Nirula’s on the block again
Malaysian buyout fund Navis Capital Partners that owns a majority stake in Nirula’s has put the Delhi-based fast-food chain on the block again and has appointed NM Rothschild to advise it on a possible sale. But potential suitors say a high asking price may be keeping buyers away. Nirula’s managing director Samir Kuckreja, a part-owner of the company, said the firm “had received several takeover proposals” and confirmed the appointment of an investment bank to “manage such queries and explore the proposals”. “But at this stage, we would like to state that Nirula’s continues to be owned by Navis Capital Partners and me, and the current shareholding pattern is not expected to change in the foreseeable future,” said Mr Kuckreja. But a senior executive with a potential suitor said the owners of Nirula’s were expecting Rs 300 crore, which was “quite high”. He said Dabur, Indian Hospitality (IHC), Thapar Group and a Dubai-based fund were also sounded out to buy the 75-year-old restaurant chain. A top Nirula’s executive, requesting anonymity, said the company was still to get any feedback from its bank that the valuation is too high. He said Nirula’s was expecting a valuation twice the Rs 300 crore figure. According to an information memorandum prepared by Rothschild, Nirula’s is expected to post an operating profit of Rs 12.5 crore in the current fiscal. Last year, the company posted an operating profit of Rs 70 lakh as against operating losses of Rs 4.2 crore in FY07 and Rs 5.4 crore in FY06. Nirula’s hopes to end the current fiscal with an estimated Rs 93.7 crore in sales. It has posted sales of Rs 64 crore in 2007-08, up from Rs 36.6 crore a year earlier. In mid-2007, IHC was on the verge of acquiring Nirula’s from the Malaysian private equity fund, which acquired the family-run chain in 2006 for Rs 90 crore. As per reports, the deal came unstuck as IHC wanted to buy a 100% stake in the chain, but Navis was willing to sell only a minority stake. Navis has since sold its two other food businesses — Mars Restaurants and Sky Gourmet Catering — to IHC for an estimated $110 million. Nirula’s operation are based on the franchise format. Apart from Delhi and the national capital region, the company has stores in Panipat, Lucknow, Chandigarh and Agra. Its network spans 60 outlets, including dinein restaurants, pastry shops, ice-cream parlours and coffee shops. Mr Kuckreja said the company’s plans to set up 100 more outlets across India and abroad continue to be on track.