According to three people who had knowledge about the negotiations, Bikaji Foods International is selling a minority stake in the firm and is looking to auction it off to a private equity firm. The Rajasthan-based snack maker was also said to have been talking with Norwest Venture Partners, Sequoia Capital, Lighthouse Capital and Tano Capital regarding the stake auction, and that Tano was most likely favored to acquire the minority interest, the sources added.

One of the sources said, "Discussions are currently on over valuations."

Bikaji Foods managing director Deepak Agarwal shot down news about the developments of the stake sale and said, "It is very premature to comment on our fund-raising plans. A decision will be taken in a fortnight."

A spokesperson for Tano could not be reached by The Economic Times for comment about the auction.

Bikaji Foods makes local snacks in India like bhujia, papad, namkeen and sweets, and also exports some of them abroad. The company also operates quick-service restaurants in Mumbai under the brand name Bikaji Food Junxon.

According to The Economic Times, proceeds from the share sale will be used towards international expansion plans of the company.

An unnamed investment banker who has knowledge about some of Bikaji Foods' plans said. "The company now wants to enter and expand into ready-to-eat category of food products. The capital will help it achieve this."

KPMG partner and head transaction advisory services Vikram Hosangady, referring to the minimum regulatory challenges that snack makers in India are facing, said, "Private equity will continue to be overweight on this sector, given the minimal regulatory challenges this sector faces and the free cash that these businesses generate."

Indian Credit Rating Agency said in July that its strong rating on Bikaji was due to the company's established distribution network and strong brand. The ratings agency said in its report, "Financial health of the company also remains comfortable, as reflected in the relatively low gearing of the company, low working capital intensity of operations and healthy debt protection indicators."