Reliance Consumer Products, a subsidiary of Reliance Retail Ventures, has agreed to buy Ravalgaon’s confectionery business for ₹27 crore.
The agreement between Reliance Consumer and the promoters of The Ravalgaon Sugar Farm envisages sale and transfer of the trademarks, recipes, all intellectual property rights, including all rights, interests, and protections relating to Ravalgaon’s sugar boiled confectionery business to the RIL group.
The sale does not include Ravalgaon’s assets or liabilities, and it will continue to own all other assets such as property, land, plant, building, equipment and machinery, an exchange filing said. All its revenues are from the confectionery business.
The transaction is expected to be completed by March.
Ravalgaon is selling because in recent years it has found it hard to sustain its business, it said. It has lost market share “owing to a surge in competition from both the organized and unorganised players in this industry.”
Rise in sugar prices and higher energy and labour costs have dented its profitability, since it has not been able to pass on the increased input costs to consumers.
The company said its machinery and equipment were reaching obsolescence while the cost of production and related wastages had increased. The outbreak of Covid and the lockdowns resulted in closure of schools and offices restricting its sales. “Being an impulse product, the absence of physical movement translated into weak demand for the company’s products,” it said.
Under the terms of the agreement Ravalgaon or its affiliates cannot engage in the manufacture or sale of competing confectionery products but can undertake contract manufacturing a packaging for third parties including Reliance.