RCPL hits sweet spot with Pan Pasand, Mango Mood as it bags Ravalgaon candy biz

“The Board, on the recommendation of the audit committee of the company, inter alia approved the sale, transfer and assignment of the trademarks, recipes, all intellectual property rights, including all rights, interests, and protections associated therewith, relating to the company’s sugar boiled confectionery business to Reliance Consumer Products Limited, for a consideration of Rs27 crore,” The Ravalgaon Sugar Farm Ltd said in a filing to the exchanges on Friday.

The proposed transaction includes the sale of the intellectual property, and does not envisage a slump sale of all assets and liabilities of the company. Ravalgaon will continue to hold all other assets such as property, land, plant, building, equipment, machinery, etc. post completion of the proposed transaction, the company said in its filing. The transaction is expected to be completed by the end of March.

The transaction restricts Ravalgaon from directly or indirectly manufacturing, sourcing, marketing, distributing or engaging in any business activity that deals with the products of the company as well as sugar confectionery, jelly confectionery, fruit confectionery, etc.

However, the company can continue to contract manufacturing and packaging for third parties as well as RCPL.

Ravalgaon was founded in 1933 as part of the Walchand Group but operates independently.

In its filing, the candymaker said the company has found it difficult in recent years to sustain its sugar boiled confectionery business. It has lost market share owing to a surge in competition from both the organized and unorganized players in this industry. At the same time, its 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 ₹1 price point.

In fiscal 2023, the company reported a revenue of ₹9.66 crore.

The pandemic hit the company’s business especially hard, it said, as schools, offices and out-of-home businesses remained shuttered for months.

“As the age of the company’s factory, machinery and equipment has increased, the cost of production and related wastage 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 for the company’s products,” it added.

RCPL is engaged in the business of fast moving consumer goods. It is a subsidiary of Reliance Retail Ventures Limited. RPCL has already launched products under the staples, biscuits, beverages, confectionery and chocolates categories. In home and personal care, it has products such as soap, laundry, dish wash, toilet cleaner and floor cleaners.

RCPL has also made a clutch of acquisitions including that of carbonated drinks brand Campa, apart from a stake in Sosyo beverages, and an investment in Lotus Chocolates for confectionery.

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Published: 09 Feb 2024, 10:29 PM IST