VC Firm Pays Rs. 21 crore for a Bite of City Vada Pav
on September 2nd, 2011 at 11:11 amMumbai-based Goli Vada Pav chain to use funds for its national rollout
The humble vada pav, Maharashtra’s popular snack, is set to compete with major multinational fastfood brands, after a venture firm joined hands with two first-time entrepreneurs to help roll out a national chain of restaurants. VenturEast, a southern venture capital firm, has invested $4.7 million, or Rs.21 crore in Goli Vada Pav, a Mumbai-based ethnic food chain that sells the snack.
The firm hopes to set up outlets across the country in an attempt to replicate the success enjoyed by Jubilant Foodworks, a franchisee for Domino’s Pizza.
Venkatesh Iyer and Shivadas Menon, founders of Goli Vada Pav, set up this firm in 2004 with an investment of Rs. 1 crore and now seek funds to expand the chain into smaller towns . “At least five investors had approached us, but we selected VenturEast because of their pedigree, approach and ability to understand our business,” said Mr Iyer.
The investment values Goli Vada Pav at about . 100 crore, he added. The funds will be used to improve managerial capabilities and also for brand building.
The company plans to set up training centres for its own staff and also those of franchisees and will also put in place audit and MIS systems, said Iyer who has 20 years of experience in corporate consultancy, franchising chain and retail chain models. His partner Menon’s expertise lies in corporate finance.
With assets of over $300 million under management, VenturEast focuses on highgrowth, small and medium enterprises and has offered financial support to over 50 projects in technology, healthcare and life sciences and other emerging sectors.
The Indian fast food market is growing at an annual rate of 25-30%, industry estimates show. Goli Vada Pav’s turnover is about Rs. 20 crore and Mr Iyer says sales could more than double by the end of 2012-13. “We would also like to make a public issue when market conditions are favourable,” he added.
Goli Vada Pav focuses on smaller towns and cities where the company sees major scope for expansion , given the limited presence of multinational food companies.
The company has grown on a franchisee model with a network of 125 outlets spread across Maharashtra, Karnataka, Andhra Pradesh and Tamil Nadu. It plans to develop a network of around 500 franchisees in the next three years.
Iyer says Goli Vada Pav’s strength lies in the quality of its products that are manufactured in hygienic environments with supply chain and technology support from Vista Foods. Vista provides infrastructure and support services from its plant at Taloja in Maharashtra.
