Indian conglomerate Reliance Industries is adding to its FMCG assets with the acquisition of local confectioner The Ravalgaon Sugar Farm Ltd.
According to a filing on the Bombay Stock Exchange, Reliance is making the purchase through the Reliance Consumer Products division, a wholly-owned subsidiary of the Reliance Retail Ventures business unit.
It plans to pay Rs270m ($3.3m) for Ravalgaon, a supplier of boiled sweets. The transaction covers “the sale, transfer and assignment of the trademarks, recipes, [and] all intellectual property rights”.
The sale is “subject to fulfilment of certain conditions precedent including shareholders’ approval”, the filing said.
Ravalgaon also said it would not approve a sale of “all assets and liabilities of the company”, and that intended to retain ownership of “property, land, plant, building equipment, machinery” following the purchase.
Under the agreement, Ravalgaon will be restricted “from directly or indirectly manufacturing, sourcing, marketing, distributing or engaging in any business activity which deals with the products of the company as well as sugar confectionary, jelly confectionary, fruit confectionary, etc. and all products using, under or associated with the Intellectual Property”, the filing read.
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The group will still be allowed to perform its contract manufacturing duties, “and packaging for third parties as well as RCPL”.
Ravalgaon produces confectionary brands including boiled sweets Pan Pasand Gold, Cheer, Mango Mood, Coffee Break, Tutty Fruit and Assorted Center. It also makes the toffee products Choco Cream and Supreme.
According to the filing, Ravalgaon decided to enter into an agreement with Reliance as it had “found it difficult in recent years to sustain its sugar boiled confectionery business”.
The company has faced a combination of headwinds, including a loss of market share from increased competition, as well as rising raw material, energy labour, machinery and production costs.
Ravalgaon added that it was still facing continued effects from the pandemic. "Being an impulse product, the absence of physical movement translated into weak demand,” it said.
Consumer brands already under Reliance’s belt include savoury snacks maker Snactac, plant-based foods producer Good Life and Desi Kitchen, which offers a range of blended spices, instant drink mixes, flours, cooking pastes and millets.
In January 2023, Mumbai-headquartered Reliance secured a 51% stake in publicly-listed Lotus Chocolate Company.
At the time, the deal included the option of buying a further 26% in the Hyderabad-based group.