Calcutta, March 15: Godrej Industries Ltd has sold its foods business unit, Godrej Foods, to group firm Godrej Tea for Rs 70 crore.

Godrej Industries today signed the sale agreement with Godrej Tea. The takeover of Godrej Foods by Godrej Tea will take effect from March 31.

According to the terms of the agreement, Godrej Tea will pay Godrej Industries Rs 40 crore in cash and Rs 30 crore in the form of shares. However, Godrej Foods’s manufacturing facility at Wadala in Mumbai will not be sold to Godrej Tea.

The Godrej group flagship and Godrej Tea also signed a shareholders’ agreement today with IL&FS Investment Managers Ltd (IIML), wherein IIML would invest Rs 60 crore in Godrej Tea through its Leverage India Fund and Sara Fund to acquire a 40 per cent stake in Godrej Tea.

Meanwhile, Godrej Tea will be renamed as Godrej Beverages and Foods Ltd to reflect the combined business.

Godrej Industries chairman A.B. Godrej said, “The consolidation of the two foods businesses of the group will help realise synergies in the areas of manufacturing, marketing and distribution. The equity infusion (by IL&FS Investment Managers) will also help the company (Godrej Tea) to scale up the business and add value to its shareholders.”

Godrej Industries’s foods division produces edible oils, vanaspati, fruit drinks, fruit nectar and bakery fats and has two manufacturing facilities at Wadala and at Mandideep in Madhya Pradesh. It has a network of 800 distributors nationwide besides 24 consignment agents.

Earlier, the board of directors of Godrej Industries had approved the sale of Godrej Foods (excluding its Wadala factory) to the group company for Rs 70 crore plus a networking capital of over Rs 15 crore.

The board has also convened an extraordinary general meeting on April 19 to seek shareholders’ approval to invest up to Rs 100 crore in Godrej Tea in addition to the existing limits.