High price may delay MTR Foods sale plan

MTR Foods' efforts to find a buyer for its ready-to-eat foods business may take some time to fructify as it is reportedly demanding a much higher price that the business deserves.

According to potential bidders, the company has asked for Rs 300 crore, approximately double the sales of its ready-to-eat and ready-to-cook portfolio.

Sadananda Maiya, chairman, MTR Foods, was unavailable for comments.

The company has already appointed N M Rothschild to see the deal through. According to investment banking sources, the high price is keeping away potential buyers like Godrej Beverages & Foods and others.

So far, companies like ITC and Britannia, as well as private funds such as Actis, are said to have evinced interest in acquiring the MTR portfolio.

MTR Foods, which has a presence in both packaged foods and restaurants, is considering divesting its foods business and focusing on the restaurants business.

"For a relatively niche category of products in a segment which has yet to fully take off in India, the price is a tad high," said one of the parties interested in buying out the brand.

Another aspect that goes against MTR pitching for a high price is that while the company is a strong brand in the southern markets, it is not considered a national-level player "� though it does have a presence in most parts of the country through its modern retail network.

MTR Foods' product portfolio comprises ready snack mixes and spices as well as ready-to-eat foods.

While the domestic market for ready-to-eat food is still at a fairly nascent stage, it surely is among the faster-growing categories at currently.

At present, Maiya has 40 per cent stake in the company, while JP Morgan Chase holds 26 per cent and Singapore-based private equity fund Aquarius 15 per cent. The balance 19 per cent is mainly divided between the Maiya family and associates.