Modern Food Industries, the wholly-owned subsidiary of consumer goods giant Hindustan Lever, lost Rs 100 crore (Rs 1 billion) in potential sales after it lost out on an order from the government.

M K Sharma, Hindustan Lever vice-chairman told Business Standard: "The company has been affected as it has lost the supplementary nutritional foods business, which has been executing state government orders.

"With Modern Food becoming a private company after the government divested its balance stake to Hindustan Lever, this business faced uncertainty due to lack of government orders."

In November 2002, Hindustan Lever acquired a 25.99 per cent stake in Modern Food from the government for Rs 44.07 crore (rs 440.7 million). Earlier, in January 2000, it had acquired a 74 per cent stake in the company.

After acquiring management control in Modern Food, Hindustan Lever had implemented a strategy to turn around the company. Modern Food had registered a 52 per cent growth in sales in 2001.

It had rolled out a range of products -- breads to cakes, rusks to biscuits and a complete basket of value-added wheat-based products.

Hindustan Lever is already working out synergies with Modern Food to create an integrated wheat sourcing model for its products, such as chappatis and breads, across the country. The company has also launched a new bread called Modern atta bread.

Hindustan Lever has been betting big on its foods business and investing and focusing on its power brands -- Modern, Kissan, Knorr and Annapurna among others -- as part of its restructuring exercise.

For the quarter ended June 30, 2003, the foods business declined marginally to Rs 508. 29 crore (Rs 5.08 billion). Its foods and beverages power brands grew 8.3 per cent.