November 8, 2010
Mercian Corporation to get out of fish feed
Wine company Mercian Corp. has decided to withdraw from its scandal-hit fish feed business due to declining sales.
The firm expanded into fish feed back in 1975 to utilise winemaking byproducts. The business generated sales of RMB1.35 billion (US$9 billion) in 2007 but has since faltered, with its sales declining to RMB5 billion (US$0.75 billion) in 2009.
It was revealed this past May that the segment had engaged in transactions to artificially inflate profits by more than RMB6.5 billion (US$0.98 billion) for about seven years from 2004.
Kirin Holdings Co., which owns 50.12% of Mercian, announced in late August that it would turn the winemaker into a wholly owned subsidiary December 1 via a stock swap.
Kirin aims to strengthen compliance at Mercian by putting it on a shorter leash. But with fish feed contributing little to the Kirin group brand and fish feed prices languishing at low levels, the parent decided to let the business go.
Kirin will decide whether to sell or liquidate the operations by year-end.