Mauritius-based PE firm Mandala Capital has invested $10 million (approximately Rs 67 crore) in an integrated food testing lab start-up in Kolkata EFRAC founded by a clutch of city-based angel investors. The PE firm has agreed to commit another $10 million into the startup after three years provided the facility achieves 100% capacity utilization and clocks an annual turnover of $40 million.
The PE firm is picking up a majority stake of 51 % in the startup, which Swiss food giant Nestle had used to test Maggi instant noodles during the controversy last year.
Elaborating on the deal, Mandala Capital founder Uday Garg said: “About 60 % of the total $ 10 million invested will be ploughed back into the startup.” The fund will be used to set up a US Food and Drug Administration (USFDA) certified new pharma testing line adjoining the existing ones at Barasat, Kolkata. The new line will become operational over the next 18 months from now.
Balance 40% of the amount has been used to buy out angel investors led by Balwinder Bajwa who set up the testing lab in November 2014 over 5 acre plot with an initial investment of $ 5 million.
Commenting on the transaction, West Bengal Finance Minister Amit Mitra said: “This is the result of Chief Minister Mamata Banerjee’s visit to Singapore with a business delegation. Talks with the Mauritius firm advanced in UK. The investment was clinched during the “Bengal Global Business Summit 2016′. We have urged the PE fund to invest atleast $ 100 million in the state’s food processing sector.”
EFRAC is one of the largest integrated testing and research lab for food & agri, pharma and environment sectors. It has all regulatory approvals in place such as NABL, BIS, FSSAI, APEDA, AGMARK, etc. It has on its payroll 150 plus employees.
“Post transaction, we intend to enhance our team of scientists. We will have some 150 scientists from 94 now. We hope to clock a turnover of $50 million (around 300 crore) by 2020-2021,” Bajwa added.
Since the company is currently on a growth trajectory, Mandala Capital’s investment will accelerate EFRAC’s presence in the pharmaceutical testing space, he said.
Incidentally, EFRAC retained Deloitte Touche Tohmatsu India LLP (Kolkata Corporate Finance Practice) as their financial advisors and Fox & Mandal as their legal advisors, while Mandala Capital, DSK Legal as their legal advisors.
Founded by Uday Garg in 2008, Mandala Capital decided to invest in the food and agri sector of the Indian sub continent including the likes of Jain Irrigation, GatiKausar, Godavari Biorefineries and Sustainable Agro Commercial Finance. The PE firm has invested over Rs 1200 crore till now.
Source: The Economic Times
Image Courtesy:The Hindu Business Line
