Godrej Consumer Products to sell Indonesian food biz to Creador - Angel Broking

Godrej Consumer Products (GCPL) has entered into an agreement with private equity firm Creador to divest its non-core food business in Indonesia. The transaction is expected to be completed in two months.

GCPL's food business in Indonesia includes cereals, snack and instant food products under the brands Simba and Turbo. GCPL had acquired these businesses in 2010 as a part of its deal to acquire the Megasari group in 2010. GCPL's Indonesian food businesses generated net sales of about US $22 million in 2012. Although GCPL has not disclosed the deal, media reports place the value of the deal at US $30-34mn.

We believe this decision by GCPL would enable it to focus on its core home and personal care business. We also expect the company's profit margins to improve and result in better return ratios. We maintain a neutral rating on the stock.

Source : Equity Bulls

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