Calcutta, Feb. 23: Harsh Mariwala-led Marico is likely to sell a stake in its wholly owned US subsidiary Sundari LLC.
“Sundari is not doing well for the last few years and considering the current economic scenario in the US, we are now planning to restructure our equity interests in Sundari,” chief (HR and strategy) Milind Sarwate told The Telegraph.
Marico may partly offload its stake in Sundari and there is a “good possibility” of selling the entire equity interest in the company, Sarwate said.
Sundari LLC was formed in February 2003 as a joint venture between Marico Ltd and New York-based Shanthil LLC, the owner of the Sundari line of luxury ayurvedic cosmetics in the US. Marico acquired a 63 per cent stake, while Adil & Associates held 7.5 per cent equity. Shanthil LLC has a 24.5 per cent stake and private investors hold the rest. In July 2004, Marico had raised its equity interest in Sundari to 75.5 per cent. Sundari became a wholly owned subsidiary in late 2007.
Last month, Marico said in a stock exchange notice that the company was looking at alternatives to maximise possible value from the Sundari business. “A final decision on this will be taken soon,” Sarwate said.
Sundari has about 20 products. The business was founded by supermodel Christy Turlington and her partners.
Besides the US, Marico has operations in Bangladesh, the West Asia, Egypt and South Africa. In March 2008, Marico had sold off its processed foods business under the brand “Sil ” to a Danish business house, Good Food group.
In the same month, it had ended its distribution alliance with Indo Nissin Foods Ltd, a year ahead of expiry. The company had entered into an alliance with Indo Nissin in 1998 for marketing and distributing the latter’s products such as the Top Ramen and Cup Noodles range in India. Marico has done seven acquisitions in the last 35 months and has a debt to equity ratio of 1.
The company said the divestment of Sil was on a slump sale basis. In slump sales, the seller receives a lump sum from the sale on a unit. The asset, and liabilities are not valued separately. The sale includes the manufacturing facility at Saswad near Pune.
