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Godrej Soaps to increase stake in Godrej Pillsbury

Latha Venkatraman

MUMBAI, June 23

GODREJ Soaps Ltd (GSL) is planning to increase its equity holding in Godrej Pillsbury Ltd from the current 26 per cent.

However, the company has not specified to what extent it plans to increase its stake in Godrej Pillsbury Ltd.

GSL plans to increase its stake in Godrej Pillsbury Ltd through subscribing to its issues, which are due to be floated by the latter. The company has sought shareholders' approval for this move.

Godrej Soaps is also considering making a further investment in its subsidiary Tahir Properties Ltd. Currently, GSL holds 24 per cent of the equity share capital in Tahir Properties, 25 per cent of the Preference Shares Class A and 30.57 per cent of Pref erence Shares Class B. The rest is held by Godrej Properties and Investments Ltd, another subsidiary of GSL.

Godrej Pillsbury Ltd is a joint venture company between Selviac Nederland BV and the Godrej Group. Selviac Nederland holds 51 per cent while the Godrej Group through its various companies hold 49 per cent. GSL holds a 26 per cent stake.

In its AGM notice to shareholders, GSL said that Godrej Pillsbury is currently in the investment stage and returns are expected to start flowing back after a few years.

``The Board of Directors of the company (GSL) is of the opinion that it would be in the interest of your company to invest in issues to the full extent of its rights entitlement and if possible to increase the stake of the company beyond 26 per cent,'' G SL said in its notice. GSL has scheduled its annual general meeting on July 1.

GSL had received its shareholders approval in January 1999 to make an investment of Rs. 10 crores in Godrej Pillsbury. Subsequently, the fast moving consumer goods company had made an investment of Rs. 6.21 crores in Godrej Pillsbury.

According to the notice, Godrej Pillsbury is expected to come out with further issues until the next annual general meeting to finance working capital needs and brand building of atta and bakery and food services business.

GSL wants its shareholders' nod for its special resolution, which will enable the company to invest a further sum of Rs. 5.50 crores to acquire securities of Godrej Pillsbury Ltd by subscription, purchase or in any other form.

In the case of Tahir Properties Ltd, GSL's estimated cost of further investment is Rs. 7.5 crores.

The investments requirements in both Godrej Pillsbury Ltd and Tahir Properties will be met through internal accruals.

GSL has also asked shareholders' approval for providing financial support to Godrej Photo-Me Ltd (GPME) to the extent of Rs. 6 crores. GSL holds 40.46 per cent stake in GPME while the joint venture partner Ms Photo Me, France holds 50 per cent.

GSL also plans to place inter corporate deposits or loans with Godrej Properties & Investments Ltd and Godrej Sara Lee to the extent of Rs. 25 crores with a maximum individual limit of Rs. 8 crores. ``The company would be charging interest on such loans/ intercorporate deposits at market rates which would be more than the bank rate of interest. This would ultimately benefit the company and consequently its shareholders,'' GSL said.