Sunrise Foods eyes strategic sale; valuation pegged at Rs 2,500 crore

Sunrise Foods, the Kolkata-based maker of packaged spices, which competes with the likes of Everest and MDH Masala, has begun the groundwork for a strategic sale that could see its promoters dilute majority stake in the company, said persons in the know. The promoters, which is the Sharma family from Kolkata, may also choose to exit the firm altogether, the sources said, depending on the contours of the deal.

The Sharmas are eyeing a valuation of Rs 2,500 crore, which is two-and-a-half times estimated FY19 sales of Rs 1,000 crore. The company has appointed JM Financial as the investment banker on the deal. A mail sent to JM Financial elicited no response till the time of going to press. Shailendra Prakash Sharma, director, Sunrise Foods, said he could not comment on market speculation.

The Sharmas, who've been spice traders for decades, set up Sunrise Foods in Kolkata in 1975. The Sunrise brand is into whole, grounded and blended spices, with manufacturing units in Kolkata, Agra, Jaipur and Bikaner. The company also exports to neighbouring markets such as Bangladesh and Nepal.

Sources said the Sharmas may either choose to exit the company in one go or may phase it out over a few years. JM Financial’s mandate includes tapping food companies that are into branded commodities and growing the Sunrise brand both in India and internationally. Sunrise, said industry experts, had a strong brand equity in the east and is known for its standardisation and quality-consciousness.

“The promoters may exit completely or hold minority stake and subsequently exit over the next few years. The promoters probably feel they have achieved what they could and it is time to hand over the reins to a player with deeper pockets,” an official privy to developments said.

According to industry estimates, the Indian spices market is worth around Rs 40,000 crore annually, with roughly 15-20 per cent of the market contributed by the branded segment. However, the rate of conversion from unorganised to organised is growing as the proliferation of sub-standard products has increased in the former segment.

Edible oil producer Emami Agrotech recently forayed into the spices market, hoping to become a top three player nationally in a few years. The packaged spices market is dominated by MTR in the south, Ashok and Goldiee Masale in the north, and the Sunrise and Cookme brands in the east. Everest and MDH Masala are national-level players, with a presence across markets, said experts.