Reliance Consumer Products (RCPL) has acquired the trademarks, recipes, and all intellectual property rights of sugar-boiled confectionery maker Ravalgaon for INR 27 crore, as per a stock market disclosure by Ravalgaon Sugar Farm Ltd.
RCPL’s strategy of acquiring old Indian brands in distress and relaunching them aligns well with its recent acquisition of Ravalgaon, which boasts nine confectionery brands including Pan Pasand and Coffee Break. This mirrors its previous success with brands like Campa soft drink.
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The agreement was signed by 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.
Although the agreement includes a non-compete clause for Ravalgaon, the company clarified that it retains the option to engage in third-party manufacturing for other firms, including RCPL.
Ravalgaon generated a revenue of INR 9.66 crore in the fiscal year 2022-23.
This move will bolster RCPL’s competitive position against major players like ITC, Parle Products, and DS Group in the confectionery segment, where it already operates with two acquired brands – Lotus Chocolate and Toffeeman. Ravalgaon revealed in its disclosure that it has struggled to maintain its sugar boiled confectionery business in recent years, resulting in a decline in market share due to intensified competition from both organized and unorganized competitors.
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“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 INR 1- price point,” it said in the disclosures.
Additionally, Ravalgaon stated that as the company’s factory, machinery, and equipment have aged, the cost of production and associated wastage have also risen.
“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.
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