Actis, a global private equity major, is looking at consolidating the presence of Bangalore-based Nilgiris Dairy Farm Limited. Actis holds 65 per cent stake in the company, which operates a chain of retail stores through franchisees and has a stronghold in the southern region. The rest of the stake is held by the promoter's family of Nilgiris Dairy Farm. The company recently commissioned its 100th store in Chennai and is looking at touching the 200 store mark in another year.
The global fund, recently tangled in a board room battle with promoters of Nilgiris Dairy Farm, is embarking on this expansion strategy to build valuation, a step towards a possible exit over the next one year. While Actis declined to comment on their exit plan, industry analysts detail that being a private equity fund, an exit roadmap has to be eventually charted out given that it has been nearly three years since Actis made a $65 million investment in this company. Industry information indicate that Actis is actively involved in turning around this company and slowly moving towards profitability after a period of sustained losses.
According to investment bankers close to Actis, there is also a possibility that the promoter family may also explore an exit along with Actis if the valuation was right. "It is too early to decipher what the promoter family will do," the banker noted. The family members could not be reached for comments.
In a recent conversation with Business Standard, J M Trivedi, partner, Actis, said differences between them and the family had been sorted out and both were investing to grow the business. According to him, the plan is to open around five new stores every month through the franchisee route and take the total number of stores to 200 over the next 12 months.
“Grocery retail is the most defensive segment and our sales per sq feet has been steady. We have our niche in South India and we will grow our business actively,” he said. In addition to operating the retail stores, Nilgiris Dairy Farm also has revenues from general trade, mostly from cereals.
Actis is currently investing from a $2.9-billion Actis Emerging Markets Fund III.
