RJ Corp-owned Devyani Food Industries has acquired 100% stake in ice-cream venture Cream Bell, having acquired part-owner CK Jaipuria’s share in the entity. The share transfer, in tranches, was completed last week.
Sources said the Cream Bell business is valued at around Rs 450-550 crore. The historical valuation of Cream Bell, carried out by private investment firm International Finance Corporation (IFC) a year ago, was about Rs 120 crore. It has subsequently multiplied about four-five times with capacity expansion and increase in Cream Bell’s market share.
The Ravi Jaipuria-promoted RJ Corp is now in the process of setting up a greenfield facility in Goa for the ice-cream venture on an investment of Rs 40 crore to double installed capacity. The new plant is expected to go onstream in about four months’ time, and is being set up to cover a pan-India footprint for the ice-cream business.
The Cream Bell business was originally floated as Universal Dairy Products as a 50:50 venture between Ravi Jaipuria and his brother CK Jaipuria. But after mutual discussions, it was decided that CKJ exit this business. The process of the share transfer was kicked off some months back.
Confirming these plans, RJ Corp president and group CFO RP Gandhi told ET: “It was always the intention that one of the two would exit the ice-cream venture; it was mutually decided that RJ Corp take over complete control of this business. The consolidated entity is now doubling capacity.”
Mr Gandhi said RJ Corp did not pursue the proposed deal with IFC last year. “We will consider private equity funding once we establish size and scale on a national basis for the ice-cream business,” he said.
With the new plant, Cream Bell will cater to the western and southern regions. Cream Bell has been till now largely focused in the northern region. The plant at Goa, the second for Cream Bell, is expected to have a capacity of 6-million litres. The existing plant in Baddi, also with a similar production capacity, caters to the northern markets. RJ Corp is hoping to leverage its bottling network in Goa to establish the ice-cream business in the region.
In addition to Cream Bell, Devyani Foods owns the franchisee rights of Disney ice-creams. But Cream Bell accounts for more than three-fourths of Devyani’s ice-cream business, with the Disney brand contributing only about 10% to the pie.
While manufacture and distribution of ice creams fall under Devyani Food, other franchisee tie-ups such as Pizza Hut, KFC, Costa Coffee and Disney Retail are grouped under Devyani International. The tie-ups with Disney are independent to each other. Cream Bell has entered the country through a technical tie-up with French dairy firm Candia.
Source: Economic Times