Home / Companies / The next stop for Prataap Snacks is a billion dollars

Mumbai: Not many people may know about Indore-based Prataap Snacks Pvt. Ltd or even Prakash Snacks as it was previously known. But say Yellow Diamond potato chips, and the answer could be different.

Since 2003 when it was started in Palda near Indore by brothers Amit Kumat and Apurva Kumat along with Arvind Mehta, a classmate of Apurva, the company has grown its revenues to over 700 crore.

This is no mean feat considering that this is a fiercely competitive market dominated by brands like Lays from PepsiCo India Holdings Pvt. Ltd and Bingo from ITC Ltd.

Prataap Snacks’ revenue grew 30% in the financial year 2014 to 446.9 crore from 344.3 crore in the previous year. The extruded snacks division contributed 211.9 crore to revenue, the highest, followed by the potato chips division with 166.9 crore, Mint reported on Friday.

The Sequoia Capital backed company which has grown consistently since inception is now considering an initial public offering of 400-500 crore as it looks to have a national footprint. So far, its presence has largely been regional, limited to markets like Madhya Pradesh, Delhi, Haryana, Uttar Pradesh, Maharashtra and Rajasthan.

What makes Prataap Snacks interesting is the fact it has got the taste and value proposition right and is able to scale, experts said.

The company has created a space for itself by targeting smaller mom-and-pop stores that were not the forte of larger companies like PepsiCo. “They provided direct service to these smaller stores that were traditionally only serviced indirectly by the larger companies and also gave incentives to the trade, creating a space for themselves. It is now one of the top three brands in those markets as a result," says Pankaj Gupta, practice head, consumer and retail practice, Tata Strategic Management Group.

The other reason is affordability. “Local players are gaining in popularity as they are more affordable," said an analyst at business intelligence firm Euromonitor International, while pointing out that brands like Balaji are very strong in Gujarat and Yellow Diamond is picking up very well in South India.

The company has also managed to keep its costs low as it spends little on advertising and promotions and is promoter-driven.

Homegrown companies like Haldirams, known for their Aloo Bhujia and Bhujia Sev, have become household names by catering to the Indian palate. These savouries were earlier bought from traditional sweet shops and were consumed at tea time in many parts of the country. Haldirams now provides them in a packaged form. The same is the case with Prataap Snacks.

In an interview in 2012 to Forbes, Amit Kumat said that he spent a lot of time on taste and the recipes are a closely-guarded secret.

“This market is more about catching the traditional flavours, providing hygiene, branding and good packaging which these companies understand," said Harminder Sahni, founder and managing director, Wazir Advisors, a retail consultancy firm. He said Indians haven’t adapted to drinking Coke or having corn flakes for breakfast the way people have in the West. Hence, he said, homegrown companies catering to Indian tastes have more chances of success here.

To be sure, there are not that many mid-sized regional companies. Most regional companies get stuck in the 20-100 crore market. For companies like Prataap Snacks, the possibility is to cross a billion dollars in revenues in the next 10-15 years, said Sahni, while noting that the growth potential is huge.

The snacks market which includes crisps, extruded snacks and sweet and savoury snacks grew 25% from 15,007.89 crore in 2014 to 18,764.23 crore in 2015, according to data provided by Euromonitor.

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