More dishes brewing in packaged foods

Parampara looks at offload route; Orkla, McCormick in initial talks.

Inbound acquisitions in domestic packaged foods are set to continue. Following the sale of family-owned MTR Foods and Kohinoor Foods, another such Indian ready-to-cook company is on the block. The Chillal family of the Pune-based Parampara Ready Mix is considering selling the company.

It has begun negotiations with potential buyers. The deal is expected in the range of Rs 80-100 crore. Parampara was looking for a strategic investor who could take the business to the next level, as it has not been to expand successfully, sources in the know said. Also, the mounting interest shown by foreign companies in India’s packaged food sector makes the promoters feel this is the right time to offload, they added.

According to sources, Norwegian major Orkla ASA and US-based McCormick have started initial talks with the promoters. A few private equity firms and domestic companies have also shown interest. However, the names could not be ascertained. Parampara Foods has asked Deloitte, the consultancy major, to find potential buyers. The market for the organised or branded packaged foods in India is estimated at a little over Rs 10,000 crore and growing at 15 per cent yearly. The ready-to-eat market is worth about Rs 300 crore.

The Chillal family consists of Gurunath Chillal, his wife, Meena, and their son, Amit. The three together hold all the equity. The company’s revenue is not known. Amit Chillal refused to comment.

Parampara has a wide range of non-vegetarian products such as butter chicken, prawn masala, tandoori chicken, chicken moghlai and fish fry. The 60-year-old company has a product range of seven starter and 26 main course variants. According to data from VCCedge, a financial research firm, the size of merger and acquisition deals in Indian packaged foods till date this year has risen by 200 per cent as compared with last year. There have been six deals worth $120 million so far, against five deals worth $37 mn last year.

The $10.6-billion Orkla, a potential buyer, entered India in 2007 by acquiring the Bangalore-based MTR Foods for $80 mn (Rs 364 crore) from the latter’s promoters, the Maiya family. In May this year, Orkla had acquired Pune-based Rasoi Magic Foods, maker of spice mixes and ready-to-eat foods, through its Indian subsidiary MTR Foods. Rasoi Magic’s product portfolio comprises spices, spice mixes and ready-to-eat foods such as paneer tikka, veg kadhai, dum aloo, paneer makhanwala, malai kofta, palak paneer and methi mutter malai.

According to a source close to the development, Parampara’s non-veg products will fit into Orkla’s Indian portfolio, filled with mostly vegetarian products of the recently acquired Rasoi Magic.

When asked, Hakon Mageli, director (corporate affairs), Orkla, said, “I cannot comment, except saying we are positive to the Indian food and beverage market. It is a growth market. We are very satisfied with the development for our promising Indian business.”

Last month, McCormick acquired 85 per cent in Kohinoor Speciality Foods India Pvt Ltd, a joint venture with the Arora family-owned Kohinoor Foods Ltd, to market and sell the latter’s food products in India, by investing $115 mn.

Satish Rao, McCormick’s vice-president, business development, in an earlier interview with Business Standard , disclosed the company’s plans for further buyouts in India.