Sequoia Capital India has invested $30 million in Indore-based Prakash Snacks Pvt Ltd for an undisclosed stake in series A round of funding. Established in 2002, Prakash Snacks manufactures packaged food and snacks under the brand name Yellow Diamond. Its products include potato chips, puff biscuits, wafers, fruit juices and snacks.
The funds raised will be utilised for expanding manufacturing facilities and also for brand building.
“We believe that the snacks market is worth more than $1.5 billion and growing at 25-30 per cent every year. While there are many entrants in this space, there are only four or five serious players in the key sub-segments who have built a solid distribution network and supported the brands with a strong value proposition for customers. We genuinely believe that Prakash is one of the key players in this market, and can continue to scale up the business by building its distribution, strengthening its already strong brand proposition and expanding into multiple segments,” said VT Bharadwaj, MD of Sequoia Capital.
According to Bharadwaj, like any other consumer good category, there are many players who have entered or are planning to enter this space, since this is a fast-rowing category. However, given the immense scope, he believes that many players can emerge winners here.
“The company has been built brick by brick and has self-funded its growth through internal accruals. And it has been profitable from Day One. Now, the company wants to continue its strong growth trajectory by expanding into multiple segments, growing its geographic & distribution footprint and strengthening its brand proposition to customers,” added Bharadwaj.
Since its inception, Prakash Snacks has been witnessing a steady growth in terms of revenue and profit. Between FY’07 and FY10, the company’s revenue grew over fourfold to Rs 154 crore, according to VCCedge, the financial research platform of VCCircle. Incidentally, regional players in FMCG products have been growing pretty fast in India and across many categories – giving bigger rivals including top global firms a run for their money.
There had been deals of similar nature in the past. Last year, Motilal Oswal Private Equity Advisors picked up 22 per cent stake in Ludhiana-based Rs 500 crore Cremica Foods, which makes biscuits, condiments and sauces, and supplies to McDonald’s, Pizza Hut and Cafe Coffee Day.
Sequoia Capital has been making bets on India’s domestic consumption story through its investments in companies like kitchen appliances firm Stovekraft Pvt Ltd, whose flagship brands are Gilma and Pigeon; Genesis Colors, which owns premium Indian fashion labels like Satya Paul and Bw!tch; FMCG firm Paras Pharmaceuticals and most recently, Lovable Lingerie.
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