 "Motilal Oswal invests Rs 100 crore in Ganesh Grains")
Kolkata-based Ganesh Grains, a company engaged in manufacturing and marketing of branded food staple, on Tuesday announced that it has got a private equity investment of Rs 100 crore from Motilal Oswal. With this, Motilal Oswal has become a 'significant minority shareholder' in the company. In general, the PE firm typically picks up 20-40 per cent stake in companies.
In the last ten years, Motilal Oswal has invested in close to 23 company, of which half are either family-owned or first-generation enterprises. However, what makes Ganesh stands out is its roots in the bylanes of Barabazar in Kolkata, the home of many Marwari enterprises. However, not many small or mid-sized family enterprises from the east have opted for private equity investment to bring an essence of professionalism in the company.
Binay Kumar Agarwal, director, Fast Capital Market Limited, has been pushing at least four Kolkata-based companies to tie-up with private equity investor. However, so far he has not been able to convince any of the promoters, who perceive PE investments as an unwanted intrusion.
"I find the Marwari companies in Kolkata to be extremely conservative in approach when comes to private equity investments. They are not open to the idea of scrutiny and they don't want them to be questioned by anyone," says Agarwal.
Breaking the stereotype, Ganesh expects Motilal Oswal to bring in professionalism to expand market reach, strengthen distribution network and research and development facilities.
Started way back in 1936 as a small mill or Chakki in Bara Bazar, Manish Mimani took over the reins around 1994, when the company forayed into packaged staple food business. Around 2006, Ganesh set up its first manufacturing unit and clocked a turnover of around Rs 20 crore. At present, the company's turnover is close to Rs 500 crore, with around eight manufacturing facilities and an installed capacity of around 1400 tonnes per day.
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"Being a family driven business, coming out of a conservative mindset, we decided to go for PE investments as we thought that Motilal Oswal can lend its experience to bring in professionalism and management bandwidth. The funds will be used for expansion of capacity, deepening the distribution network and brand building," says Mimani.
At present, Ganesh's operations are concentrated in West Bengal but it plans to expand in eastern India states like Bihar, Jharkhand, Orissa, Assam and North East. Last year, the company beefed up its installed capacity by 600 metric tonne a day by setting up manufacturing units in Hyderabad and Varanasi. According to Mimani, operating only in West Bengal, the company has the potential to clock a turnover of Rs 800 crore in the next two years and Motilal Oswal is expected to help achieve this goal through business restructuring. In West Bengal, Ganesh commands nearly 38-40 per cent market share in the packaged atta segment by catering to the demand in West Bengal alone, while it holds first position nationally in packaged Maida and Sooji segments, he added.
Over the last few years, Motilal Oswal has been investing in some of the small home grown companies. Recently, it invested Rs 110 crore at Bengaluru-based Dairy Classic Ice Creams. Motilal Oswal is planning to launch its third private equity fund with a corpus of around Rs 2,000 crore in January 2017.
"This is our first investment in eastern India. The food staples industry is undergoing a fundamental transformation. The combined effects of demographic shifts and rise of new consumption centres will have a profound impact on the shape of demand over the next few decades," said Vishal Tulsyan, Managing Director and CEO, Motial Oswal Private Equity.
The share of organized sector in the food staple market, which is close to Rs 75000 crore, is less than 10 per cent. However, the organized market is growing at a healthy pace of 20-25 per cent.