Noodles-maker CG Foods scouting for buys in India

CG Foods, the maker of Wai Wai instant noodles and a part of Nepal’s diversified company Chaudhary Group, is scouting acquisitions of a few regional fast moving consumer goods (FMCG) brands in South East Asia and the Indian market.

The company has also chalked out a Rs100 crore investment plan for expanding manufacturing capabilities in India over three years.

Nirvana Chaudhary, managing director, Chaudhary Group, said the company will commission a new noodles plant in Rudrapur, Uttarakhand, by February this year and will also double capacities at its existing facility in Assam by April.

The company also has a facility in Sikkim and the combined annual capacity of existing plants is 270 million packs.

By December the company will look at opening another facility in India. The investment will majorly go into strengthening the noodles and snacks business where the company has brands like Wai Wai and Kwiks, respectively.

The last one year has seen players like Hindustan Unilever Ltd (HUL), GlaxoSmithKline (GSK) Consumer and ITC Foods entering the Rs 1,200-1,500 crore instant noodles category that is growing in excess of 20%.

Analysts said while the new entrants will gain market share from Nestle India’s Maggi that is the dominant player with 80-82% share, they will also grow the category size.

“Players like GSK and ITC entering this category is actually favourable for us. It will help us achieve our plan much faster,” Chaudhary said.

Chaudhary said that the Wai Wai brand enjoys a 70% market share in North East, Sikkim and West Bengal, while on an all-India basis the market share is 15%.

“We are the second-largest player in the market and are looking to sell 400 million packets in 2011, which would translate to a market share of 22%,” he said, adding that the company has expertise in rural distribution already.

The company intends to close some acquisitions by 2012 which will give it greater distribution access in markets like West and South of India. It has given the mandate to investment institutions like Barclays, Credit Suisse and ICICI.

In Nepal, the company has got footballer Baichung Bhutia to endorse the Wai Wai brand and it will look at roping in an equally popular local celebrity in India once the company reaches a pan-India distribution by 2012.

CG Foods that sells FMCG products across the categories of confectioneries, beverages, mineral water and snacks in Nepal under brands like Mimi, RinTin, Rio and others, was set up in 1984 by Singapore-based Cinnovation Group, a Chaudhary Group company.