Rajkot-based snacks maker Balaji Wafers Private Limited is now preparing to come out with an initial public offering (IPO) to raise fund for its future expansions. The company that was in talks with private equity (PE) funds to sell stake, has dropped the idea of stake sale for now.
“We are now preparing to come up with an initial public offering (IPO) to raise funds for our future expansion. The company plans to offer not more than 10 per cent equity shares of the company,” confirmed Keyur Virani, director of Balaji Wafers adding that “As Indian economic and political scenario is changing and country’s economy will surely grow in next five years under the new government, and hence we have decided to take benefit of this and plan for IPO.”
Last July Balaji Wafers had decided to sell 15 per cent stake to PE funds and had started an exercise for it. Around December the company was in talks with investment firm Capital International Privet Equity Funds (CIPEF), however, the deal did not go through as Balaji felt that CIPEF’s offer was below Balaji’s market valuation. According Virani, the present market value of Balaji Wafers is about Rs 4,000 crore and the company will raise around Rs 400 crore from the equity markets.
Balaji Wafers plans to enter the north and south Indian market and also set up manufacturing units there. To fund this expansion project, the company had earlier decided to offload 15 per cent stake. The company had hired Ernst and Young to find suitable investors, and so far around 15-20 investors have shown interest. Several multinational heavy weights like Kellogg’s India and Pepsico had shown interest to acquire a stake in the Rajkot based company.
Balaji had earlier indicated that while it was in talks with PE funds, it was not open to sell stake to the extent that it would loosen the Virani family’s hold over the company. Virani had said that through the stake sale the promoters were actually trying to create a better management for Balaji Wafers.
It enjoys around 65 percent market share in western Indian snacks market and is present in the states of Gujarat, Maharashtra, Goa, Rajasthan and some parts of Madhya Pradesh. Its current turnover is over Rs 1,200 crore and is expecting 25-30 percent growth in 2014-15.
The company had doubled its production capacity in 2013 at its Valsad plant in south Gujarat with an investment of Rs 50 crore in line with its strategy to expand beyond west India. Rajkot plant produces 1,200 kg potato wafers per hour while in Valsad plant production capacity is around 2,500 kg per hour.
