{"id":3288,"date":"2013-12-23T07:17:41","date_gmt":"2013-12-23T07:17:41","guid":{"rendered":"http:\/\/www.franchisemart.in\/franchise\/?p=3288"},"modified":"2013-12-23T07:23:02","modified_gmt":"2013-12-23T07:23:02","slug":"kelloggs-joins-race-balaji-wafers","status":"publish","type":"post","link":"https:\/\/www.franchisemart.in\/franchise\/kelloggs-joins-race-balaji-wafers\/","title":{"rendered":"Kellogg’s joins race for Balaji Wafers"},"content":{"rendered":"

\"Kellogg's<\/a><\/p>\n

The stake dilution process at Rajkot-based Balaji Wafers is getting warmer, with one more multinational giant in the fray.<\/p>\n

According to people in the know, Kellogg’s India<\/strong>, the breakfast cereal maker, has started discussions with the management of Balaji for acquiring a 10-15 per cent stake in the wafer maker. The deal size is expected to be Rs 350-400 crore.<\/p>\n

Though Kellogg’s<\/strong> has a global presence in the wafer business through its buyout of Pringles for $2.7 billion early last year, the latter hasn’t been able to make a strong presence in India. The minority stake buyout in Balaji is likely to help Kellogg’s India explore the wafers market, those in the know said. “Though Pringles is a high-end brand, (this) entry into the Indian wafers market will help them to push even Pringles in tier-II cities, where the consumption power of people are on the rise,” said an investment banker.<\/p>\n

According to industry estimates, wafers is a Rs 3,000-4,000 crore market within salty snacks. Founded in 1976, Balaji Wafers is a strong regional player, with a share of 65 per cent in western India. It has a presence in Gujarat, Maharashtra, Goa, Rajasthan and some parts of Madhya Pradesh. The Rajkot-based company has an annual turnover of Rs 1,000 crore and is looking to close the current financial year with a growth of 25-30 per cent. It is said to be eyeing three to four times the sales as its total valuation.<\/p>\n

When the Virani family at the helm decided to restrict the stake sale to 15-20 per cent, food & beverages giant PepsiCo India had backed out from discussions.<\/p>\n

Another major, Agrotech, has met the Balaji management and conducted a due-diligence but have decided the company is ‘too regional’, with operations restricted to a few states.<\/p>\n

According to media reports, private equity entities Actis Capital and Capital International have also engaged in discussion to buy the stake.<\/p>\n

Advisory firm E&Y has been mandated to find buyers. Keyur Virani, director, Balaji Wafers, was not available for comments. A mail sent to Kellogg’s<\/strong> remained unanswered till the time of going to press.<\/p>\n

The salty snacks market in India is dominated by PepsiCo (with Lays, Kurkure), ITC (Bingo), Haldiram’s and Parle Products, with a number of regional brands.<\/p>\n

The breakfast cereal market remains small, largely in the region of Rs 800-900 crore, led by cornflakes, which is a Rs 700-crore segment, dominated by Kellogg’s, which has 60 per cent share.<\/p>\n

Oats is a Rs 160-crore market, dominated by Quaker from PepsiCo. Marico recently stepped into oats and has built its Masala Oats franchise business<\/a> <\/strong>quite well. Its market share here is estimated at 14-15 per cent in oats.<\/p>\n

WIDENING ITS HORIZON<\/strong><\/p>\n

\u2022 Though Kellogg’s has a global presence in the wafer business through its buyout of Pringles for $2.7 billion early last year, the latter hasn’t been able to make a strong presence in India<\/p>\n

\u2022 According to industry estimates, wafers is a Rs 3,000-4,000 crore market within salty snacks<\/p>\n

\u2022 The breakfast cereal market is small, largely in the region of Rs 800-900 crore, led by cornflakes, which is a Rs 700-crore segment, dominated by Kellogg’s, which has 60 per cent share.
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