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Global Green completes Saptarishi acquisition -- Plans pvt placement, IPO

Our Bureau

NEW DELHI, Sept. 6

GLOBAL Green Company Ltd (GGCL), part of the L.M. Thapar group, engaged in horticulture-based food processing, has announced plans to come out with an initial public offer (IPO) by mid-2002. The company has appointed HSBC Merchant Banking as its lead man ager for the issue.

GGCL has also completed the acquisition of Saptarishi Agro, with the acquisition of the 65 per cent equity stake of Tata Tea in the company.

Speaking to presspersons here on Wednesday, Mr. Debashish Mitra, Chief Operating Officer of GGCL, said the company was also planning a private placement of its equity totalling Rs. 8 crores. The private placement is part of a funding programme that the c ompany has drawn up aggregating Rs. 67 crores for financing its expansion plans.

GGCL is also receiving a loan of $3-million from IFC, Washington, at Euro LIBOR plus three basis points. The seven-year loan, which works out to approximately Rs. 14 crores, comes with a three-year moratorium. The company's promoters are also planning to take additional equity in GGCL. The Thapars already hold Rs. 12 crores of equity in the company. The second round of equity financing aggregating Rs. 28 crores was taken by the promoters at a premium of Rs. 50 per share.

The funds raised from these sources are expected to be applied by the company in funding capacity expansions at the company's facilities near Bangalore and for financing its acquisitions. GGCL has already acquired two units, VST Industries and Saptarishi Agro Industries.

The first acquisition, the mushroom processing unit _ VST Natural Products of VST Industries, was done last year. The company is restructuring the operations at the VST unit and is expected to include the packaging of its other vegetable products at the unit, in addition to the manufacture and packaging of mushrooms. The merger of the VST unit with GGCL was expected to be formally completed by November, Mr. Mitra said.

GGCL has also acquired Tata Tea's 65 per cent equity stake in Saptarishi Agro Industries Ltd (SAIL). The company has signed a memorandum of understanding (MoU) with Tata Tea for finalising the purchase of the 65 per cent stake. A portion of the new funds being raised would also be applied to fund the takeover, company officials said. Of the balance of SAIL's equity, Tamil Nadu Industrial Development Corporation (TIDCO) owns 15 per cent and the remaining 20 per cent is held by the public.

Mr. Mitra said the merger of SAIL with GGCL would be completed by next year. He said that GGCL would turn around this year and would announce profits during the financial year 2001-02. Only after this, would GGCL go in for an IPO, he added.

GGCL has also announced plans to enter other areas and products in the horticulture food processing business and achieve a turnover of about Rs. 500 crores in five years. The company achieved a turnover of Rs. 35 crores for the six-month period ended Jun e 2000. It is hoping to close the current financial year with a turnover of Rs. 75 crores.

GGCL plans to continue exports of its products, including some of the newly introduced ones such as paprika and jalapenos. Over 90 per cent of its current turnover constitutes exports to countries in western Europe, the US and Korea. The company is also planning to expand its export markets to include Germany, the UK, Australia and New Zealand.

The company intends to market its range of products to retail chains such as TESCO and Morrisons in the UK, Carrefour in France, Aldi in the US and Germany etc. In addition, leading food services companies such as Dominos, McDonalds and Burger King were also in discussion with the company to make it one of their global sourcing vendors, company officials added.