JP Morgan in no hurry to sell MTR stake

Investment banking and private equity firm JP Morgan Chase is in no hurry to sell its 26 per cent stake in MTR Foods, the Bangalore-based Rs 135 crore packaged foods company. JP Morgan, in 2002, had invested Rs 19.20 crore into MTR Foods.

Said Latika Monga, representative of JP Morgan on the board of MTR, "We don't have any intention to exit MTR. It is very clear that we will exit one day when it is appropriate for us. At this moment, we are not in a hurry to exit. We are in discussion with the promoters of MTR on the best options for both JP Morgan and MTR as it grows."

Speaking to Business Standard over telephone from Singapore, she said JP Morgan will continue with MTR as the company is showing signs of rapid growth.

"As of now we have not reached any agreement with MTR. It will be in the best interest of everybody and there is no compulsion on us nor any time pressure to exit. We will come to a mutually agreeable solution for all of us including other financial institutions before exiting," she said.

Sadananda Maiya, chairman and managing director, MTR, directly holds 40 per cent. JP Morgan holds 26 per cent and Singapore-based private equity fund, Aquarius holds 15 per cent.

Maiya's relatives and associates hold the remaining 19 per cent stake in the company. According to sources close to the promoters, Aquarius too is not looking at exiting MTR.

Said Maiya, "We are on a growth curve at the moment. There is no plan to exit the business on our part. As regards our investors, they have not indicated to us about their plans to exit. There is no question of them exiting MTR when we are on a solid growth curve."

MTR is presently working out an expansion strategy which involves modernisation and automation of its manufacturing plants at an investment of Rs 10 crore over the next two years.

MTR will invest Rs 5 crore this year to import machinery from Taiwan for its automated plant in Bangalore and the remaining Rs 5 crore will be invested next year.

He said that MTR is charting out its growth strategy for the next three years. It is expanding its product portfolio by introducing more food varieties and also expanding the market.

"We are in the takeoff stage now. Having started this 'ready-to-prepare and eat' food business, we don't want to exit the business at this stage. Rather, we want to consolidate our core strength by modernising our plants and launching a new range of products."

Maiya said that the company which reported a net profit of Rs 6 crore on a turnover of Rs 135 crore in 2005-06 is aiming at achieving a turnover of Rs 156 crore during the present fiscal, Rs 200 crore in 2007-08 and Rs 250 crore in 2008-09. It also plans to tap the capital market after three years, he said.

For the first quarter-ended June 30, 2006, MTR has reported a growth of 25 per cent to touch a turnover of Rs 38 crore as against Rs 30 crore in the same period last year.