Progress at snail’s pace end the Godrej-Hershey's JV

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Godrej-Hershey's JV came to an end
India's Godrej Group and US-based chocolate and confectionery major Hershey's have decided to call off joint venture (JV), due to management differences in running the entity, as reported by Economic Times.

Hershey's had 51% stake in Godrej and JV formed in 2007. At a recent board meeting, both entities mutually agreed on calling off JV following which Hershey's will sell its 51% stake back to Godrej. The amount is still undisclosed.

Lazard Capital, the financial advisory firm has been entrusted the task of managing the deal.

Godrej group was impatient with the slow progress of the 450-crore Godrej-Hershey's, when compared to other marketers in chocolate category, Investment banking officials said in report. After launching silver award winner brand - Godrej-Hershey's syrup in 2008, the US company did not progress beyond that in the span of four years.

Godrej Hershey's were the makers of Hershey's Syrup, Jumpin, Sofit and Nutrine Eclairs. They also had fresh strategic plans, which include scaling up its operations and manufacturing capacity to drive volumes in the domestic markets. But due to some management differences in running the entity, they decided to move out of JV.

Analysts point out that Godrej's contribution to the top line of the venture would have been at least 85%. Godrej came up with a good number of brands in the JV after acquiring Nutrine in 2006. Brands such as Maha Lacto, Maha Choco, Nutrine Eclairs, etc. acted quite well in market.

After the end of JV, both the entities will work independently. Hershey's will now operate on its own in India through a wholly-owned subsidiary and Godrej may choose to enter chocolates category since a non-compete clause will not be applicable on them.

Recently, Godrej Group has acquired rights for 51% stake in pan-African leading hair care company, Darling Group Holdings, which is the market leader in hair extension products and has operations in 14 countries of Africa.

OneIndia Money

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