CavinKare hungry for food brands, divests packaging to Essel Propack

Chennai: After selling its Rs90 crore turnover packaging company, Packaging India Private Limited, the Chennai-based fast moving consumer goods (FMCG) CavinKare group is hungry for the food business.

The group raked in Rs63.5 crore by handing over Packaging India to Essel Propack Limited. As a part of the deal, Essel Propack will take over debt to the tune of Rs25 crore. The sale price is between five and six times the company's operating profit.

"We are looking at acquisitions in the Indian foods business," declares chairman and managing director, CK Ranganathan.

Leveraging the sale proceeds (Rs63.5 crore), he can raise a similar or higher amount as loan to fund the acquisitions. It may be recalled that the FMCG company CavinKare Private Limited acquired one of the popular pickle brands in the South - Ruchi - in 2003 for Rs15.5 crore. Later, the company launched gulab jamun mix, asafoetida and dates under the Ruchi brand. CavinKare also retails Chinni's, another pickle brand. The company is expected to get into the nascent heat-and-eat food segment.

The company is also looking at increasing its food product exports to the US. "We started exports to US three months ago. This year, exports to the US is expected to grow big," says Ranganathan.

The main reason for unlocking value out of its packaging business is to grow the foods and FMCG business unhindered. Originally, the packaging company was floated as a backward integration mainly to serve the needs of the group's flagship company selling brands like Chik / Nyle shampoos, Fairever fairness cream and others.