Goldman Sachs set to buy stake in Cremica for $15m

MUMBAI: Goldman Sachs’ private equity fund is in talks with the Ludhiana-based Cremica to pick up an equity stake for around $15m. Cremica is an FMCG food company with an extensive sales and distribution network in northern India.

Keen to expand its network in other regions, Cremica is looking at growth capital. Company officials, however, denied that it is planning to sell a stake to Goldman Sachs. The investment banking firm Avendus was the sole advisor on the deal.

The deal may turn out to be a benchmark for mid-sized FMCG players who need resources to compete against larger companies in the sector. The Indian confectionery and food market is fragmented between several small and medium regional players.

A number of these players have strong regional brands, but are unable to scale up at a national level in the absence of financial muscle. Moreover, there is competition from MNCs and other national players for both shelf space and distributor interest. Most mid-sized players also need resources to invest in advertising to build their brands.

Cremica was established in 1978 by Rajni Bector and the company has been growing at 25-30% every year. In the last two decades, Cremica has established itself as a leading name in the food processing business.

The company is also a supplier of condiments and sauces to food chains like McDonalds, Pizza Hut, Cafe Coffee Day and Barista. Cremica has revenues of around Rs 150 crore. Cremica also had a 50-50 joint venture with the erstwhile Quaker Oats of the US.

The plant manufactures a range of liquid condiments for retail and institutional markets, and is capable of packing the products in a wide range of formats — bulk packs, retail packs and small-portion packs. The plant is geared to produce 70,000 sachets per hour, giving it a daily production level of 1.5m sachets.