M&A

Prataap Snacks to expand in Western India by acquiring majority share of Avadh Snacks

By Douglas Yu contact

- Last updated on GMT

Pic: Avadh Snacks
Pic: Avadh Snacks
Prataap Snacks will acquire 80% share of Avadh Snacks for Rs 148 crores ($2.1m) to expand its footprint in India’s westernmost state, Gujarat.

The Yellow Diamond chips producer said Gujarat is the largest salty snacks market in the country and is “one of the most important markets where Prataap would like to build a presence.”

‘Complementary’ snack portfolios

Amit Kumat, Prataap’s managing director and chief executive, said the product portfolios of these two firms are complementary and the acquisition will help Prataap create a “balanced portfolio with a mix of regional and national flavors and variants across categories.

“It will also lead to a significant synergy in distribution across Gujarat and neighboring markets,”​ he added.

Prataap manufactures snacks, including puffs, chips and popcorn, while Avadh produces products such as mini rings, snack wheels and moon-shaped chips.

Commenting on the pending acquisition, Rajesh Savani, founder of Avadh, said his company is “well positioned to penetrate deeper in its home market and expand further in new geographies and products.

“We at Avadh are delighted to have Prataap Snacks lead us on this exciting journey in the Indian packaged food industry.”

Prataap’s fiscal-year 2019 Q1 results

Prataap last month posted a Q1 net revenue of Rs 269 crores ($38.3m) in its fiscal year 2019, increasing by 18.6% year-over-year.

Kumat said: “We have started FY19 on a positive note… with our business growing by 15.5% for fiscal year 2017 to 2018.

“This growth has been on the back of deepening our reach across the country and additions to the product portfolio. The third-party manufacturing tie-ups’ recent entry into Ahmedabad, Bengaluru and Kolkata have provided additional production capacity.

“While we have witnessed pressure on margins due to an abnormal increase in a few key raw materials, we have partially mitigated the impact through volume growth and cost optimization initiatives,”​ he added.

Kumat said Prataap remains confident the continued consumption tailwinds and its strong customer value proposition will help the business sustain healthy growth momentum in the year ahead.

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