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Corporate Report

Published on: July 7, 2022, 12:05 p.m.
Nilon’s gets future-ready
  • Sanghavi: transforming Nilon's into one of the fastest growing packaged food brands in the country

By Arbind Gupta. Assistant Editor, Business India

Nilon’s Enterprises Pvt Ltd is into its 60th year. Founded in 1962 by the Sanghavi family of Jalgaon, Maharashtra, one of the fastest growing processed food companies has come a long way ever since it started its humble journey as an ethnic pickle brand. Over the years, the company has expanded its offering in a big way and today has an extensive range of quality products across 18 categories. Its product line includes cooking pastes, soups, noodles, pasta, ready-to-cook meals, jams, ketchup and sauces, papads, breakfast cereals and chutneys. Nilon's has recently also ventured into the beverage category with ‘Cheers’.    

The Rs450-crore company, backed by PE player BanyanTree and a UK-based family (the Pathaks) has made significant strides in the last decade. Nilon’s, which owns a trusted quality packaged food brand, has carried out diversification of its product portfolio as also geographical distribution in a significant manner. Today, the brand is available in more than 700,000 outlets on a pan-India basis from being present in just 20,000 outlets a couple of decades ago. It has a good presence in all Indian markets. An exception is the South, where it does not have much of a presence. Besides domestic sales, it also exports to markets in France, Japan, Malaysia, South Africa, New Zealand and Australia.

Super growth strategy

Backed by 2,500 employees, the company has put in place three global standard processing/manufacturing facilities in Jalgaon. Headquartered in Pune it has invested over Rs120 crore to completely modernise its facilities which have a total installed capacity of 80,000 tonnes per annum of packaged food products. Buoyed by its recent success, Nilon’s, which started as a cottage industry, has now put in place a super growth strategy where it is looking to take its topline to around Rs1,500 crore by 2027, even as it is planning to go public by 2024. Though the company has a presence across 18 categories, it is consciously focussing on five major categories which contribute to over 85 per cent of its revenue.

“The last decade or so has been quite transformative for us as we look to position ourselves quite strongly in the market which itself has undergone a big transition. From being present only across table categories, we have today emerged as a ‘table to kitchen’ brand with an extensive range of products. In the next few years, we are looking to build upon the categories we have got into. Besides, we would like to expand our market presence further,” says Dipak Sanghavi, 45, managing director, Nilon’s who had to take over the company in 2001 when his father Suresh Sanghavi, the founder of Nilon’s passed away due to a heart attack.

Sanghavi was a mere 24-year-old and had joined the company only four months earlier after completing a business management course from IIM, Ahmedabad. A polymer engineer by qualification, Sanghavi initially had his own share of challenges, but has shown a great deal of grit and determination and has transformed the company into one of the fastest growing packaged food brands in the country.

Nilon’s is betting big on the rapidly-growing packaged food market which is expected to double and grow up to $70 billion in the next 5-10 years. Economic growth, demographic dividend and growing e-commerce will certainly enhance the growth of the packaged food market. In fact, after the pandemic, people have become more conscious about their health, and hence, their food preferences and intake have changed. Food processing is a sunrise sector and experts believe that even with the advent of large MNC players, there is always demand for locally-processed food. An abundance of raw material and better government policies are also contributing factors.

  • The company has global standard manufacturing facilities

Various reports also suggest that by 2030, the Indian annual household consumption is expected to triple, making India the fifth-largest consumer in the world. In that context, to capture more market opportunities, the Government of India aims to boost growth in the food processing sector by leveraging reforms such as 100 per cent foreign direct investment in the marketing of food products and various incentives at the central and state government level along with a strong focus on supply chain infrastructure. Recently, the government established 18 mega food parks and 134 cold chain projects to develop the food processing supply chain.

“We are closely evaluating the macroeconomic scenario. As a company, we are all geared up to leverage the opportunities presented by this industry. Over the last few years, we have ramped up our capabilities in a significant way. And have now put into place a super growth strategy to scale up our presence across multiple categories, even as we continue to focus on quality and innovation to stay ahead of the competition,” states Sanghavi whose family belonged to a farming community. The family has farms in Jalgaon spread over 100 acres where they grow fruits and other crops which also act as raw material for the company’s three large manufacturing units. In fact, his father initially started a one-room unit to process the surplus fruits grown at his family farm.            

Carrying forward the tradition of preserving the flavours of nature in time-honoured family recipes, his father packed a batch of freshly homemade mango squash in glass bottles and convinced his uncle, a full-time farmer, to sell them at the local market. By the end of the month, 80 per cent of the bottles were sold out. Strawberry, mulberry and pineapple squash followed thereafter.

 With the overwhelming response and after building a loyal following of customers, his father decided to start his own processed food company and named it Nilon’s, inspired by the then current rage of the world's first totally man-made fibre, Nylon, that had revolutionised industries and lifestyles across the globe. The first factory, a small unit of 2,000 sq feet, was opened right next to the family’s fruit and vegetable farms. Soon pickles and jams were added to Nilon’s offerings and the company quickly gained large institutional buyers including company canteens and Indian Railways.

Going beyond its existing market stronghold in central India, scouring new markets, expanding production capacities and distribution, adding flavour profiles and developing new product categories of western foods like pasta and noodles alongside traditional favourites like pav bhaji and chaat – all this contributed to Nilon’s growth from an Rs8 crore company to a Rs100 crore one within five years. Its extensive range of value products coupled with a sharp market focus rapidly fuelled expansion. The company’s sales reached Rs132 crore by 2009, and grew at 55 per cent CAGR every year. But it was only during the last decade that it transformed itself in a big way and is now ready to commence its next growth phase. 

  • Nilon's Utran facility

“Getting the right taste in cooking is all about the finer nuances of procuring the right ingredients, getting the right, authentic recipes, the right temperatures and even the right timing of blending them to achieve culinary delight. At Nilon’s, we pay attention to the smallest detail and go that extra mile to ensure the best quality,” says Sanghavi.

To commemorate its 60th anniversary celebration, Nilon’s (also one of the largest pickle brands in the country) recently extended an invitation to aspiring women entrepreneurs to be a part of a collaboration journey through its launch of the ‘Pyaar, Achaar aur Mauka’ campaign. This aimed to tap into the true potential of entrepreneurship through direct participation from Indian households.

Pickle or achaar has a special place in meals all over India. It won’t be challenging to find a unique, mouth-watering achaar recipe in almost every Indian family. The contest invited all women to submit their unique pickle recipes and a sample, which was evaluated on various parameters by experts. The two-month-long process witnessed an astounding response, with 2,088 entries.

The entries saw some unique pickle recipes being shared. These included jackfruit, sprout, drumstick, berry, amla and onion pickles; every pickle had an interesting story behind it. On 27 April, Nilon’s selected 16 unique pickle recipes.

The company will be offering the winners of the contest all possible support, from commercial production of their pickle recipes at its factory in Jalgaon to packaging them (with their names on the label) and ensuring sales of the product through its nationwide distribution, and sharing a portion of the profits as well. This will also help the company tap into the unorganised pickle market which is estimated to be at around Rs1,500 crore as against the Rs500 crore organised market. 

Consumers' delight

Experts view this campaign as an innovative move which will go a long way in strengthening Nilon’s brand. “The first memory of Nilon’s that comes to my mind is their pickle sachet along with meals on trains from about a decade or more ago. Their innovations were a consumer delight then, as they are now. While they compete with global giants in FMCG, Nilon’s has remained relevant to consumers by continuously innovating, in the spirit of the quintessential Indian entrepreneur,” says N Chandramouli, CEO, TRA Research, a consumer analytics and brand insights company and publisher of TRA’s Brand Trust report.

Though the company has been in the business for decades now, it was only in 2009 that it commenced its journey 2.0. In 2008, the UK-based Pathak family picked up a 50 per cent stake in the company which was valued at Rs150 crore. In 2007, the Pathaks had sold their processed food business, Patak’s (into curry pastes, chutneys, pickles, etc) to Associated British Foods for around Rs1,500 crore and was looking at investing in the growing Indian processed food industry. The Pathak family not only invested in Nilon’s but also worked as a strategic investor, working closely with Sanghavi to initiate the company’s transformation story.

  • In the next few years, we are looking to build upon the categories we have got into. Besides, we would like to expand our market presence further

Currently, the Pathak family has a 39 per cent stake, while promoters hold a 31 per cent stake. The remaining stake is with BanyanTree, which initially in 2014 picked up a 22 per cent stake (Nilon’s was then valued at Rs350 crore) and subsequently in 2017 got it increased to 31 per cent. Avendus Capital had acted as the exclusive financial advisor to the 2014 transaction.   

With the infusion of equity capital, the company started its journey 1.0 in 2009 which saw it revamping its production facilities and supply chain and also putting up a new core management team which was more agile and ready to make bold decisions.   

By investing in fresh ideas sourced through customer collaborations, developing innovative recipes, and achieving quality benchmarks at affordable pricing, Nilon’s has continued its tradition of bold experimentation and introduced new products including Chinese Szechuan chutney, Chow mein masala, soya sauce, and red and green chilli sauce. All this has put the company on a high growth path.  Having grown at a CAGR of around 12 per cent in the last two fiscal years, it is all set to grow at around 30 per cent during the current year with supply chain-related challenges easing.   

As an organisation, Nilon’s is today strongly placed in a market which has evolved considerably in the last decade. Backed by state-of-the-art manufacturing facilities and professionals as part of the core team, the company is all set to start its journey 2.0. Apart from the South (4 per cent market), the company has built up a pan-India presence. It has an extensive range of products across multiple categories and looks to strengthen its position further by leveraging its capabilities and trusted brand.

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