Date:23/02/2006 URL: http://www.thehindubusinessline.com/2006/02/23/stories/2006022302801500.htm

Back Heritage Foods firm on retailing, construction plans

C.R. Sukumar

Hyderabad , Feb. 22

EVER since the company's announcement last month on plans to foray into retailing of processed food products and infrastructure, Heritage Foods (India) Ltd has been attracting significant rise in volumes and value on the bourses.

From around Rs 150, the stock shot up to over Rs 200 on the bourses during this period and is currently hovering around Rs 170; after touching a high of Rs 170.55, the stock closed at Rs 165.2 on the BSE today against Tuesday's close of Rs 168.90.

With the company bullish on huge business opportunities both in food products retailing and infrastructure by taking advantage of the existing network of 40 warehouses in three States and also the networth, the institutional investors and mutual funds have began taking positions in the stock.

According to a senior official, the company has appointed KSA Technopak (India), a Curt Salmon Associates joint venture, for preparing sound business model for food products retailing.

"KSA has to its credit successful experience of working with leading FMCG majors such as ITC and HLL. At present, three teams of KSA are working out details on procurement, technology and logistics for food products retailing. We expect the final report of KSA on the business model to be ready by March-end," the official told Business Line.

The company would consider retailing of processed food, pulses and vegetables in both urban and rural markets, he said. "The business idea is to educate and assist the farmer right from site selection to crop selection to inputs to merchandise. We propose to take advantage of our network in three States and also the existing logistics network for milk procurement and supplies. We have roughly estimated an investment requirement of around Rs 200 crore, mostly towards working capital."

Further, the company also proposes to gain from the booming infrastructure industry using its current networth towards taking up of projects in the BOT model. It has recently floated an infrastructure company - Heritage InfraDevelopers Ltd, wherein the company would hold 51 per cent equity.

"We are not going to have any cash outgo for equity in the infrastructure entity," he said. The company has real estate properties in Hyderabad and other cities.

Initially, the company plans to develop 3.5-acres of land at Kondapur in the city outskirts to take up a modern housing complex at an outlay of around Rs 70 crore. "We have already roped in Chennai-based architects towards this. The company expects over 50 per cent of its revenues to come from infrastructure foray," the official said.