India's Heritage Foods is looking to raise INR3.5bn (US$89m) after issuing 1m shares to a local investment fund.

The company has issued the shares to Kotak India Focus Fund on a preferential basis after deciding to shelve plans for a so-called "qualified institutional placement" of shares.

The move comes as Heritage looks to expand its retail business, called Fresh@.

Heritage has 44 Fresh@ outlets with seven in Chennai, 12 in Bangalore and 25 in Hyderabad.

In the cities of Kolar, Krishnagiri, Chittoor and Medakatan, Heritage is also investing US$5m to set up fruit and vegetable processing and packaging plants.