DSG Consumer Partners has invested Rs 10 crore ($1.6 million) to buy a stake in Saraf Foods Ltd, a Vadodara-based freeze dried agricultural products company. It invested Rs 5.5 crore by subscribing to fresh equity and spent Rs 4.5 crore in a secondary transaction where the promoters of the firm diluted their stake, Suresh Saraf, managing director of Saraf Foods told VCCircle.
Saraf Foods commenced production in 1992 with a funding of Rs 1.25 crore from Gujarat Venture Finance Ltd (GVFL). GVFL exited the company in 2005. It competes with companies like Flex Foods, Dehradun and Accelerated Freeze Drying Company Ltd (AFDC), Kochi. It has also launched ready-to-eat snacks under the Pure Bitz brand.
The privately held firm plans to invest Rs 15 crore for expansion. Besides the fresh funding from DSG Consumer Partners, Saraf Foods is taking Rs 8 crore loan from SBI and the balance Rs 1.5 crore would come from internal accruals.
Saraf informed that the company would focus on increasing its capacity from 7 tonnes per day to more than 10 tonnes a day by the end of next financial year from the capital raised.
“DSG Consumer Partners owns around 29-30 per cent in the company as a consequence of this transaction. Me and my family owned 75 per cent in Saraf Foods prior to the deal and a UK based company Pedoria Ltd owned 25 per cent. Both, promoters of Saraf and Pedoria have diluted our stake proportionally to raise this capital,” said Saraf.
Saraf further added that the capital raised by DSG is already in use and will be deployed within the next six months. The company is aiming at revenues of Rs 200 crore by FY18 from projected revenue of Rs 26 crore for the year ending March 2014.
Deepak Shahdadpuri, Managing Director, DSG Partners Asia Pte Ltd, said, “We have built a track record of investing for the long-term with an investment horizon of 6 to 10 years, and bring significant experience in the food and beverage processing sector.”
DSG Consumer Partners, which focuses on early stage consumer businesses in Asia and India, invests between $1 million to $10 million in companies with an investment horizon of 6 to 10 years. It recently invested in Kerala-based Tierra Food India.
Its investments include Exito Gourmet Pvt Ltd, a Chandigarh-based cheese maker and India’s largest winemaker Nashik Vintners. It portfolio also includes Bakers Circle, Indian Home Gourmet, Saffronart, Cleartrip, Salt Water Café and Smoke House Restaurants.