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26 jan 2015

mapro foods

Panchgani-based Mapro Foods is a small company, but dreams like a big


one. It started as small-scale jam unit, after government officials who
wanted to promote food processing industries in the region gave
pharmacist and businessman Kishore Vora a fruit processing licence. Vora
began by making 10 kg batches of strawberry and raspberry jam in a tiny
room equipped with a kerosene stove and a pot.

Word-of-mouth popularity prompted him to move to a bigger production


facility. He started experimenting to make other fruit-based products. The
high fruit juice content of Mapro's crushes and squashes - 45 per cent,
compared to 25 per cent for rivals Kissan and Mala's - made them instant
hits. "We came up with fruit crushes because there was a demand for fruit-
based milk additives. Since Panchgani accounts for over 70 per cent of the
country's strawberry production, we were able to forge exclusive
partnerships with farmers for sourcing," says Vora.

THE LOW-DOWN

 Mapro Foods was founded in


1959 by pharmacist Kishore
Vora
 His nephew Mayur Vora runs
the company, and Mayur's
son Nikunj, 29, heads the
chocolate division
 Key products are fruit chews,
squashes, crushes and
chocolate
 The recently launched Falero
fruit chews and Mazaana
chocolate are driving growth
 The company has a strong
presence in Gujarat and
Maharashtra, and plans to
expand distribution beyond
western India
In 1983, Kishore was joined by his nephew
Mayur Vora, an IIM Bangalore alum who had two years' experience at
Voltas. However, the company could not expand much beyond
Maharashtra and Gujarat, and had to be content with modest growth for
years.

The rise of modern retail gave Mapro a nationwide network and access to
customers with deep pockets . Also, the government replaced the 15 per cent
sales tax rate with a flat four per cent VAT. Vora invested the extra money
back into the business and set up three new units in Satara and Pune
districts in Maharashtra and Pathankot in Punjab. Today, installed capacity
is some 100 tonnes a day.

As growth in the jams and squashes business started slowing in 2005,


Mapro entered the confectionery and chocolate business. According to
Technopak Advisors, the squashes market, pegged at Rs 70 crore, is
growing at 10 per cent.

By contrast, the Rs 5,000-crore chocolate market has been doubling every


three years. In May 2008, Mayur Vora came up with pulpy fruit chews,
branded Falero. Today they contribute almost 50 per cent of revenues.
"Falero, priced at Rs 1, is an indigenously developed product," says Mayur.

"Nothing comparable exists. It's available in flavours such as unripe mango,


Alfonso mango and strawberry, which appeal to the Indian palate." There
are reports that even bigger rivals such as Parle and Perfetti are trying to
develop something similar. "We have 400-odd distributors right now who
are largely located in western India. We are exploring partnerships with
distributors in other parts of the country and intend to soon expand the
distribution network to 700."

Ashok Vithlani of Polad Trading has handled the distribution of Mapro


products in Gujarat for 15 years. He covers 25,000 retail shops in 110 towns.
He says Mapro's product replacement guarantee operates till the last mile.
"Unlike other FMCG companies, Mapro replaces the product immediately
in case of breakage, even if it happens on the retailer's premises," he says.
"They value business associates and support them through better margins
and loans for expansion."

Mohit Bahl, Partner (Transaction Services), KPMG, says companies like


Mapro need strategic investors to grow beyond their limited geographical
reach. "Private equity companies that specialise in consumer business can
help them build processes and a management team, and take their brands
to a national level," he adds.

He cites the example of Paras Pharmaceuticals. In 2006, with a turnover of


less than Rs 300 crore, Paras received a $42 million investment from PE
firm Actis. In 2010, Paras was bought by Reckitt Benckiser India for Rs
3,260 crore - eight times its 2009/10 revenues. But the Voras see no great
need for PE investment.

Mayur says he gets proposals from PE firms almost every month. "There's
no big name left who has not approached us," he says. "I don't know what
they can bring to the table except money. Sure, we need money to build a
national presence, but that can come from bank borrowing and internal
accruals."

Mapro revenues have risen from Rs 25 crore in 2006/07 to more than Rs


100 crore in 2010/11, a compounded annual growth rate of some 32 per
cent. Success, as they say, is sweet.

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