UTI Venture invests $6 mn in Vallabhdas Kanji

Mumbai, November 1, 2006: Bangalore based UTI Venture Funds (UVF), the Private Equity arm of Unit Trust of India (UTI) group, has made a private equity investment worth USD six million in Vallabhdas Kanji Limited through its Ascent India Fund.

With a 2006-07 expected turnover of Rs 150 crore, slated to cross Rs 300 crore by end 2008, VKL is part of the Rs 500 crore Kanji Morarji Group, that includes Kancor Flavours and Extracts and Auto Hangar (India).

The company is led by Mr. Ajay Mariwala, Managing Director, who is a Chemical Engineer from Purdue University, USA and a Management graduate from the Sloan School of Management, Massachusetts Institute of Technology, USA. Headquartered at Kochi, Kerala, Vallabhdas Kanji Ltd (VKL) is Asia's largest spice processor and India's largest exporter of value-added spices.

Commencing its operation in 1935 as a whole spice trader, VKL has been a pioneer in global spice trade and a company credited with establishing standards in black pepper that are still the global reference. Today, VKL has grown to be a globally competitive, dominant and professionally managed enterprise, with a clientèle that spans 40 destinations in 30 countries and includes several Fortune 500 companies.

Over the last two years, the Company has forayed into two new lines of business "� seasonings and private label. Forward integration into these higher value products have provided the company significant impetus to growth and profitability. VKL is currently a key supply-chain and ingredient-solutions partner to leading fast food, snack-food, processed food, ready-to-eat-meal and other food companies in India and abroad.

VKL also packs spices and seasonings in the brands of some of the premier companies, which are retailed in supermarkets and food-service chains in several countries, including US, UK, Australia, etc. VKL packed products have been on supermarket shelves in leading stores and also consumed at leading restaurants and food service outlets.

VKL has three manufacturing locations at Kochi , with an installed capacity of 20000mts of seasoning blends, and subsidiaries in the US and Germany. The company has plans to start further subsidiaries in the UK and South East Asia.

Mr. K E C Raja Kumar, M D & Chief Executive Officer, UTI Venture Funds, said: "VKL is poised to assume leadership in the agri-food outsourcing space. Our capital will help VKL consolidate and expand in international markets. We are bullish on VKL's growth plans under the able leadership of Mr. Ajay Mariwala."

Subsequent to the investment, Mr. Sunil K Kolangara, Director, Private Equity, UTI Venture Funds, joined the Board of VKL.

The investment is planned to be used to acquire new businesses and also enhance production and packaging capacities in India and overseas.

Commenting on the private placement, Mr. J V Mariwala, Chairman, VKL, said, "We are delighted to have an equity partner of the caliber of UTI Ventures. This would help us fast-track our ambitious growth plans and help us achieve our mission of making VKL a truly global organization, one that is recognized and respected worldwide by the Food Industry and consumers alike as the supplier and the Company of Choice."

According to Mr.Ajay Mariwala, Managing Director, VKL will witness growth, both organically and through acquisitions. He said, "We are working on a strategy to acquire unique companies in India and abroad to provide scale to the business. UTI Venture's support will help us achieve our growth plans. We have already identified markets and some companies and you will soon start seeing activities on this front.

Also, with the continued thrust in international marketing, we hope to significantly increase our presence in large retail chains across US and Europe. VKL will be at the forefront of the migrating spice pvt label packing from consuming to producing countries, in other words, something akin to the BPO phenomena."

The company is looking to significantly scale up its operations and profitability and is targeting an Initial Public Offering.

The company also has plans to start a processing facility for black pepper in Vietnam. According Mr Mariwala, Vietnam provides an alternate processing location whereby VKL can de-risk its supply chain besides substantially reducing logistics cost for shipments to customers worldwide. He said, "In the next three years we will also have the opportunity to participate in the phenomenal growth of the Vietnamese economy for all of our Divisions." The Company has already procured state-of"�the-art processing and steam sterilization equipment and plans to install it at Vietnam in early 2007.

ILF&S were the advisers to VKL for the private placement.

About UTI Venture Fund:

UTI Venture Funds (UVF) is the Private Equity arm of the UTI Group, with assets of about Rs 10 billion under management. UVF's Ascent India Fund is a growth capital fund backed by marquee Indian and foreign institutional investors that has a distinct mid market focus. Its key investment themes are India's outsourcing strength, both in services and manufacturing as well as consumption led growth in domestic industries. UVF invests in unique businesses and passionate leaders, serving their needs for growth and expansion capital thus enabling promising Indian Companies to leverage the 'India Advantage' and achieve success in global markets. (www.utiventurefunds.com)