Maiya set to step on the gas with PE funds

Sadananda Maiya, one of the key figures in developing India’s ready-to-eat segment into a strong Rs 800-crore market, is understood to be in talks with private equity (PE) firms to fund expansion. The 63-year-old son of Parampalli Yajnanarayana Maiya, who founded the iconic MTR Restaurants chain in 1924, parted with the family’s restaurant business to launch MTR Foods in 1994. This was sold to Norway-based Orkla Group for Rs 300 crore in 2007.

Five years after the no-compete clause with the family business terminated, Sadananda Maiya is understood to be in active parleys with at least two PE funds to expand his fledgling business — Maiya’s Beverages and Foods, which sells a range of ready-to-eat foods under the brand ‘Maiyas’.

Sadananda has been aggressively focusing on the market across South India and it is understood he may raise about $20 million by the end of next quarter. Sadananda has kick-started business expansion with an aggressive Rs 60-crore investment in a fully automated factory on 20 acres in Bangalore. A part of that investment was made through a short-term debt from a bank. During the expansion of MTR Foods, Sadananda had raised PE from JP Morgan and Singapore-based Aquarius in 2000.

“We may require resources, as we are expanding the business at a fast pace,” Sadananda said. He however, declined to specify the sum he might raise and didn’t comment on the option of PE funds. According to the business plan, Sadananda would first roll out a range of spices and, subsequently, instant mixes. This would be followed by ready-to-eat foods and frozen foods. Maiya’s Beverages and Foods has already rolled out 80 stock keeping units (SKUs) and is slated to touch the 300-SKU mark in a year. Sadananda has been carefully handpicking machinery and customising it to suit the Indian product range.

MTR Foods, the company Sadananda once helped become one of the market leaders in the country, accounts for about half the market share in the segment, growing 15 per cent a year. Companies such as ITC Foods, GRB Group and Haldiram’s are working on boosting their shares.

An aspect Sadananda plans to focus is the freshness of products, especially spices. Of the 20 acres Sadananda has in Bangalore for the production unit, about half would be used for captive cultivation of vegetables and essential ingredients for its range of products. “Sometimes, in an off-season, ingredients are not up to the mark. So, we are taking this route. In addition, to ensure constant supply of ingredients, we have gone for captive farming as well,” he said.

Maiya’s Beverages and Foods is also betting big on the frozen foods segment, which, according to Sadananda, is expected to grow exponentially in the coming years. “When we started MTR Foods earlier, the cold chain logistics network in the country was poor. Now, it’s an established business. The network would strengthen further, as modern retail is taking off,” said Sadananda. “In addition to such networks in India, there is major demand in global locations for our products, where the cold chain network is sturdy. We are already getting enquiries from Australia, Japan, the US and London,” he added.

Sadananda says though the market is more mature now, there aren’t enough “focused and specialised players”, adding this creates opportunities for entrants.