Reliance, one of the largest companies in the country, is now preparing to strengthen its hold in the food and consumer products business. The company’s consumer products unit Reliance Consumer Products Limited (RCPL) is in talks to buy stake in South India’s well-known food company Udayams Agro Foods. If this deal is completed, then Reliance will directly challenge big brands like Tata Consumer, iD Fresh and MTR.
What does Udayams Agro Foods do?
Udayams Agro Foods is a well-known food company, which manufactures staple foods, snacks and ready-to-cook breakfast mixes. The turnover of the company is said to be around Rs 668 crore. Its products are especially popular in the South Indian market and it is believed that this regional strength is attracting Reliance.
How could this deal be?
It was told in the report that according to people associated with this deal, Reliance can buy majority stake in Udyams. Although the deal amount has not been made public, it is believed that it will be a mid-size acquisition. Reliance has already adopted the same strategy with brands like Campa Cola and Velvet, first gaining a hold in the regional market and then expanding the brand across the country.
What will be the role of promoters?
According to the information, Udayams promoters S Sudhakar and S Dinakar can retain their minority stake in the company. That means the operation and identity of the company will remain intact, but with the power of Reliance it will get a bigger platform. Many big companies are adopting this model nowadays.
Why is Reliance focusing on FMCG?
Recently Reliance has shifted its FMCG business under a new company, New RCPL. Its objective is to focus completely on packaged food, beverage, personal care and beauty segments. After Campa Drinks, Food Brands, Personal Care and Beauty Products, now the breakfast and ready-to-cook segment is being considered as the next big move for Reliance.
Why do big companies keep an eye on small brands?
Rapidly changing trends in the consumer sector have increased the concern of big brands. Local and digital-first companies are competing through low prices, quick delivery and direct access to customers. For this reason, big companies are now emphasizing on buying or investing in small but strong brands.
What next in the food sector?
According to reports, India’s packaged food market is going to grow rapidly in the coming years. Urbanization, working lifestyle and increasing demand for ready-to-cook food are driving this sector forward. In such a situation, this possible deal of Reliance is being considered an important part of its long term plan.
