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Vinay Kamath

Chennai , April 19

THE RPG group has reportedly closed a deal with its joint venture partner in FoodWorld Supermarkets Ltd, Dairy Farm International, to part ways amicably. According to sources, an Indian partner has expressed interest to buy out RPG's 51 per cent stake in FoodWorld; DFI holds the remaining stake. The deal is expected to close in the next few months.

Apart from the planned financial transaction, which will see transfer of shares, there will reportedly be an equal division of FoodWorld stores in the southern states and Pune between the two partners. The FoodWorld brand, according to these sources, will vest with DFI while RPG will subsume the FoodWorld stores that it will retain under the Spencer's brand. The RPG group recently renamed its Giant brand of hypermarkets as Spencer's. At present, FoodWorld operates 96 stores in southern India and in Pune.

The RPG group also has a 50 per cent stake in RPG Guardian, which owns the beauty and wellness chain, Health & Glow. This too, say sources, will be see an Indian investor buying out the RPG stake. The chain of stores in this case is likely to go to one partner.

RPG Group sources say that there had been several "issues" with DFI over control of the joint venture. Also, DFI, add these sources, had raised the issue of conflict of interest with FoodWorld when the RPG group floated the hypermarket chain, Giant, now renamed Spencer's.

DFI needs an Indian partner to buy out the RPG stake in the venture as existing laws do not allow foreign direct investment in retail. DFI's investment in FoodWorld, which was floated in 1996, came in before the rules later disallowed FDI in retail.

Both the partners have been infusing funds in the proportion of their stakes in the past few years. In September 2002, the two partners invested Rs 10 crore in FoodWorld Supermarkets Ltd, taking its equity base to Rs 64 crore. They then invested Rs 8 crore more in December 2002 and a further Rs 6 crore in May 2003, taking the total to Rs 78 crore.

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