FMCG firms eye a big bite of Unibic's biz

Unibic Australia, the Rs 300-crore speciality biscuit maker, has put its Indian arm on the block.

Unibic Australia, along with former Britannia hand Nikhil Sen, now the managing director of Unibic India, holds 88 per cent in the company. The rest is held by Mauritius-based private equity fund Lighthouse Partners, which came on board in 2008. The new partner will be issued fresh equity in the company.

Sources aware of the developments told Business Standard that for the last two months, a formal process of identifying a strategic partner was on. They said large fast moving consumer goods players in the foods space like GlaxoSmithKline Consumer and PepsiCo, along with a few other multinational players, were in the fray to acquire a majority stake in the company.

But Marico, they said, had emerged as the front runner and a deal was expected to be closed this week. But last minute hiccups saw the deal with Marico fell through.

Unibic has a market share of close to 10 per cent and a turnover of Rs 75 crore. The company is valued at close to Rs 200 crore.

Saugata Gupta, chief executive officer, consumer products division, Marico, said he was not in a position to comment on market speculation. Sen of Unibic said he could not comment on market rumours.

But the sources said the process of seeking a strategic partner will continue despite the setback.

Unibic has been operating in India since 2004. The company has a dozen-odd products in the cookie space, including Chocolate Chip cookies, Oatmeal cookies, Butter, Cashew, Choconut and Jamz cookies, priced between Rs 12 and 35.

The Indian biscuit market is estimated to be Rs 8,000 crore in size, with the glucose segment constituting 60 per cent. The premium, or value-added, market comprising cookies, creams, etc, makes the rest of the market.

But the value-added market is where much of the action is happening, with existing players such as Parle, Britannia and ITC targeting this end aggressively with new products and new players such as Kraft looking to strengthen their presence.

At the moment, Kraft has Oreo cookies at the premium end. Unibic also operates at the premium end of the market. Company executives say the target is to have a 15 per cent market share of the cookie market in the next few years.