Bengaluru-based packaged food company, MTR Foods has announced an INR 50 Cr (about $7 Mn) fund to invest in early stage food processing startups.
“The face of the Indian food processing industry is redefined by the startups. We want to now clearly participate in this market,” Sanjay Sharma, CEO of MTR Foods told PTI.
The company plans to be a minority partner in its every investee. So far MTR Foods has invested in one Bengaluru-based children food manufacturer FirmRoots, in which the company picked up 42% stake.
“We keep evaluating many more options (for investment) which come true in this way. We are in the process of investing in a couple of other startups,” Sharma added.
MTR Foods claims to have generated a revenue of about INR 900 Cr. in 2018, and aims to reach INR 1K Cr. mark in 2019. The company has been consistently growing at 14% CAGR for the past five years.
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Earlier in 2016, MTR Foods had launched its own online store with an inventory of its then existing 140 product categories. The store is currently delivering across India under five to nine days and also features a recipe section.
At that time, the company had also announced an investment of $30 Mn (INR 200 Cr) to expand the manufacturing capacity at its plant in Bangalore to 72K tonne from the earlier 45K tonne.
MTR Foods is a 90 year old company started by Yagnanarayana Maiya in 1924 with the establishment of a Bengaluru eatery Mavalli Tiffin Room (MTR). The company was later acquired by Norwegian conglomerate Orkla Group in 2007. The company is known for its instant food mixes and ready-to-eat food products.
The Foodtech Sector
According to RedSeer’s Foodtech Market Updates, the foodtech industry has seen an overall GMV growth of close to 140% in 2018, with order volumes increasing by a whopping 176%.
RedSeer’s March updates on the sector had noted an evolution of order use cases with more and more consumers using food delivery applications to order lunches, breakfasts and snacks, in addition to the usual dinner orders. This increase in the number of use cases has lead to around 25% drop in average order values in 2018. The average order values are further expected to go down to INR 250 in the next five years. However, overall this increase in use cases has lead to greater customer engagement for businesses and hence, much larger market.
In January 2019 updates, RedSeer had released a FoodTech Leadership Index (FLI) which ranked Swiggy at the top place in the sector with a total score of 96 in the fourth quarter of 2018. While Zomato came in second with a score of 82. Meanwhile smaller players UberEats and Ola’s Foodpanda came in third and fourth respectively.
The two unicorns in the foodtech segment – Swiggy and Zomato have been busy in raising funds and expanding their portfolio services. Recently in February, Zomato had raised $39.74 Mn in a private equity round from US-based Glade Brook Capital Partners. While its arch-rival, Swiggy had raised a billion dollar funding in a Series H round led by Naspers in December 2018.
Cloud Kitchens are also increasingly catching up, with cloud kitchen startup Fassos raising $15.9 Mn from a bunch of its existing investors in its ongoing Series D round in March. Closely followed by Mumbai-based Box8 which raised $15 Mn in its Series C funding round, led by eWTP Ecosystem Fund in the same month. Also, Gurugram-based hospitality chain OYO Hotels and Homes had reportedly been in talks to acquire Bengaluru-based cloud kitchen startup FreshMenu in a deal worth $50 Mn-$60 Mn (INR 356 Cr-427 Cr).