Hyderabad-based dairy and retail major Heritage Foods, promoted by the family of former Andhra Pradesh Chief Minister N Chandrababu Naidu, has sold its entire holdings in Future Retail for Rs 131.94 crore. Kishore Biyani-led Future Group acquired the retail and allied business of Heritage Foods in 2016, which gave the company over 3% stake in Future Retail.
â€śThe Company has disposed off its entire holdings/investment of 1,78,47,420 equity shares held in Future Retail Limited. These shares were sold through Stock Exchange in Open Market in various tranches and the net amount of Rs. 131.94 Crores was received by the company,â€ť Heritage Foods said in a regulatory filing.
Following the announcement, the stock of Heritage Foods surged nearly 20% to Rs 335.90 on the Bombay Stock Exchange. On the National Stock Exchange too, the stock was up 20% trading at Rs 335.70.
Heritage Foods said that the proceeds of the sale will be utilised for the repayment of term loans of the company.
Hyderabad-based Heritage Foods, which was founded by Chandrababu Naidu, sold its retail and allied businesses to Future Group in 2016, retaining the dairy and dairy products business. This acquisition gave Future Group Heritageâ€™s chain of 124 supermarket stores at the time in Hyderabad, Bengaluru and Chennai.
The company reported a 10% drop in revenues to Rs 610 crore core and 75% decline in net profit in the July-September quarter to Rs 2.7 crore compared to the same period last year. However, the company said in an investor presentation that there was no major business disruption with respect to procurement and sales due to COVID-19.
Heritage Foods selling off its entire stake in Future Retail also comes at a time when Future Retailâ€™s retail, wholesale businesses is being bought by Reliance Retail by way of a slump sale for Rs 24,713 crore. Future Retail saw its business take a massive hit due to the pandemic, with Biyani saying they lost over Rs 7,000 crore revenue in the first 3 months of the pandemic.
However, the deal is currently undergoing legal proceedings after Amazon objected to the deal and dragged Future Retail to emergency arbitration proceedings in Singapore. Following this, Future Retail approached Delhi High Court alleging Amazon was interfering with its transaction with Reliance Retail. A judgement on the same is currently awaited from the Delhi HC.