the total valuation of the business to a little over Rs 3 billion. The board of directors of the new company will comprise three nominees of the ICI group and two from HLL. The chairman and the chief executive would be nominated by the ICI group. Negotiations between HLL and ICI India have been going on since 1997-end, after Unilever sold its global specialty chemicals business carried by Quest International, National Starch, Crosfield and Unichema to the UK-based ICI group. The sale included the transfer of business, technology, brands and goodwill to ICI Plc. However, Quest International's business in India was not transferred to the ICI group. The transfer of the global business discontinued of free flow of technology and know-how to the Indian operations. For fiscal 2000, the Quest business has recorded a turnover of Rs 950 million against the same last year. Powered by YOU MAY ALSO WANT TO READ:
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