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Sharan Lillaney, an analyst with Angel Broking, wrote in his latest report that if the company managed to
raise $225 million, about $150 mn would be used to reduce debt and lower interest cost and cash
outflow. “Assuming an annual 10 per cent interest cost, the company could easily save around $15mn or
Rs. 75 crore annually in interest cost. Interest cost at the end of FY2011 stood at Rs. 498 crore, which we
believe will increase to Rs. 650 crore by the end of FY12. If the company reduces debt by $150 mn, it
could annually reduce its interest cost by 11-12 per cent,” Lillaney wrote
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IL&FS may buy Hershey’s 51% in joint venture
Private equity major IL&FS Investment Managers (IL&FS) has offered around $35 million or Rs 175 crore
to buy out US chocolate confectionery major The Hershey Company's 51% stake in its Indian joint
venture (JV) with the Godrej Group. The Godrej Group would continue to hold the remaining 49% in the
company, which will go back to its original name, Godrej Beverages & Foods. The Godrej Group will go
back to managing the business as it did prior to forging the JV with Hershey's.
TOI has learnt from sources that after the exit of Hershey's, the Godrej Group is likely to forge another
joint venture with a food multinational. These talks are, however, in the exploratory stage. According to
sources in the know, an offer was recently made by IL&FS to Hershey's, which is expected to come back
on its approval soon. Sources said that although the joint venture is valued at Rs. 350 crore, the amount
quoted by IL&FS for the Hershey stake is much lower than what Hershey's had paid to the PE firm in
2007 to gain an entry into India — over Rs. 250 crore.
A Mahendran, who is director on the board of Godrej Hershey, was not available for comments, while
The Hershey Company could not be reached. Hershey's is expected to go it alone in India, and is said to
be keen on pushing its products to consumers here. The only product from the American chocolate
maker's stable which has so far been launched by the JV in India is the chocolate syrup. While talks are
in the early stages, the Godrej Group is understood to be in discussions with a few food multinationals
that are keen on entering India. As and when this happens, IL&FS would exit the company.
Cultural issues appear to have resulted in a break-up between Godrej and Hershey. The JV operated in
multiple categories such as confectionery, beverages and grocery products. Brands like Mahalacto,
Nutrine, Jumpin and Sofit were part of the product portfolio. Prior to Hershey’s, the Godrej Group had a
tie-up with Pillsbury, which was called off in 2001.
Among other joint ventures which have not lasted for the Godrej group include the one with US
personal care giant, Procter & Gamble, which ended in a bitter break-up around 1995. The only JV of the
group which has lasted for 15 long years was with Sara Lee Corp. Besides being a platform for MNCs
marking an entry into India, the Godrej Group has, on its own, expanded its base outside India into
Africa, Indonesia, South America and UK, on the back of a well chalked out acquisition strategy.
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Ybrant Digital close to acquiring US firm for $200 million
Ybrant Digital, a Hyderabad-based digital marketing and online advertising company, is set to acquire a
US-based online services firm for around $200 million (Rs 1,000 crore), underscoring its global ambitions
in the fast-growing sector of the media industry.
ET could not ascertain the identity of the company that Ybrant is about to buy. Two people familiar with
the negotiations said that the target company is a provider of online comparison shopping, personal
finance and educational services, a platform where US universities, banks and financial institutions
advertise.