Theobroma Foods in fund-raising talks with PE investors

New Delhi/Mumbai: Theobroma Foods Pvt. Ltd, a Mumbai-based bakery, patisserie, and chocolaterie owned and managed by a Parsi family, is in talks with private equity investors for a series A round of funding to finance expansion plans, a top executive said.

Theobroma has grown from humble beginnings in 2004 at the iconic Cusrow Baug on Colaba Causeway to a chain of 12 outlets in Mumbai, offering a range of products including cakes, chocolates, cookies, pastries and toffees.

Founded by Kainaz Messman Harchandrai, who began her career as a pastry chef at the Oberoi Udaivilas hotel in Udaipur, the company is looking to raise about $5-$6 million.

Theobroma will use the capital to double its presence in Mumbai and also enter New Delhi with the launch of at least two outlets, chief executive Cyrus R. Shroff said, but did not disclose details of the investors with which the company is in talks.

“A chunk of this capital will also be utilized to support back-end and front-end operations. So, funding would be utilized for capacity expansion as well as outlet expansion,” he added.

Based on the response in Delhi, the company will look at entering other metro and non-metro cities in the next phase of expansion.

Boutique investment bank Candle Advisors is advising the company on fund-raising.

“We need to complete the fund-raising process as soon as possible as we need to embark on our expansion. So, we hope it to be completed in two-to-three months from now,” said Shroff.

Indians are moving from traditional forms of desserts and sweets to more western forms such as ice-creams and pastries, said Pankaj Gupta, senior practice head-consumer and retail at Tata Strategic Management Group.

Gupta said there are a number of chains, all of them probably small- to mid-sized, supplying such food across the country.

“The entire bakery industry, finally, in some way, you can subsume it either under the confectionary or the cafe industry. Because, there is a fair bit of overlap in many of these segments,” he said.

“If I look at the entire confectionary market, within the cafe market, cafe would be a Rs1,500-Rs1,700 crore market. Now, in addition to that, there will be the entire ice-cream and frozen desserts space. So, combined together, this is an around Rs3,000 crore market, where all these players are operating,” Gupta said.

The bakery business has seen quite a few deals in the recent past.

In 2014, Speciality Restaurants Ltd acquired a 51% stake in Love Sugar and Dough Pvt. Ltd, a Mumbai-based bakery set up in 2011 by Nauzad Munshi and Tarannum Merchant.

Also, Future Consumer Enterprise Ltd, the food and fast-moving consumer goods, or FMCG, arm of the Kishore Biyani-led Future Group, has acquired a 35% stake in Mumbai-based Sarjena Foods Pvt. Ltd, which manufactures and distributes bakery products under the brand ‘Baker Street”.