Capital Foods founder denies selling out

Capital Foods' consolidated sales (March 2013 end) were Rs 145 crore, growing at 17% over previous year

Amid speculation that Japanese foods giant Nissin was looking to buy out Mumbai-based Capital Foods, Ajay Gupta, the latter’s founder-chairman, has denied seeking to exit the business.

Gupta said Nissin had approached his firm with a proposal two years ago. “We are one of the larger processed foods companies. So, interested players will approach us. But that doesn’t mean I intend to sell out,” he said.

Capital Foods accounts for brands such as Top Ramen noodles, Ching’s Secret and Smith & Jones noodles and sauces.

While Gupta holds 60 per cent stake in the company, Kishore Biyani’s Future Ventures holds the rest. For 2012-13, Capital Foods’ consolidated sales stood at Rs 145 crore, about 17 per cent more than the previous year. Operating profit was Rs 16 crore, a rise of eight per cent compared to 2011-12.

Biyani, chief executive, Future Group, said a few companies were in talks with Future Ventures for a stake sale. “I cannot comment till the deal is finalised,” he said, adding, “We are getting the valuation we want.”

Of late, there has been speculation that Future Ventures is looking at an enterprise value of three-four times the sales, in line with the benchmark in the fast-moving consumer goods segment. In recent months, deals have also been struck at six-seven times the sales. These deals include private equity firm Sequioa’s Rs 100-crore investment in Ahmedabad-based Vini Cosmetics for a nine per cent stake in August, valuing the firm at about Rs 1,100 crore. Earlier, Singapore-based Arisaig Partners had acquired 3.47 per cent stake in McDonald’s franchisee Westlife Development for Rs 180 crore, valuing the firm at about Rs 5,200 crore.

Future Ventures is exiting other areas such as apparel manufacturing, where it is believed to be close to offloading stakes in brands such as Biba.