How high-flying FMCG Startup Fizzy Foodlabs ended up in liquidation

Fizzy Foodlabs Ltd, an FMCG start-up co-founded by three IIT Bombay batchmates in 2012, was on its way to greatness when in 2015 it raised $6 million in a Series A round of funding from SAIF Partners and Haresh Chawla, partner at India Fund Advisors.

The company that boasted of two successful brands — Chef’s Basket, ready-to-cook meal kits and Colonel & Co, a Chip ‘n Dip snack – had plans to expand its reach to top 15 cities through its tie-ups with online retailers like Flipkart, Amazon, Snapdeal, BigBasket, Paytm and Grofers as well as with supermarket chains such as Hypercity, D-Mart and Big Bazaar.

The company was aiming high and by end of 2017-18 it was on its way to $1 million a month revenue. The packaged convenience foods company’s two brands were distributed across 12,000 outlets in 11 countries.

According to the LinkedIn posts of Manish Tirthani, one of the co-founders, the company established in-house R&D and QA Lab, and two in-house manufacturing plants. All this was achieved with the of highest level of quality benchmark which helped it secure USFDA approval. Its R&D lab received DSIR accreditation and QA lab received accreditation and financial grant from APEDA.

However, things did not work out as planned. The company found it tough to scale up with its limited portfolio. Its revenues never crossed Rs 10 crore mark while losses kept mounting. In 2016-17, it posted a loss of Rs 30 crore against revenue of Rs 4.85 crore. In 2018-19, its revenue fell to a third of what it was in the previous year even as losses remained at over Rs 10 crore.

And within a year, the ‘start-up’ is under liquidation after having failed to clear a payment of Rs 8.95 lakh of one of its vendors – Colours Cartons Ltd.

The vendor filed an insolvency petition against Fizzy Foodlabs, which got admitted by NCLT in September 2019. Three months later after having failed to find any resolution, the decided to liquidate the company. During the resolution process, resolution professional Suresh Chandra Jena took custody and control of the assets of the corporate debtor and constituted the CoC. Due to non- availability of funds, even though two valuers were appointed the valuation report was not given by the valuers. The CoC was reconstituted, and but the CoC did not give approval for invitation of expression of interest as the company’s future plan was not viable.

The CoC on 9 December 2019 decided to liquidate the company with 81.39% of voting share. The company owed Rs 2.11 crore to its creditors of which Rs 1.5 crore was due to financial creditors. The NCLT gave its approval to liquidate the company on 12 March 2020.

Fizzy Foodlabs’ successful ready-to-cook meal kits – Chef’s Basket – has been acquired by WeikField Foods.

Two of its co-founders have since then taken up new roles in other companies. Nipun Katyal is now national sales head, supply acquisition in Blackbuck, a new-age logistics company, while Varun Jhawar has joined medicine and healthcare delivery firm Generico.

How it fizzled out: Key numbers