HLL Announces Joint Venture For It's Seeds Undertaking

The joint venture decision is in keeping with HLL’s well articulated strategy to secure the future of its seeds business. HLL was advised by Lazard India.

HLL’s shareholders had earlier in the year approved the transfer of the company’s seeds undertaking to PEGSL by an overwhelming majority of 99.56% votes in value through a postal ballot.

The objective and purpose of the said transfer was to induct a suitable technology partner into the business who could add value through technology, know-how, marketing and product development.

India Seeds Holdings Limited is an associate of Hicks Muse Tate Inc and Emergent Genetics LLC which are firms based in USA with global interests in seeds and biotechnology. Emergent Genetics LLC has extensive experience in the industry and have access to new seed traits through biotechnology and the operational expertise needed for their introduction and growth in new markets. Emergent’s associates in seeds include Stoneville Pedigreed Seed Company (the second largest hybrid cotton seed company in USA), Produsem SA (a leading wheat seed producer in Argentina) and L Daehnfeldt A/s (a leading vegetable seed company in Denmark). The knowhow and expertise from Emergent and its associates will complement HLL Seeds business strengths in operations, marketing and distribution thereby adding significant value to the business. The existing strong franchise in Cotton seeds will be considerably strengthened through access to Biotechnology-based seeds traits of Emergent, with the recent approval of Bt Cotton Seeds by the Government of India.

The seeds business undertaking of HLL which had a turnover of approximately Rs.100 crores will stand transferred with effect from March 30, 2002 on a “going concern” basis to PEGSL for a consideration of Rs.115 crores, and is likely to lead to Profit Before Tax of Rs. 72 crores for HLL.

As already indicated above, the capital base of PEGSL has been expanded to finance this acquisition and in order to retain 26% shareholding in the expanded capital base, HLL has made further investment of Rs.7.19 crores in the equity capital of PEGSL.