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Lotte picks up 60.39% in Parrys Confectionery

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Mr M.V. Subbiah, Chairman, Parrys Confectionery Ltd, Mr Soo-Kil Han, President and CEO, Lotte Confectionery Co. Ltd., Korea, and Mr Indo Hwang, CEO, India project of Lotte, at a press conference in Chennai on Friday. — Shaju John

Chennai Jan. 16

THE Chennai-based Murugappa group on Friday said that it was selling its 60.39 per cent stake in a group company, Parrys Confectionery Ltd (PCL), to Lotte Confectionery Co Ltd of Korea for Rs 64.47 crore. This works out to a price of Rs 283.12 per share.

Lotte said it would make an open offer to acquire another 20 per cent at Rs 283.25 per share.

Addressing a press conference, Mr M.V. Subbiah, Chairman, PCL, said the group had been consolidating its portfolio for sometime and had decided to sell its stake in the company as part of this effort.

In the last 10 years, the group had not been able to invest enough money to meet the competition from multi-national companies, he said. PCL had also slipped from its leadership position.

The PCL Board will continue for the next nine months till the formalities are over, Mr Subbiah said. Mr N.C Venugopal, Managing Director, PCL, and the senior management will continue with Lotte in its new "avatar", he said.

Lotte has invited the Murugappa group to appoint one representative on the board of the new company, which the group had accepted.

It will continue with the Parrys brands for the next five years and will pay EID Parry a royalty of Rs 5 lakh per annum. After that, the Korean company will introduce its brands in the Indian market.

Mr Soo-Kil Han, President and CEO, Lotte Confectionery, said Lotte had been looking for an opportunity to enter the Indian market for sometime and had come across the possibility of an association with PCL, sometime back. As a part of the company's global expansion plan, the company had been looking at emerging markets such as India. He was confident that Lotte's R&D capability and Parrys Confectionery's distribution network would be successful.

The Murugappa group's stake in PCL is through EID Parry India Ltd (28.49 per cent), Santhanalakshmi Investments Ltd (15.04 per cent) and other group companies such as Cholamandalam Investments and Finance Co Ltd, Tube Investments of India Ltd, TI Diamond Chain Ltd and Carborundum Universal hold the balance stake.

PCL has plants in Nellikuppam (Tamil Nadu), Kolanchery (Kerala), Sangli and Nashik (Maharashtra). It has over 25 types of candies and toffees and makes brands such as Coffy Bite, Lacto King, Caramilk and Coconut Punch.

Lotte Confectionery is a Rs 4,000-crore ($900 million) company and manufactures a range of chewing gums, candies, biscuits and snacks, chocolates, soft cake and ice creams.

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Lotte picks up 60.39% in Parrys Confectionery

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