The acquisition will allow Mother's Recipe to expand its product portfolio into sauces and spreads and increase it distribution network from 150 to 350 in the Eastern region. Elmac has total revenue of Rs 40-50 crore with Rs 10 crore coming from the domestic market.
"Elmac has strong export presence, that will help us to expand in international market. We acquired this company for Rs 30 crore and we have additionally allotted Rs 10 crore for reburshing and upgrading their facilities. In the next three years we are targeting a sales turnover of Rs 70 crore under ELMAC brand from the region," Sanjay Desai, executive director, Desai Brothers. The company also said that the current management at ELMAC will continue and oversee production.
Mother's Recipe aims to grow their volumes from Kolkata and the Eastern region which currently contributes about 20 per cent of their domestic sales. "We are a debt free and cash generating firm. This acquisition has also been done through internal accruals. We have a corpus of Rs 50-100 crore for acquisition," said Balraj Dubey, VP commercial and procurement, Desai Brothers.
Desai also added that for faster growth the company is looking at an inorganic strategy that will allow it to increase its footprint and range of products. "We are looking to acquire a distribution company overseas. This will allow us to get into main stream marketing internationally. We will also look at spaces that will allow us to increase our product range," said Desai.
Mother's Recipe, according to Desai, will record a turnover of over Rs 200 crore and is eyeing growth of 25-30 per cent going ahead. "We are also betting on the ready-to-eat (RTE) segment which is growing at 25 per cent for us. While we have been exporting products in the RTE segment, we will soon launch 10 products for the Indian market," said Rajan Mathews, VP-sales and, marketing, Desai Brothers.
In terms of growth, the group is investing around Rs 40-50 crore in expanding its manufacturing plants in India. "We are putting up four to five plants in states like Pune, Gujarat, Karnataka and Kolkata. These will be operational in the next 18 months," said Desai.
The company is also keenly looking to tap the online segment for growth. "We will soon launch our own website. We are already working with ecommerce player Big Basket and we will soon get on Amazon too," said Sanjana Desai, head business development.
The Indian food industry presently stands close to $135 billion with a compounded annual growth rate of 100 per cent, said the India Brand Equity Foundation. It is expected to touch $200 billion by 2015. The total processed foods market size is Rs 1,500 crore, out of which ready-to-cook market size is Rs 600-700 crore and is expected to grow around 20-25 per cent over the next five years.