Motilal Oswal buys out Goldman Sachs in Cremica

Motilal Oswal Private Equity Advisors Private Ltd (MOPE) has bought the 20 per cent stake of Goldman Sachs in Ludhiana-based food company Cremica.

According to persons close to the development, the private equity (PE) arm of Motilal Oswal Financial Services Ltd (MOFSL) bought the stake for around Rs 70 crore, valuing the company at Rs 350 crore. MOPE bought the stake through its India Business Excellence Fund (IBEF).

In 2006, Goldman Sachs had picked up the stake through its unit Jade Dragon (Mauritius) Ltd for close to Rs 70 crore, indicating that its exit had been on par, said the sources. In 2009-10, Cremica’s turnover was close to Rs 400 crore.

Raamdeo Agarwal, chairman of MOPE, said, “The food industry in India is in a high-growth phase. If the economy has to grow from one trillion dollars to two trillion dollars in the next four to five years, branded food consumption will increase with growing income levels. Companies like Cremica, which have established a strong presence in the last few decades, will benefit from this trend.”

For Motilal Oswal, this is the second such investment in the food processing industry in the last two years. In 2008, it had picked up a 11 per cent stake in Pune-based dairy products maker, Parag Milk, for Rs 60 crore.

Cremica, according to Director Akshay Bector, is engaged in the manufacturing and marketing of biscuits, buns and breads, liquid condiments etc. The company has plans to foray into segments such as syrups, mayonnaise, jams, fruit juices and ready-to-eat curries, pastes, etc. The company has five manufacturing units across the country.

IBEF has so far made 11 investments across sectors such as bulk packaging, power transformers, auto components, fast moving consumer goods, etc. Though sector agnostic, the fund is said to be skewed towards themes that are linked to the domestic consumption story.