According to Euromonitor the Indian snacking market will be around Rs 35,000 crore by 2020 and Prataap Snacks is targeting a 10 percent share.
Startup: Prataap Snacks was founded in 2003 by two brothers Amit Kumat and Apoorva Kumat along with their friend Arvind Mehta who started marketing cheese balls in Indore, Madhya Pradesh. In 2011 they created the Yellow Diamond brand and set their own manufacturing plant and supply chain. For the year ending April 2017 the company registered a turnover of Rs 850 crores with four factories, 168 super stockists and 2,900 distributors covering 24 Indian states.
So what helped Yellow Diamond succeed?
Credit : pixabay.com
Taste: The most important factor is taste. Amit Kumat spends a lot of time experimenting with flavours. His main test market is his own family. The flavours are made by his wife and they are then brought to the factory in a concentrated form.
But there are two other factors that have led to their success —falling equipment prices and a clever distribution strategy.
Manufacturing: Amit Kumat’s first challenge was manufacturing Yellow Diamond. To get the quality right they needed the best machines.
Ishida machines which are made in Japan were chosen. These machines can make as many as 50,000 packets in a day. These machines cost around Rs 60 crore with a payback period of four years.
Seeing rapid expansion, Sequoia Capital invested Rs 125 crore in April 2010. This investment helped the company to scale up faster. The company has a pan India distribution covering 2 million outlets. Sequoia Capital also invested Rs 70 crore in a new manufacturing line.
Present Day
Distribution: After flavour and production were managed, things moved fast. Their next challenge was distribution. Retailers in SEC C and D class outlets were tapped by the company who were earlier ignored by bigger FMCG companies. These retailers were given stock on immediate payment terms. This distribution strategy helped the company to keep its working capital requirement under check.
Future Plans
Prataap Snacks launched its maiden public offer of 482 crores which opened on 22 September 2017. It aims to use the proceeds to further expand the capacity of chips by 50 per cent and double that of namkeens. It also intends to use the public offer proceeds for marketing & brand building activities and to retire debt on its books.
Prof. Dinesh Mehra
Dr V.N. BRIMS
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