The Telegraph
Since 1st March, 1999
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UTI sells Nestle pie to parent

Mumbai, Aug. 23: Nestle India stole the show on bourses today, propelled by reports that Unit Trust of India (UTI) sold 15.34 lakh shares, or 1.6 per cent of the company’s equity, to its Swiss promoter at Rs 570 apiece.

The block deal, market watchers said, fetched the mutual fund major a sum of Rs 87.44 crore. It was in line with Nestle’s declared intent to buy up to 10 per cent of the Indian arm’s equity through creeping acquisitions.

The scrip was among the chart-toppers on the BSE, notching up the third highest turnover at Rs 137.19 crore on a volume of 24.14 lakh shares. It opened at Rs 532.40, hit an intra-day high of Rs 573 before finishing at Rs 565.80 — a rise of Rs 39.25 or 7.45 per cent over its previous close.

On the National Stock Exchange, more than seven lakh Nestle shares changed hands. Here, the stock closed at Rs 565.80 after having started the day at Rs 532.40.

Nestle India’s filing with exchanges in June showed promoters’ controlling 53.98 per cent, institutions 22.87 per cent and Indian public 21.12 per cent.

In February this year, the company told bourses its parent, Switzerland’s Nestle SA, had applied for government approval to acquire up to 10 per cent of its equity from other shareholders, and via creeping acquisitions. If the approvals came in, it said the purchase of shares would be done at a price set by the parent.

Later, at a meeting held on March 31, the FIPB cleared Nestle’s proposal for an increase in foreign equity from 53.96 per cent to 63.96 per cent. Market watchers say the company has been mopping up shares, although in small quantities, since it got that permission.

In India, Nestle has a presence in the foods business, and dominates the market for instant coffee, infant foods, milk products and noodles. It has also grabbed a larger share of chocolates, confectioneries and other semi-processed food items sold over the past few years. A few of its leading brands include Cerelac, Nescafe, Maggie, Kitkat, Munch and Pure Life.

Nestle was promoted by Nestle Alimentana, Switzerland, a wholly owned subsidiary of Nestle Holdings based in Nassau, Bahama Islands. The company has, over the years, enlarged its range with new products in instant coffee, noodles, sauces, chocolates and confectionery, dairy products and even mineral water.

Nestle was incorporated as a limited company in 1959. In 1978, it tapped India’s market in a flotation that brought down the foreign stake to 40 per cent. Its name was changed from Foods Specialities to Nestle India in 1981.

The company started its manufacturing operations with Milkmaid in 1962 at the Moga unit. Manufacturing of Nescafe started in 1964 at the same unit. The company set up another factory at Cherambadi in Tamil Nadu, for manufacture of infant foods and coffee. The company set up its Nanjangad (Karnataka) factory in 1989 and the Samlakha (Haryana) factory in 1992.

Recently, UTI sold Bajaj Hindustan and secured an attractive premium on the ruling market price.

The fund has also divested a major portion of its Hindustan Zinc holding, and is believed to be close to selling its large slice of the IPCL equity in the open offer to be made by Reliance Industries in the days ahead. Cadbury’s, Phillips and Ciba Specialities are among the shares it hawked in open offers by foreign owners.

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