McCormick & Co, Inc, of the US, a leading spice maker, will invest close to Rs 520 crore (about $ 115 million) in a joint venture it will form with Kohinoor Foods Ltd, a leading marketer of branded Basmati rice and other food products.
McCormick's investment, through a Singapore-based subsidiary, will include picking up an 85 per cent stake in the new joint venture Kohinoor Speciality Foods India Pvt Ltd. Kohinoor will hold the balance 15 per cent.
Kohinoor's board has authorised Mr Satnam Arora and Mr Gurnam Arora, Joint Managing Directors, to negotiate a slump sale of the assets and production facilities in Haryana to Kohinoor Speciality Foods for a consideration of Rs 315 crore.
The proposal would be subject to shareholders' and regulatory approvals. The board on Thursday approved the proposal to finalise the business transfer agreement and other transaction documents, the company said in a statement to the Bombay Stock Exchange.
According to the agreement, Kohinoor Foods and the promoters will not compete with the business to be transferred to Kohinoor Speciality Foods. Kohinoor Foods will negotiate for an agreement with the joint-venture company separately for supply and marketing of rice. The joint venture will market and sell Kohinoor Foods' basmati rice and food products in India.
The employees of Kohinoor Foods related to the distribution, marketing and supply of rice in India shall also be transferred to Kohinoor Speciality Foods, said the company statement.
In a notice seeking shareholders' approval for the proposed move, Kohinoor Foods has said it will assign certain trademarks to an affiliate of McCormick for Rs 50.40 crore. Certain other trademarks, including the trademark “Kohinoor”, registered/applied for by three affiliate partnership firms of Kohinoor's promoters will also be assigned to McCormick's affiliate, for an agreed consideration.
McCormick has interests in two other ventures in India – a 26 per cent stake in Kerala-based Eastern Condiments, which it picked up for about $ 35 million, and a 50 per cent stake in AVT McCormick Ingredients, a joint venture with the A.V. Thomas Group. AVT McCormick produces cleaned, steam-sterilised, ready-to-use spice ingredients for the global market.
Shares of Kohinoor Foods on the BSE were up 15.28 per cent at Rs 61.50 on Thursday.