Sadananda Maiya, promoter and chief of Maiyas Beverages & Foods Pvt. Ltd, is engaged in a serious tiff with at least one of the firm's two private equity investors and is likely to quit the company.
Maiya, whose family had founded MTR Foods before selling it to Norway’s Orkla in 2007, has stopped his involvement in day-to-day operations of the company after a falling out with Peepul Capital, one person privy to the development told VCCircle.
Peepul and Ascent Capital are the two PE investors in the firm, holding 42.5% and 41% stake, respectively. The rest of the stake is with the Maiyas. Peepul Capital had invested Rs 160 crore in Maiyas Beverages in May 2016.
The company has been bleeding heavily and notched up losses of around Rs 300 crore since it started its core business in 2012, after a five-year non-compete clause with Orkla ended.
Email queries sent to Peepul Capital and Maiyas Beverages did not elicit a response till the time of publishing this report.
Earlier in the day, The Times of India reported citing unnamed persons that Maiyas Beverages, which primarily offers instant mixes and ready-to-cook categories, had stopped supplying its products to retailers down south as the working capital dried up following the tiff between founder Maiya and Peepul Capital.
The tussle, as per the report, began last year when Maiya refused to bring in follow-on capital. He had also expressed willingness to leave the company, wherein he would take over the restaurant business and stay on as chairman of the packaged foods company in return for an annual remuneration.
Maiya had invested most of the proceeds from MTR's sale to Orkla, including Rs 60 crore on setting up a manufacturing unit, in Maiyas in 2012.
The company sells products such as butter murukku, rice kodubale (a popular snack in Karnataka), packaged rasmalai, badam milk and rava idli mix, among others.
Maiyas’ revenue stood at Rs 142.7 crore for the financial year 2016-17, higher than the previous fiscal. However, its net loss stood at Rs 54.2 crore during for 2016-17, according to VCCEdge, the data research platform of News Corp VCCircle.
The development marks the latest instance of founders and investors locking horns over governance and corporate strategy, among other issues.
VCCircle reported last month that the co-founder of dental clinics chain Axiss Dental Pvt. Ltd had taken PE investor India Equity Partners to court, claiming that he was forcibly ousted as chief executive officer.
Last year, Jayaram Banan last year bought back the stake held by India Equity Partners in popular south Indian restaurant chain Sagar Ratna Restaurants Pvt. Ltd after a prolonged tussle with the private equity investor.
Both parties had accused each other of violating the share purchase agreement.
In another case, global financial services firm JPMorgan's asset management arm was said to be in talks to exit hospital chain SevenHills Healthcare Pvt Ltd after a fallout with its doctor-turned-promoter.
Private equity firm New Silk Route is also involved in a legal spat with the promoters of Bengaluru-based Vasudev Adiga’s Fast Food Ltd. The latter had accused the PE firm, which had invested in the company in 2012, of mismanagement and oppression.