McCormick has entered into a joint venture with Kohinoor Foods Ltd to market and sell basmati rice and food products in India. The venture was announced in June 2011 and will now be named as Kohinoor Specialty Foods India Private Ltd.
McCormick invested Rs 520 crore ($113 million) in the deal and takes 85 per cent share in Kohinoor Specialty Foods.
Going ahead, McCormick will also bear approximately $4 million of fees and other costs in the fourth quarter of 2011 related to the deal, which would reduce earnings by 3 cents per share.
However, McCormick expects the joint venture sales to be approximately $85 million in the first year, and will be accretive to McCormick’s earnings per share in 2012.
New Delhi-based Kohinoor Foods Ltd is one of the leading manufacturers and marketers of basmati rice.
The joint venture is a part of McCormick’s strategic business plan to expand sales in emerging markets. Including India, McCormick expects emerging markets to contribute approximately 12 per cent of total sales by 2015, reflecting an increase of 33.3 per cent from 9 per cent in fiscal 2010. The Kohinoor brand of products is an ideal fit for the company’s portfolio.
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McCormick has a decade-long presence in India. The company first partnered with A.V. Thomas Group in 1994. AVT McCormick Ingredients Private Limited has grown into a leading supplier of cleaned, steam sterilized, ready to use spice ingredients for the global market.
In 2010, McCormick acquired a 26 per cent interest in Eastern Condiments Private Limited that is a leading brand of spices, seasonings and other related food products in India and the West Asia.