Vitan Agro Industries Ltd is planning to acquire A-Diet Express Hospitality Service Limited, a Chennai-based corporate and healthcare catering house for an undisclosed amount it said on Wednesday.
Established in 2005, A-Diet Express provides its food service to industrial, IT, education and healthcare sectors.
With an annual revenue of over Rs 25 crore, it manages 12 industrial canteens and serves over 50,000 meals a day, as per its website. It also claims to manage six institutional mess. In the healthcare segment, it serves over 27,000 meals a day to 12 hospitals across Tamil Nadu.
Promoted by Vishnu Prasad Chokani (non executive chairman), Vitan Agro is also looking to appoint Singara Babu Indira Kumar, who is currently the managing director of A-Diet Express, as its own managing director. Kumar, who has over a decade long experience in the hospitality sector, has been working as an independent director of Vitan Agro since February this year.
The deal could be a potential case of reverse merger as Vitan itself is a tiny firm and had revenues of Rs crore in the year ended March 31, 2015. The company's share price had rocketed in the past one year rising around 37 times to hit Rs 364 a share in June before losing half of its value. At the current market price it has a market cap of Rs 153 crore.
Vitan Agro scrip was up 2.2 per cent and quoting at Rs 184 a share at 2:45 PM on the BSE in a weak Mumbai market on Wednesday.
Despite repeated calls the spokespersons of the two firms could not be reached out for comments on the proposed deal.
Vitan Agro, which was formerly known as Vitan Departmental Stores and Industries Limited and specialises in agro-based FMCG goods, is also eyeing acquisition of Amirdam Food Private Limited, it said today without elaborating on the business of this firm.
Launched in 1980s, Vitan Agro is engaged in the trading of products such as pulses, grains, spices, edible oil, incense sticks etc. It has been looking to launch speciality stores to sell its agro-based products besides entering the institutional catering business for the last few years.
Institutional catering has a large potential market especially in business and IT hubs such as Bangalore, Chennai, Pune, Hyderabad, Delhi NCR etc.
Some big players in the institutional catering business includes global names like Sodexo and Compass. Moreover, Uday Kumar, who has worked for Radhakrishna Hospitality Services (now part of Sodexo) and later ran his own institutional catering business under Epicurean Enterprises before selling it to global corporate catering giant Compass in 2009, is also looking to enter the catering business through his restaurant chain Nalas Aappakadai.