New Delhi: Hector Beverages Pvt. Ltd has raised close to $30 million from investors Advent Management and Hillhouse Capital Group, valuing the maker of the Paper Boat brand of traditional Indian drinks at more than $100 million.

Existing investors N.R. Narayana Murthy-led Catamaran Ventures, Footprint Ventures and Sequoia Capital also participated in the current fund-raising, official documents filed with the Registrar of Companies show. Hector Beverages, which also makes the energy drink Tzinga, declined to comment. Hillhouse and Advent Management did not immediately respond to emails seeking comment.

Founded in 2010 by former Coca-Cola India employees Neeraj Kakkar and Neeraj Biyani, Hector Beverages is growing rapidly, driven by demand for its drinks such as Aam Panna, a thirst-quencher made from raw mangoes that is traditionally consumed in North India to beat the heat; another popular summer drink Jal Jeera; and Jamun Kala Khatta, a drink made from the jamun fruit. The drinks are packed in squishee pouches that are easy to carry and are part of the brand’s appeal in urban India. Hector’s Paper Boat range of drinks currently account for 75% of its sales. It’s also one of the few home-grown beverage brands to have tasted success.

“Paper Boat is a fast growing brand and has managed to grab market share and attention very fast. Creating a consumer brand is not easy, but once you crack the market, rewards can be phenomenal," said Abhishek Goyal, co-founder Tracxn, a data analytics firm for start-ups. “Investors today are aggressively looking to invest in product companies in the food sector."

The non-alcoholic beverages market, comprising carbonated drinks, juices, bottled water, ready-to-drink tea and coffee, and sports drinks, in India is expected to have sales of $5.18 billion by the end of 2015, according to researcher Business Monitor International.

Paper Boat’s success and the size of the Indian food market have attracted attention from both Indian and foreign investors. Hillhouse Capital, which invested $50 million in online automobile company CarDekho.com in January, is one of the latest to bet on Hector. Hillhouse, an investment management firm founded by Zhang Lei in 2005, manages more than $18 billion of assets as of December 2014. It has investments in China’s search website Baidu.com, e-commerce portal JD.com and taxi aggregator GrabTaxi.

In March, Hector Beverages opened its second manufacturing plant in Mysore to meet growing demand. Hector also sells Paper Boat in the US, Malaysia, Dubai and the UK, mainly catering to people of Indian origin. It has also tied up with British supermarket chain Tesco Plc to sell its products in London. In the year ended March 2014, close to 30 lakh of sales came from exports.

The company has invested close to $4.5 million on building the plant and on advertisements and promotions on television and in newspapers.

Hector’s first facility in Manesar in Haryana produces 80 bottles of beverages per minute. The company has the capacity to produce 220 bottles per minute at its 4.75-acre Mysore facility.

The company, which has also received money from Godrej Industries Ltd’s managing director Nadir Godrej, reported a loss of 11.4 crore on gross sales of 16 crore in the year ended March 2014.

The company recently tied up with Indo Nissin, owner of popular brand Top Ramen noodles, to expand its distribution in Tier II cities and rural pockets of India. Hector is looking to sell its drinks in more than four dozen cities and towns in a year’s time. Nissin buys Paper Boat stocks upfront and gets to keep channel partner margins from Hector Beverages.

Under the partnership, Hector Beverages launched 200ml packs of its four most popular drinks—Aam Panna, Aam Ras, Jal Jeera and Jamun Kala Khatta— to be sold exclusively by Indo Nissin Foods. Indo Nissin has a network of close to 200,000 retail outlets across 200 cities.

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