The Hindu Business Line : Global Green plans revamp by ‘reducing subsidiaries’

The Global Green Company, part of Gautam Thapar’s $3-billion Avantha Group, is planning to restructure its company, and is set to make at least three acquisitions this year.

“There is a scope for reducing the number of subsidiaries by half,” the Global Green company’s Managing Director and group Chief Executive Officer, Mr Vineet Chhabra, told Business Line.

At present, Global Green has nine companies under its fold which includes three in India, two each in Hungary and Belgium, and one each in Turkey and the US.

Previous acquisitions

The paper-to-power Avantha Group has operations in 10 countries and its food company, Global Green Company works with over 2 lakh farmers across several countries to take their produce to the world market.

The company has also grown through acquisitions. It acquired its joint venture partner Poupon Reitzel International in 1996, and in 1999, it acquired VST Natural Products and followed it up with the acquisition of Intergarden.

Global Green is now set to acquire a $25-million company based out of Europe and two others this year. These acquisitions will help us to acquire talent as well as de-risk our business model apart from giving us access to newer technologies, Mr Chhabra said.

He said by 2010 the company expects to go public and expects to double its turnover to around $200 million. He added that he expects the company’s valuation to be about $1 billion in six years.

“With the new acquisitions, we expect our valuations too, would go up,” he said.

Margins hit

Mr Chhabra, however, admitted that as the dollar value had come down 12-13 per cent in the recent past, the company’s margins too, have reduced. “We are trying to derisk the market as we have plants in Europe,” he said.

Private label companies

Global Green supplies its products mostly to private label companies. Some of its customers are Dollar Tree in the US, which is the second largest dollar store in that country, and Loblaws and Sobeys in Canada giving it a 60 per cent market share among private label companies. It has its own brand Tiffy in India.

Mr Chabbra pointed out that its strategy of an integrated seed to shelf operation through contract farming and supply chain which ensures competitive pricing and better delivery schedules has helped the company to increase its market shares in North America and Europe.

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