Sunrise Foods starts process for strategic sale

Kolkata-based packaged spices maker Sunrise Foods, which competes with the likes of Everest and MDH Masala, has begun the groundwork for a strategic sale that could see its promoters dilute majority stake in the company, said people in the know.

The promoters — the Sharma family from Kolkata — may either choose to exit the company in one go or might phase it out over a few years, the sources said, depending on the contours of the deal.

The Sharmas are eyeing a valuation of ~2,500 crore, which is two-and-a-half times estimated FY19 sales of ~1,000 crore. The company has appointed JM Financial the investment banker on the deal. A mail sent to JM Financial elicited no response till the time of going to press. Shailendra Prakash Sharma, director of Sunrise Foods, said he could not comment on market speculation.

The Sharmas, who have been spice traders for decades, set up Sunrise Foods in Kolkata in 1975. The Sunrise brand is into whole, grounded, and blended spices, with manufacturing units in

Kolkata, Agra, Jaipur, and

Bikaner. The company also exports to neighbouring

Bangladesh and Nepal.

JM Financial's mandate includes tapping food companies which are into branded commodities, and to grow the Sunrise brand both in India and internationally. Sunrise, said industry experts, had strong brand equity in the

East and is known for its standardisation and quality-consciousness.

“The promoters may exit completely or hold minority stake and subsequently exit over the next few years. The promoters probably feel they have achieved what they could and it is time to hand over the reins to a player with deeper pockets,” an official privy to developments said.

According to industry estimates, the Indian spices market is worth around ~40,000 crore annually, with roughly 15-20 per cent of the market contributed by the branded segment. However, the rate of conversion from unorganised to organised is growing as the proliferation of sub-standard products has increased in the former segment.

Edible oil producer Emami Agrotech recently forayed into the spices market, hoping to be among the top three Indian players in a few years. The packaged spices market is dominated by MTR Foods in the South, Ashok and Goldiee Masale in the North, and the Sunrise and Cookme Spices brands in the East. Everest and MDH Masala are national-level players, with a presence across markets, said experts.

The promoters — the Sharma family from Kolkata — may either choose to exit the company in one go or might phase it out over a few years, sources said, depending on the contours of the deal