Reliance Consumer Products, a subsidiary of Reliance Retail Ventures, has inked a significant deal to acquire Ravalgaon’s confectionery business for ₹27 crore. This strategic move marks a significant expansion for Reliance Retail Ventures, further solidifying its presence in the consumer goods sector.
The agreement between Reliance Consumer and the promoters of The Ravalgaon Sugar Farm entails the sale and transfer of trademarks, recipes, and all intellectual property rights associated with Ravalgaon’s sugar boiled confectionery business to the RIL group. Notably, the sale excludes Ravalgaon’s assets and liabilities, allowing the company to retain ownership of its property, land, plant, building, equipment, and machinery.
The transaction, slated to be completed by March, underscores Ravalgaon’s decision to divest its confectionery business due to challenges in sustaining profitability. Over recent years, the company has faced stiff competition from both organized and unorganized players in the industry, leading to a decline in market share. Additionally, factors such as rising sugar prices, increased energy and labor costs, and the impact of the Covid-19 pandemic have further exacerbated its financial woes.
The closure of schools and offices during lockdowns resulted in a downturn in sales for Ravalgaon, as its products are primarily impulse purchases. With limited physical movement, consumer demand weakened, posing additional challenges for the company. Furthermore, the company cited issues such as machinery obsolescence and heightened production costs as contributing factors to its decision to sell its confectionery business.
As part of the agreement, Ravalgaon and its affiliates are restricted from engaging in the manufacture or sale of competing confectionery products. However, they retain the option to undertake contract manufacturing and packaging for third parties, including Reliance.
This acquisition by Reliance Consumer Products represents a strategic investment aimed at strengthening its foothold in the confectionery segment. By leveraging Ravalgaon’s established brand and product portfolio, Reliance aims to further expand its presence in the consumer goods market and drive growth in the coming years.
With the completion of the transaction expected in the near future, all eyes are on Reliance Consumer Products as it embarks on this new chapter of expansion and innovation in the confectionery industry.