A Bector uninterested in serving Cremica fare

One of the promoters may exit after demerger

One of the three sons of Rajni Bector of Mrs Bector’s Food Specialities, which owns the Cremica brand of biscuits, bakery and condiments, is likely to exit after the ongoing demerger of it various businesses is complete.

Cremica, founded by Rajni Bector as a backyard firm about 35 years ago, is now controlled by three siblings Anoop, Akshay and Ajay, with equal shareholding. Last year, the three brothers agreed on a settlement in which the biscuit and bakery business will be demerged from the condiments business.

After the demerger, Anoop and Ajay will get biscuits and bakery, which contribute 65 per cent of the company’s total revenue, while condiments will be with Akshay. However, Ajay is unlikely to continue with the family business, said a source.

A DIVIDED PLATTER

• Cremica founded by Rajni Bector as a backyard firm in 1978
• Now, controlled by three siblings: Anoop, Akshay and Ajay, with equal shareholding
• Last year, the three brothers agreed on a settlement in which the biscuit and bakery business will be demerged from the condiments business. Sources said the demerger was to ensure returns to investors
• Anoop and Ajay will get biscuits and bakery, which contribute 65 per cent of the company’s total revenue, while condiments will be with Akshay
• Private equity firm Motilal Oswal PE, which currently has about 20 per cent stake in the company, will only have a stake in the biscuit business as part of the entire settlement process

Private equity firm Motilal Oswal PE, which currently has about 20 per cent stake in the company, will only have a stake in the biscuit business as part of the entire settlement process.

“After demerger, the private equity firm would eventually exit the business, either through a listing or a secondary sale. Management buyout is not being considered at the moment,” said the source.

Speaking to Business Standard, Akshay Bector, managing director of Mrs Bector’s, said, “The demerger process is on and it would take about six more months to complete the demerger.” The demerger would help each of the businesses to increase, Akshay said, declining to comment on the biscuits business.

Another source in the company said 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. People with knowledge of the matter have said the private equity backer has been assured a three times return on its investment and the demerger was part of the strategy to ensure returns to investors.

Most of Cremica’s business comes from institutional sales. Cremica is the sole supplier of buns, liquid condiments, batter and breading 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.

The biscuits business contributes close to Rs 500 crore, while condiments accounts for about Rs 180 crore. The total revenue was Rs 500 crore for the year ended March 2013.

According to Akshay, who will own the condiments business, products such as sauces, bread spreads, ready-to-eat curries and syrups were growing faster. This vertical recently entered the premium snack food segment. “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 the recently launched Opera chips. We plan to have a nation-wide presence in the condiments business. Over the next few years, we may look at entering the neighbouring countries,” he added.