Diversified RP-Sanjiv Goenka Group has picked up a controlling stake in Gujarat-based packaged foods company Apricot Foods Pvt. Ltd in a bid to boost its eatables business, according to a media report.
The group has acquired 70% in Apricot Foods, he firm, which markets its affordable snacks under the brand Evita, for Rs 440 crore ($68.6 million). Apricot’s founders—Sanjay and Rajesh Patel—will hold the remaining 30% stake as of now, Mint reported.
Apricot Foods, which operates manufacturing facilities in Rajkot and Hyderabad, claims to have annual revenues of around Rs 200 crore. The company, which has nearly 400 employees, is known to be producing 19 lakh snacks pouches in a single day.
The RP-Sanjiv Goenka Group, which has recently launched its eatables business under the Too Yumm brand, is going to invest Rs 150 crore to scale up its snacks business.
Goenka splitting businesses
The RP-Sanjiv Goenka Group early this year in a stock market disclosure revealed its plan to split flagship company CESC Ltd into four listed firms that will focus on power generation, distribution, retail and information technology sectors.
As part of the restructuring, the company will merge units CESC Infrastructure Ltd, food retailing firm Spencer’s Retail Ltd and Music World Retail Ltd into itself. The company will then be divided into CESC Ltd, Haldia Energy Ltd, RP-SG Retail Ltd and RP-SG Business Process Services Ltd.
After the restructuring, CESC will hold the power distribution business while Haldia Energy will be the holding firm for the power generation and renewable energy business.
In 2016-17, the power generation business reported revenues of Rs 2,034.23 crore, which was 28% of the turnover of CESC.
RP-SG Retail Group will hold the retail business of Spencer’s Retail, excluding its operations in Gujarat. The businesses to be merged into RP-SG Retail had total revenues of Rs 2,000 crore in FY2016-17.
RP-SG Business Process will house the information technology business of the company. It will also include the company’s investment in Spen Liq Pvt. Ltd, a wholly owned arm. Spen Liq has a stake of about 55% in listed BPO firm Firstsource Solutions Ltd.
The total income from operations of CESC Ltd stood at Rs 14,202 crore in FY2016-17.
Several snack manufacturers in the otherwise unorganised space have already geared up to make their debut on the stock market. Gujarat-based potato chips and snacks maker Balaji Wafers Pvt. Ltd may float an initial public offering (IPO) next year as it looks to fund its expansion plans while eschewing private equity investment as well as bank credit.
Prataap Snacks Ltd, the maker of Yellow Diamond Chips, has received capital market regulator the Securities and Exchange Board of India's approval to float an IPO.
Another listed firm in the space is DFM Foods, which operates under the brand Crax. It counts PE firm WestBridge Capital as a key shareholder.
Other regional players have also attracted private equity interest in the past. In 2014, mid-market-focused private equity firm Lighthouse invested $15 million in Rajasthan-based snacks maker Bikaji Foods International Ltd for a 12.5% stake. In 2011, Sequoia had invested $30 million in Prakash Snacks.
Recently, Rajkot-based Gopal Snacks Pvt. Ltd hired an investment bank for its first external fundraising.
Recently, the diversified Inox Group was reported to be in discussions to acquire Kanpur-based Daksh Fun Marketing Pvt. Ltd.
According to a report by research firm Frost & Sullivan, the size of India's snacks market is approximately Rs 50,000 crore. The segment grew at a compound annual rate of 16% between 2011 and 2015. A large part of the market is dominated by unorganised players, but there is a gradual shift towards branded players.