Reliance Consumer Products (RCPL) has acquired the trademarks, recipes, and all intellectual property rights of sugar-boiled confectionery maker Ravalgaon for Rs 27 crore, according to a stock market disclosure by Ravalgaon Sugar Farm Ltd.
Ravalgaon owns nine confectionery brands such as Pan Pasand and Coffee Break. This fits RCPL’s strategy of acquiring old Indian brands which are under distress and relaunching them, like it had acquired the Campa soft drink brand.
The deed was signed between both parties on Friday. It excludes the slump sale of all assets and liabilities of Ravalgaon. “It is clarified that while 100% of the revenue of the company (Ravalgaon) is ascribed to the intellectual property being sold, the company will continue to hold all other assets such as property, land, plant, building, equipment, machinery, etc. post completion of the proposed transaction,” as per the disclosure.
While the agreement has a no-compete clause for Ravalgaon, the company said it can do third-party manufacturing for other companies including RCPL.
Ravalgaon’s revenue in 2022-23 was Rs 9.66 crore.
With this, RCPL will strengthen its competition against ITC, Parle Products and DS Group amongst others in the confectionery segment where it already operates with two acquired brands – Lotus Chocolate and Toffeeman. Ravalgaon in the disclosure said it has found it difficult in recent years to sustain its sugar boiled confectionery business and has lost market share owing to a surge in competition from both the organized and unorganized players.
“At the same time, profitability has been affected by the sustained increase in raw material, energy and labour prices, without the ability to effectively pass on the input price increases to its customers beyond the Re.1/- price point,” it said in the disclosures.
Ravalgaon further said as the age of the company’s factory, machinery and equipment has increased, the cost of production and related wastages have also increased.
“The financial position of the company was exacerbated by the COVID-19 pandemic as schools and offices remained closed for physical attendance over a prolonged period, resulting in the reduction of movement of the company’s largest demographics of consumers. Being an impulse product, the absence of physical movement translated into weak demand,” it said.
Source: Economic Times