DSIJ Mindshare

Godrej Hershey’s JV In Trouble

On 22nd February 2012, media reports suggested that IL&FS Investment Mangers was planning to buy Hershey’s 51 per cent stake in the latter’s JV with Godrej. Due to this, the scrip of IL&FS rallied 6.41 per cent to Rs 31.50 on an intra-day basis. However, on the very same day, IL&FS provided a clarification to the Bombay Stock Exchange (BSE) that the company is a private equity fund manager and invests in various sectors and not directly in the company. IL&FS is not considering an investment in Godrej Hershey JV.

However, elaborating further on the JV between Godrej and Hershey’s, it was formed in the year 2007 after IL&FS sold its 40 per cent stake for an aggregate sum of Rs 270 crore to Hershey’s. The JV between Godrej and Hershey’s was formed so that the MNC would be able to tap the Indian market while on the other hand Godrej would get the required technical expertise from the MNC which in turn makes it a win-win situation for both. 

It seems though that from the beginning both the companies had different strategies of expanding the business. Hershey’s is interested in the chocolate business, competing with peers like Cadbury and Nestle. On the other hand, the Godrej Group focuses on driving growth in the confectionary as well as the beverages business.  With a crack forming in this JV, we expect Hershey‘s would continue with its business in India on its own while Godrej would continue with its original name i.e. Godrej Beverages and Foods.

Even in the past the Godrej Group has not been able to prosper when it has entered into any joint venture agreement. Take for instance, Godrej Sara Lee JV, Godrej Pillsbury JV, Godrej’s JV with Procter and Gamble and now it Godrej Hershey’s JV. Why is one of the leading FMCG players not able to maintain a strong relationship in any joint venture and grow rapidly?

We at DSIJ believe that Godrej should venture out with some of the existing players in the confectionary and the beverages segment which could further help the company to grow. For Hershey’s the competition from its peers is still very strong and it should focus on innovation of new products coupled with a good marketing strategy which could further create a better market for the company.

DSIJ MINDSHARE

Mkt Commentary28-Mar, 2024

Expert Speak29-Mar, 2024

Mindshare29-Mar, 2024

Multibaggers28-Mar, 2024

Interviews28-Mar, 2024

DALAL STREET INVESTMENT JOURNAL - DEMOCRATIZING WEALTH CREATION

Principal Officer: Mr. Shashikant Singh,
Email: principalofficer@dsij.in
Tel: (+91)-20-66663800

Compliance Officer: Mr. Rajesh Padode
Email: complianceofficer@dsij.in
Tel: (+91)-20-66663800

Grievance Officer: Mr. Rajesh Padode
Email: service@dsij.in
Tel: (+91)-20-66663800

Corresponding SEBI regional/local office address- SEBI Bhavan BKC, Plot No.C4-A, 'G' Block, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051, Maharashtra.
Tel: +91-22-26449000 / 40459000 | Fax : +91-22-26449019-22 / 40459019-22 | E-mail : sebi@sebi.gov.in | Toll Free Investor Helpline: 1800 22 7575 | SEBI SCORES | SMARTODR