MUMBAI, January 29: Hindustan Lever's indirect acquisition of Tasty Bite Eatables Ltd has worked as a Midas touch for the ailing company. The not-so-frequently traded share zoomed up from Rs 3 to Rs 21 in just a few trading sessions. The mad rush for the scrip has forced the Mumbai Stock Exchange (BSE) to impose a special margin of Rs 6 from January 28.For HLL, which holds around 25 per cent stake in Tasty Bite through Grand Foods & Catering Consultants Pvt Ltd (GFCCP), it has been quite a bargain -- picking up 49 per cent of Rs 12 lakh equity of GFCCP. This effectively means acquiring 5 lakh shares of Tasty Bites for only Rs 5.80 lakh!
This is how it happened. Tasty Bite promoters Ravi Ghai and Ravi Aggrawal transferred their 51 per cent stake i.e., 10.20 lakh shares of Tasty Bites to GFCCP, reducing it to 1.20 lakh shares of GFCCP (of which 58,000 shares of Rs 10 each were acquired by HLL). HLL sources have not confirmed whether this acquisition was at par, discount or premium. Assuming it was at par,the total consideration for 58,000 shares of GFCCP must have been Rs 5.80 lakh only. That is to say acquiring 5 lakh of Tasty Bite's 20 lakh shares at Rs 5.80 lakh or Rs 1 per share which is now ruling at Rs 21.
The arrangement seems to have worked in favour of all parties, the promoters, public as well as HLL. For HLL, the indirect acquisition means an additional manufacturing facility in the food business recently started after the takeover of Brooke Bond Lipton and that too making any fresh investment which could have cost the company heavy.
HLL has already started using Tasty Bite's idle capacity to process tomato paste, baked beans in tomato sauce and sweet corn cream with green peas, etc. Besides higher utilisation of capacity, Tasty Bite can count on Lever's worldwide network to push its exports of processed food and frozen vegetables. Tasty Bite has an installed capacity of 5,000 tpa of ready-to-serve food and 10,000 tpa of frozen vegetables.
With HLL to back it, Tasty Bite can hope to come outof the red. The company's accumulated loss ran up to Rs 9.60 crore in March 1997 while sales for 1996-97 was just Rs 1.50 crore on gross assets of Rs 10 crore. For the public shareholders, it is an opportunity to either exit now or wait for a real turnaround.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
