CavinKare eyes food sector buys

After selling its packaging business last week, Chennai-based consumer goods manufacturer CavinKare, is now looking for acquisitions.

CK Ranganathan, managing director, CavinKare told Business Standard the company was scouting for acquisitions in the foods category.

CavinKare would focus more on its foods business that currently contributes less than 10 per cent to the company's turnover.

The growth plans in the food category will be through inorganic route. Last week, CavinKare exited from the packaging business by selling Packaging India to Essel Propack.

"The funds received through the sale of Packaging India will be used mainly for acquisitions," said Ranganathan, adding that CavinKare had still not fully leveraged its fund raising capability.

Though there is no fixed sum earmarked for these acquisitions, Ranganathan said that they would be looking at a deal size in the range of Rs 100 to Rs 200 crore (Rs 1 to Rs 2 billion).

In addition to acquisitions, CavinKare would beef up its product range in the foods segment. The company is introducing new products in the health foods space.

"In health foods, there is tremendous potential to provide value added products. We are working at launching new products in this category," said Ranganathan. The company is likely to introduce these under the HealthPlus brand under which it already markets seedless dates.

While Ranganathan said CavinKare has no plans to enter the beverage or beverage mixes space, he added that the company would look at product categories like value added honey and so on.

Ranganathan said the company also plans to invest in its existing brands -- Chinni and Ruchi under which it has products like pickles, spices and ready mixes.

At present, the size of its foods business is Rs 30 crore (Rs 300 million) with a turnover of Rs 570 crore (Rs 5.7 billion). But the foods business is growing at 100 per cent and executives expect to sustain this growth rate.

In 2004, CavinKare had acquired Ruchi, the Rs 10-crore (Rs 100 million) brand owned by the south-based Shyam group, better known for its Savera Hotel chain.

With an enhanced focus on foods, CavinKare is taking a leaf out of the global consumer goods giants such as Unilever, which has interests spread across foods and personal care.

While personal care products have always been the focus of the company, which entered the national scene by spearheading the shampoo sachet revolution, now plans to replicate its success in foods.

Ranganathan said foods was a fast growing category and CavinKare would like to broaden its presence through products where it could provide value additions.

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