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Cremica Food Industries is set to raise Rs 150 crore from private equity investors in next three months for a minority stake. The company is learnt to be in advanced talks with atleast three private equity firms, including Tata Capital.
There may be a second round of fund raising after 2-3 years, according to a source with direct knowledge.
The company is looking at a valuation of more than Rs 800 crore, said the source.
Cremica Food Industries was established after the demerger of Mrs Bector’s Food Specialities, which was founded by Rajni Bector as a backyard firm about 35 years ago. Mrs Bector’s Food Specialities owned Cremica brand of biscuits, bakery and condiments.
Tata Capital did not respond to Business Standard queries.
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Last year, three sons of Rajni Bector -- Anoop, Akshay and Ajay decided to demerge the business into two segments – bakery and foods. Ajay exited the business, Anoop took over the bakery business, which is substantially owned by investors, and Akshay took over the foods and condiments business as the sole owner.
Cremica Foods now has just about Rs 200 crore in revenue and is growing at about 30% annually. “We plan to touch the Rs 1,000 crore mark in the next five years as we establish the company as a strong national player,” Akshay Bector said, declining to comment on the funding.
Bector, however, said that the company will be investing about Rs 250-300 crore over the next three years or so. Funds will be arranged through debt and equity.
Cremica Food Industries has a distribution network of just 10,000 outlets, primarily in North India and Mumbai. “We are spreading our reach and we will be across 2 lakh outlets in next 3-5 years nationally,” said Bector.
Most of Cremica’s business used to come from institutional sales. Cremica is the sole supplier of buns, liquid condiments, batter and breads to McDonald’s. It also supplies to Hindustan Unilever, Big Bazaar, Spencer's, the Taj group, ITC, Jet Airways, Air India, Barista, Café Coffee Day, Pizza Hut, Domino’s and Papa John’s.
“We plan to focus more on direct retailing rather than institutional sales. We’ll bring aspirational products and focus in the premium segment of the market, like Opera chips. There will be mayonnaise and sandwich dressings. We want to take sandwich to the villages. Going forward, we’ll be tapping the neighbouring countries,” said Bector.
Besides, the company is looking at smaller companies with Rs 50-100 crore revenue in India for acquisitions over the next 1-2 years. “Smaller companies with strong portfolio could be of interest,” said Bector.
The family had always kept the operations of the two businesses separate but started giving a merged balance sheet after Goldman Sachs invested in the company in 2006. Motilal Oswal PE invested in Cremica in 2010 by buying the stake of Jade Garden, the Mauritius-based unit of US investment banking giant Goldman Sachs, for about Rs 70 crore.
