Bectors Food: From a Backyard Enterprise to the Most Successful IPO of 2020
| Case Code: LDEN172 Case Length: 14 Pages Period: 1980-2020 Pub Date: 2021 Teaching Note: Available |
Price: Rs.400 Organization : Mrs. Bectors Food Specialities Ltd. Industry : Food & Beverage Countries : India Themes: Entrepreneurial Strategy, Growth Strategy, IPO, Going Public,Women Entrepreneurs |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Building the Business
Rajni single-handedly ran the business, and Bectors Food gradually became famous for its ice creams and Rajni became a reputed entrepreneur in Ludhiana. It was only a matter of time before the business became a household name in Punjab for its biscuits and bakery items..
Business Strategies
India liberalized its economy in 1991 and MNCs such as McDonald’s decided to set up shop in the country. Since food processing in the country was still at a nascent stage, the burger giant scouted for suppliers of raw materials (buns and sauces) for its Indian operations. By then, Bectors Food had grown into a regional player in northern India with reported revenues of around INR200 million in 1996..
Marketing Strategies
Between 2000 and 2010, Bectors Food improved its market share and became one of the top five manufacturers of biscuits through MBFSL and the third largest producer of tomato ketchup through CFIPL in India. While partnerships with big brands provided the early impetus for large scale production and growth, MBFSL and CFIPL later began focusing on the retail market and ventured into different product segments, manufacturing quality products that appealed to the taste buds of Indian consumers. The retail market initiative was based on three pillars – quality, taste, and innovation..
MBFSL
MBFSL was one of the leading companies in the premium and mid-premium biscuits segment and the premium bakery segment in north India. The biscuits range included cookies, creams, crackers, digestive, and glucose under their flagship brand ‘Mrs. Bector’s Cremica’. MBFSL entered into an agreement in 2010 with Cadbury India Limited for contract manufacturing of Oreo biscuits. In 2019, it launched various new biscuit products that included ‘Trufill’ ‘Premium Sugar and Classic Crackers’, ‘Pista Almond Cookies’, ‘Choco Chip Cookies’, and ‘Honey Oatmeal Cookies’. As of June 30, 2020, the bakery segment had a total of 96 products..
CFIPL
By 2016, CFIPL was producing Indian gravies and curries, tomato ketchup, sauces, mayonnaise, bread spreads, salad dressings, syrups, and dessert toppings for the mass market. In 2016, it introduced a Vegetarian Mayonnaise Squeeze pack that made the mayonnaise more portable and easier to store..
Funding and Wealth Creation
Bectors Food was successful in growing its revenues and it reached a position where it was able to rope in private equity investors to create value and wealth..
Taking the IPO Route
In August 2018, MBFSL filed an application and received approval from the Securities and Exchange Board of India (SEBI) for an INR8 billion IPO. The company initially backed out but finally decided to go in for an IPO in 2020 despite the COVID-19 pandemic, primarily driven by the private equity investors’ desire for a partial exit. According to the management, the IPO filing was approved by SEBI in less than a month, the first such case for a non-public sector undertaking..
Road Ahead
With intense competition and consumer preferences rapidly changing toward vegetarian and healthy food options, companies in India had been heavily focusing on products based on improved nutritional standards while putting in place effective quality control systems. This resulted in the industry becoming more organized and streamlined..
Exhibits
Exhibit I: List of Awards Received by Rajni Bector
Exhibit II: MBFSL’s Segment Information (9 months FY 2021)
Exhibit III: Cremica Food Industries Private Limited – Directors
Exhibit IV: Mrs Bectors Food Specialities Ltd. – Directors
Exhibit V: Shareholding Pattern – Mrs. Bectors Food Specialities Ltd.
Exhibit VI: Subsidiary and Associate Companies of Mrs Bectors Food Specialities Ltd.
Exhibit VII:
Mrs Bectors Food Specialities Ltd. in Comparison with Listed Players
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