The majority owner of Indian processed food manufacturer Capital Foods has vigorously scotched suggestions that is company is poised to be sold to Japanese giant Nissin Foods.
Earlier this week, an Economic Times report citing unnamed sources suggested that Nissin, which is known around the world for its Top Ramen brand of instant noodles, was in “advanced discussions” to buy out capital foods for between Rs500cr and Rs600cr (US$79m-94.8m).
Capital’s consolidated sales reached Rs145cr (US$22.9m) in the last financial year—an increase of 17% over the previous year. Its operating profit stood at Rs16cr (US$2.5m), a rise of eight per cent over 2011-12.
No plans to sell
Ajay Gupta, Capital’s founder-chairman, holds 60% of the business, with the remainder in the hands of Kishore Biyani’s investment arm, Future Ventures. The business is best known in its domestic market for its Smith & Jones and Ching’s Secret lines of Chinese noodles, soups, condiments and curry pastes.
However, Gupta has subsequently denied that he was looking to sell the company, and that Nissin had in fact approached him with a proposal two years earlier.
“We are one of the larger processed foods companies. So, interested players will approach us. But that doesn’t mean I intend to sell out,” he told Business Standard.
Biyani, though, hinted that some companies were in talks with Future Ventures for a stake in the business. “I cannot comment till the deal is finalised,” he said, adding, “We are getting the valuation we want.”
As Japan’s economy slows, food companies there have been increasingly open about their interest in India’s faster-moving market, with firms like seasonings and flavourings manufacturer Kikkoman and Nissin considering stakes in the country.
Analysts also suggest that Asahi Breweries, Calbee Foods, Japan’s biggest crisp maker and noodle maker Acecook are also scanning the Indian market for investments, either through joint-ventures or acquisitions.
Kagome, one of Japan’s leading tomato ketchup and juice manufacturers, recently entered into a joint venture with Ruchi Soya and trading company Mitsui to launch premium tomato purees and sauces by June 2014.
Ruchi has also approved the sale and transfer of its soya processing business to a joint-venture with Toyota Tsusho Corporation and J-Oil Mills to manufacture edible oils.
And last year, Suntory acquired controlling stake in Narang Connect, a subsidiary of Narang Group, to enter India’s non-alcoholic beverages sector.