FMCG firm Hindustan Foods to invest ₹100 cr in shoe biz

Fast-moving consumer goods company Hindustan Foods Ltd will be investing ₹100 crore in order to set up and invest in sports shoes manufacturing, according to the regulatory filing by the company.

"We have been closely monitoring the steps taken by the Indian Government to encourage sports shoe manufacturing in India. We are convinced that the policies along with the growing customer demand will enable a robust manufacturing eco‐system and are trying to leverage our expertise and experience in contract manufacturing in being able to offer manufacturing solutions to Indian and global sports shoe brands," says Sameer Kothari, MD, Hindustan Foods Limited.

As part of the investment, the FMCG firm has entered into a share purchase agreement (SPA) to acquire a 100% stake in KNS Shoetech Private Limited. KNS Shoetech Private Limited has a factory located in Kundli Haryana, and is currently manufacturing the entire portfolio of sports shoes and sneakers, says the company.

"The acquisition of the Shares of KNS Shoetech is in line with the Company’s strategy to enter into Contract Manufacturing and expansion of its business into Sports Shoes. This acquisition will kickstart HFL’s journey in this industry and Company is looking forward to strengthening its position in the future by additional capex and expansion. India is one of the largest markets for sports shoes in the Asia-Pacific region. The industry comprises both domestic and international players, with brands like Nike, Adidas, Puma, and Reebok, and domestic brands like Bata and Lakhani, among others. Post completion of the transactions contemplated under the SPA, the Company shall hold 100% of the total Share Capital of KNS Shoetech, thereby will become the wholly owned Subsidiary Company of the Company," says the company.

Established in 1984, Hindustan Foods Limited provides shared manufacturing services to FMCG corporates. In 2013, Vanity Case Group bought a controlling stake in Hindustan Food Limited. At present, the FMCG firm has a presence in food & beverages, home care,  fabric care, beauty & personal care, health care & wellness, leather & sports footwear, and household insecticides, amongst others.

On Monday, the share price of Hindustan Foods Ltd closed 1.86% lower at ₹528.85 apiece on the BSE. This is in line with the broader BSE Sensex, which tanked 824.74 points or 1.26% to 64,571.88. The market capitalisation of the company stood at ₹5,962.40 crore as 19,481 shares exchanged hands on the BSE, as against the two-week average of 7,495 shares.