Companies

Prataap Snacks to double distribution network to take on MNC brands

Purvita Chatterjee Mumbai | Updated on January 12, 2018 Published on June 09, 2017

Prataap Snacks wants to build its business by raising funds through an IPO than resorting to tie ups and investments from MNCs to enhance its brand building or distribution capabilities.



Indore-based Prataap Snacks, which is ready to raise money from the capital market, plans to double its distribution network from the current 1.2 million outlets to compete with MNC competitors like PepsiCo.

“PepsiCo has similar products like ours reaching out to almost 2 million outlets for its Frito Lays brand, which is the largest in the snacking category with a turnover of more than ₹3,200 crore. We are not that strong in the Southern markets and want to compete with such MNCs with our Yellow Diamond brand by doubling our distribution in the next five years, ’’ said Amit Kumat, MD and CEO, Prataap Snacks.

Spending on high-profile brand ambassadors like Salman Khan is also expected to have a rub off on its snacks business.

“Last year, we hired Salman Khan with a ₹9-crore endorsement deal for two years as we to wanted to give a boost to our brand,’’ he added.

Funds through IPO

Besides, Prataap Snacks wants to build its business by raising funds through an IPO than resorting to tie ups and investments from MNCs to enhance its brand building or distribution capabilities.

Riding on the healthy snack wave like the MNCs, Prataap is expanding its product range with new products like quinoa chips.

“MNCs realise that the Indian snack market is growing at 10 per cent compared to their home markets where growth has slowed down and want to participate in India’s growth story. But we believe in going on our own and with an IPO, we will also become a debt-free company,’’ he said.

In the past, there were reports of PepsiCo planning to acquire another domestic snack company Balaji Wafers, but the deal did not materialise.

“Indian snack companies are not that big and we do not see any point in acquisitions at the moment. Our domestic competitors like Balaji Wafers and Haldirams may be bigger than us in turnover, but there is enough demand for snacks to grow in this segment,’’ he said.

PE funds

With a turnover of ₹908 crore, Prataap Snacks has already attracted investments from PE funds. Sequoia and Faering Capital have invested in the snacks company and the former is expected to partially exit after the IPO.

“Sequoia Capital had picked up a majority stake in 2011 while last year we had Faering Capital investing in our company. After the IPO we expect the promoter’s stake to come down from 32 per cent to about 27 per cent, with the PE funds and public holding the balance,’’ he added.

Published on June 09, 2017
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