Vadodara-based Manpasand Beverages plans southern foray

Plans to increase capacity by 80% by FY18; scouting for land in Andhra

Vadodara-based listed soft drink player Manpasand is now eyeing national presence, and it is all set to enter the southern markets soon. The company is scouting for land in Andhra Pradesh and has already set up a team for the southern foray.

As such it plans to expand capacities by 80 per cent over FY16 to FY18 with an estimated investment of about Rs 320 crore.

Manpasand had raised close to Rs 400 crore through an IPO last year. It has expanded its current facilities and launched new products to fan its national ambitions. Now the company plans to enter the southern markets with its entire product range, starting from its flagship mango drink Mango Sip to the latest launch Coco Sip, informed Dhirendra Singh, chairman and managing director of Manpasand.

He added that they are in the process of finalising land for setting up a factory in Andhra Pradesh, and the overall project cost is estimated to be around Rs 150 crore.

Manpasand currently has a strong presence in the west and north markets, and as Singh claimed it is the number four beverages player in Uttar Pradesh.

Manpasand started off a regional player with its mango drink brand Mango Sip (which till date accounts for nearly 80 per cent of the company's turnover), but is now planning to emerge as a pan India player.

With a stronghold in the rural markets, the company launched a carbonated fruit juice brand Fruits Up, to woo the urban consumers. Singh said that while Fruits Up is aimed at the urban consumer, there were plans to take it to the semi-urban and rural pockets next year.

The fruit juice market size is around Rs 13,200 crore and is growing at 19 per cent. A Motilal Oswal Securities analysis expected Manpasand to improve its market share from 5 per cent in 2016 to 7.5 per cent in 2018 in the fruit juice market.

Low penetration of 30 per cent and per capita annual consumption of soft drinks in India at 16 litres versus166 litres in the US, provide significant market opportunities for growth.

The rural market contributes nearly 55 per cent of Mango Sip's sales. Fruits Up as a brand too has evolved, and it contributed nearly 20 per cent of Manpasand's revenues in FY16. It clocked a turnover of Rs 556 crore last fiscal with a net profit of Rs 50 crore.

The company already has 200,000 retailers, 2,000 distributors, over 200 super stockists, and plans to add 500-1000 distributors in the medium term with a special focus on south India where it has a low penetration.

It has planned to increase its capacity by 80 per cent over FY16-18 (58 per cent increase for fruit drinks and 300 per cent for carbonated fruit drinks) increasing capacity from 125,000 in FY16 to 225,000 cases per day in FY18. New facilities in Haryana, Dehradun and existing Varanasi plant, would cater to north and north east, while facilities in Vadodara would cater to west and south. Add to this the proposed plant in Andhra that is expected to go onstream by FY18 or so.

As for east, Singh said that the Varanasi plant already caters to that market, and going forward there were plans to enter the eastern India markets more actively.

The company turned debt-free in the fourth quarter of FY16 by repaying long term debt of Rs 100 crore from IPO proceeds. Singh said that the for the proposed expansion, he was open to raise some bank debt if needed.

Motilal Oswal expects Manpasand to clock a 49 per cent CAGR in revenues and 63 per cent CAGR in PAT over FY16-FY18 driven by new product launches and geographical expansion.