Private equity major Everstone Group, which today completed the acquisition of Modern Foods, has set an ambitious target of trebling revenue from the ex-Hindustan Unilever's bread and bakery brand to Rs 1,000 crore and has made top-level changes with a new chief executive.
Everstone had announced intentions to acquire the brand from HLL last September for a reported Rs 250 crore. HLL, which had paid close to Rs 150 crore to the government in a two-step divestment process in 2000 and 2001, cashes out with a Rs 100 crore premium.
Following the deal closure, Everstone has hired Aseem Soni, a former Cargill Foods executive, as new chief executive with immediate effect and Kuldip Kaura as chairman of the board.
The PE fund also appointed ex-DGP of Maharashtra PS Pasricha as an independent director and two Everstone MDs -- Rajev Shukla, a Unilever veteran known for building consumer brands and Deep Mishra, who led Modern deal, as directors.
Kaura was a former managing director and chief executive of ACC Cement apart from being a senior director with the Everstone Group.
"We aim to quadruple the turnover of Modern Foods to Rs 1,000 crore in a few years by providing high-quality and healthy food options in bread, baked items and possibly in new categories," Soni said in a statement.
For Modern Foods, this the third ownership change since it was set up by the government way back in October 1965 as Modern Bakeries India and as the country's first bread company at Kazhikundram, near Tidel Park in Tamil Nadu.
The company has 14 bakery units in 13 cities including Mumbai, Bengaluru, Chennai, Kochi, Kolkata and Hyderabad and 40 franchisees and sells breads, cooking oils, flour, fruit pulps, fruit juices, beverage concentrates and energy food.
Earlier it also used to sell fruits juice concentrate under brand name Rasika in Delhi and aerated soft drinks under the brand Double Seven.
In January 2000, the Atal Behari Vajpayee government sold 74 per cent in the company to Hindustan Lever for Rs 105 crore. It was the first privatisation of a central public sector unit. HLL was the sole bidder for the sale. Later in November 2002, HLL snapped up the remaining 26 per cent for Rs 44 crore with the government exercising its 'put option'.
But in the same year, HLL referred the company to the
Board of Industrial and Financial Reconstruction as losses mounted and in 2006, it merged Modern Foods with itself and had set a target of turning around in two years.
But it could never meet that objective and since then HLL was planning to sell the company and in 2007 was close to selling the unit to Gulf-based Switz Group, promoted by the Mumbai-based Khorakiwala family, but did not go through on valuation issues.
According to analysts, for HUL, Modern Foods became an enduring symbol of failure of how their famed management culture and systems failed them in the face of a hidebound sarkari culture.
The deal closure comes after both the parties secured the necessary statutory approvals and clearances. The company will now be known Modern Food Enterprises.
"Modern is an iconic brand that created the bread category here and is synonymous with trust and quality for over 50 years. We will work with the management board and will make significant investments to unlock its full potential and to expand its portfolio and reach," Everstone co-founder and managing partner Sameer Sain said in a statement.
Everstone is an India- and Southeast Asia-focused private equity and real estate investment firm with assets under management of USD3.3 billion.
The Singapore-based PE has invested in Advent Group's Crompton Greaves' consumer business, Care Hospitals, Hinduja Leyland Finance Financial, which has announced its IPO plans.
Last year, it had raised USD-730 million for its third fund for its India play.
Its other investments in the country include fashion house Ritu Kumar, VLCC Healthcare, Internet services provider Tikona Digital Networks, beauty saloon chain YLG India, restaurant operator Pan India Food Solutions, Capital Foods, wind-turbine maker Regen Powertech, IndoStar Capital, Global Hospitals and winemaker Sula Vineyards.
