Since the first week of December 2020, we noticed Mrs Bector’s Food Specialities or Mrs Bector’s Cremica making its way to the headlines. They announced share allotment to the public and got a whopping response by becoming the most subscribed IPO this year.
Initial Public Offering (IPO) is the process in which a private company sells its stocks to the general public. It could be a budding, young company or a well-established old company which decides to be listed on the stock exchange. With the help of an IPO, companies raise equity capital by issuing new shares to the public or the existing big shareholders can sell their shares to the public without raising any fresh capital.
Mrs Bector’s Food Specialities IPO or Mrs Bector’s Cremica offered 1.32 crore shares and got oversubscribed very soon witnessing a massive 198.02 times subscription. The window offered to the general public was from 15-17 December 2020. In fact, the craze over their IPO knew no bounds as bids reached over 262.10 crores against the total issue size of 1.32 crore according to the National Stock Exchange. This brand has existed since my childhood days and it made me question how it all came into existence.
Family History of Mrs Bector’s Cremica
Before one gets confused it needs to be clarified that biscuits and sauces are sold under the brand name “Mrs Bector’s” and bakery products are sold under the name “English Oven”. The founder and creator of this large a company is Mrs Rajni Bector who was born in the city of Karachi but shifted to Ludhiana in Punjab during the 1947 partition. Brought up in the same city and got married at the age of 17, she raised three sons and sent them off to boarding school in Mussoorie. After this, it dawned upon her that all the free time she had could be utilized well and more productively by enhancing her culinary skills. She was very passionate about food and to take it a notch higher she enrolled herself into a course offered by Punjab Agricultural University.
During 1978, almost 42 years back when women were suppressed by society and looked down upon for stepping into the business sector, Mrs Bector decided to start a small venture in her backyard. Just like any home-cooked food startup, hers relied on word of mouth for the news to spread and soon started receiving orders not just from her friends and family but also from her neighbours with regard to cooking for parties and social gatherings and built a network of her own.
A startup aims for something higher every day but it was disheartening for the entire family to see their efforts not yielding desirable profits. There was no sign of growth whatsoever and the investments weren’t helping. Dharamvir, Rajni’s husband, took a call of putting all their eggs in one basket and moving ahead with investing big, expanding and commercializing the initiative. With their first bulk investment of Rs.20,000 for the budding company in 1978, Mrs Bector decided to set up a compact ice-cream manufacturing unit in the same backyard to cater to bulk orders.
The 1990s also saw terrorism as a bad phase and the Bector’s ancestral business in Punjab got highly affected for the first time in 107 years of its existence. They decided to not let this setback affect them in any way as Cremica Group had already started making booming profits and was a well-known business worth 5 crores.
1990s LPG (Liberalisation, Privatisation and Globalisation)
On July 24 1991, India announced its New Economic Policy (NEP) and named it LPG or Liberalisation, Privatisation and Globalisation model. The main objective was to achieve economic stability through plunging into “Globalization” and to give the economy a new thrust on market orientation. The process of globalization, therefore, was accompanied by a strong dose of Americanization manifest as India opened its arms to big private companies in such symbols as Coca-Cola and McDonalds and spread their influence all over the world.
McDonald’s India, a wholly-owned subsidiary of McDonald’s India Private Limited (MIPL) was incorporated in 1993. From the term McDonald’s, McDonaldization as a concept was derived and can be applied and studied in Indian society. This term was first used by sociologist George Ritzer in his book “The McDonaldization of Society”. He goes on to explain that it is the occurrence of homogenization of cultures when a culture possesses the characteristics of a fast-food restaurant. Right before India transitioned into the McDonaldization phase, Mr Akshay Bector came to know that McDonald’s was scouting for local suppliers and therefore wrote a letter directly to their head office expressing his interest to be a part of this venture.
To their surprise the company zeroed down to Cremica for the supply of buns and the partnership was later expanded to liquid condiments, buns and other bakery products as well, this in itself was a huge turning point for the entire family in 1995. They also entered into a 50:50 joint venture with Quaker Oats in 1996, a USA based company, and launched a new brand by the name Quaker Cremica Foods (P) Ltd. They mainly looked after liquid products such as, Mayonnaise, Tomato Ketchup, Milkshake Syrups, Tartar & Sandwich Spreads, and Ice Cream topping which would mainly cater to McDonald’s requirement in India and its neighbouring countries. Mrs Bector also supplied to Burger King.
Demerger of Mrs Bector’s Cremica
In 2013 there was a paradigm shift and the entire business was divided into three equal parts between Rajni Bector’s sons. An agreement was made between Ajay, Anoop and Akshay where biscuits and bakery business was demerged from the condiments business. Post demerger Akshay Bector decided to go national in retail space by planning an IPO. As a part of the entire settlement process, the PE Firm Motilal Oswal which is known to currently possess a 20% stake in the company will now have a stake in the biscuit business only. Mrs Bector’s also planned to focus more on retailing with time and put more emphasis on the premium segment of the market.
Mrs Bector started her venture in the small backyard of hers by herself when the society was busy harbouring toxic traits of its ancestors, holding women back in whichever way possible, not letting them reach the top. Mrs Bector’s Cremica soon grew into a full-fledged family run corporation bringing joy and pride to the entire country. However, with success and achievements came greater strategic issues leading into a demerger. In my opinion, demerger intertwined with the introduction of IPO and the road ahead seems very exciting but at the same time, it’s a rollercoaster ride. The family is bound to face a new set of highs and lows individually and we can only take a backseat and watch them tackle hurdles, grow and expand to the best of their potential.
2015, ‘The Cremica Story’, AIMA Journal of Management & Research, Article 13, Volume 9, Issue ¾