Caterer Elior eyes buyouts to expand

French firm plans to invest $100 mn in India, spend a third of it on acquisitions

Elior India Catering LLP, a French food catering and support services provider, is in talks with three companies for a buyout as it plans to expand its footprint by building centralised kitchens and paring costs using technology.

“A third of the $100 million we talked about bringing to India will go for acquisitions,” Sanjay Kumar, chief executive officer, Elior India, a fully owned subsidiary of France’s Elior Group, said in an interview.

‘Top priorities’

“There will be two sectors which will be of interest to us. One is corporate, and the second is education and healthcare. These will be the top priorities.”

Elior India aims to challenge competitors such as Sodexo and Compass Group in India. The Indian food service industry is valued at about $40 billion and growing at a CAGR of 11%, according to Elior. It is slated to reach $78 billion by 2018. The Indian contract catering market is worth $3.3 billion and growing at a compounded rate of 16%. The market is, however, highly fragmented with more than two million organised caterers.

“We are talking to three players in the industry space, who undertake banquets as well,” he said. “We do not want to acquire for the sake of scale and it should fit in with our premium food service provider position,” Mr. Kumar said. “Most people whom we talk to are in the business for more than a decade. Otherwise, the confidence level that the customer has on their services is very low.”

“The banquet segment is a huge one,” he said. “There is a large space outside of it which includes conferences, company events like employee day, family day, each of which brings in sometimes 3,000 to 5,000 employees to have food together. Then there is healthcare segment. That is very large and involves a very complex delivery system including patient food, attendant food, visitor food, doctor food, staff food and within the patient food also you have multiple categories.”

Elior is present in the education segment. It caters to different universities and hostels. “As of now there are multiple segments which do not exist in India, for example, the defence, the railway,” Mr. Kumar said.

“In healthcare, we are looking for a target to acquire as we do not have the competency. In educational institutions, we are already there with Indian Institute of Technology, Canadian International School and others. We will be gradually expanding in this segment,” he said. “All the target companies are in central and northern India.”

Elior entered India in late 2016 through two acquisitions — a 70% stake in Chennai-based CRCL and 100% of Bengaluru-based Megabite Food Services.

Together the companies serve 129,800 meals every day. Post-acquisition, Elior’s customers include Daimler, Pfizer, Cisco, Google, MRF, Vellore Institute of Technology, Larsen & Toubro, Ashok Leyland, Panasonic and Hindustan Motors.