Indian Hotels Company (IHCL), which operates the country's biggest hotel chain, has sold its entire stake in a processed foods making company less than four years after it bought the stake.
IHCL’s subsidiary Residency Foods and Beverages sold the entire stake of 69.22 per cent in Innovative Foods early this year for an undisclosed sum. The Kochi-based loss-making company was into frozen, ready-to-eat and ready-to-cook foods business.
The Tata group had bought stake in Innovative Foods in 2007 from Amalgam Group, with an aim to diversify into new areas of the processed foods business and to leverage its fast-moving consumer goods, food and beverage and retail businesses.
Though the acquisition price of Innovative Foods was not disclosed officially by IHCL, sources said the price did not exceed Rs 20 crore. In the last financial year, Innovative Foods had reported a net loss of Rs 3.66 crore and a total revenue of Rs 32.50 crore for a period of 10 months (IHCL exited the company in February).
An emailed questionnaire sent to IHCL seeking reasons behind the company's exit from the reporting company and its strategy in the processed foods business remained unanswered at the time of going to press.
Innovative Foods, which was a listed company before being referred to the Board of Industrial and Financial Reconstruction that subsequently led to its delisting from the stock exchanges was keen to expand in areas of value-added foods products segments such as snacks and chicken products.
Innovative foods operated under the brand name Sumeru in India and export markets such as US, Europe, West Asia, Japan and Singapore to name a few. It also provides supplies to various food service companies and private labels.
Though the company secured lucrative supply contracts with popular fast food chains like McDonalds, Pizza Hut, KFC in addition to other restaurants, it failed to achieve its targeted growth of 30-40 per cent. Innovative Foods also failed to bring itself out from the red posting losses year after after. This was primarily because of high operating costs and equally higher interest rate payout.
With the sale of stake in Innovative Foods, Indian Hotels Company has nearly fully exited the processed foods business which once formed a part of its strategic growth plan.
Another IHCL another loss-making subsidiary, Residency Foods and Beverages, holds an agreement with Jasper Aqua Exports, a Vizag-based seafood company. Residency Foods recorded a loss of Rs 11.24 crore in the last financial year, with revenues of Rs 1.2 crore.
