Tata Consumer Products Ltd (TCPL) has recently made significant strides in expanding its portfolio with the acquisition of two prominent companies - Capital Foods and Organic India. The acquisitions, valued at a total of Rs 7,000 crore, reflect TCPL's strategic intent to broaden its product offerings and tap into new markets.
Acquisition of Capital Foods
In a cash deal worth Rs 5,100 crore, TCPL is set to acquire a 100% stake in Capital Foods, the owner of renowned brands such as Ching’s Secret and Smith & Jones. The acquisition will be executed in phases, with 75% of the equity shareholding to be acquired upfront and the remaining 25% within the next three years.
Capital Foods, a 25-year-old company, boasts a strong presence in the market, reporting a revenue of Rs 705.5 crore in FY23. Ching’s Secret, a market leader in Desi Chinese, covers diverse product categories, including chutneys, blended masalas, sauces, and soups. On the other hand, Smith & Jones caters to the growing demand for in-home cooking of Italian and other Western cuisines.
The acquisition aligns with TCPL's vision to enhance its product portfolio and strengthen its pantry platform. The estimated turnover of Capital Foods for FY24 is expected to range between Rs 750 to Rs 770 crore. This move enables TCPL to tap into the estimated Rs 21,400 crore market where Capital Foods operates.
Sunil D’Souza, MD & CEO of Tata Consumer Products, expressed excitement about the strategic fit, stating, "This transaction will accelerate momentum in our business and is margin accretive to our business."
Acquisition of Organic India
Simultaneously, TCPL has entered into a definitive agreement to acquire a 100% stake in Organic India, a business owned by Fabindia. This all-cash deal is valued at Rs 1,900 crore, with an additional earnout for shareholders linked to FY26 audited financials.
Organic India, with an estimated turnover of Rs 360 - 370 crore for FY24, specializes in organic herbal teas and health foods. The company has a geographical footprint covering over 48 countries, primarily in India and the US. Organic India's product portfolio spans herbal supplements, tea & infusions, and organic packaged foods. With relationships with over 12,000 farmers and a robust organic supply chain, the company has pioneered the commercial cultivation of tulsi and introduced high-value medicinal crops in India.
TCPL's acquisition of Organic India aligns with its strategic objectives in the rapidly growing health & wellness segment. D’Souza emphasized the exciting market opportunities presented by Organic India and the potential for accelerated momentum in the business.
Strategic Intent and Market Opportunities
Both acquisitions reflect TCPL's commitment to strategic growth and market expansion. The overall size of the categories in which Capital Foods operates is estimated at Rs 21,400 crore, while the total addressable market for Organic India is significant at Rs 7,000 crore in India and Rs 75,000 crore in international markets.
The acquisitions offer TCPL substantial synergy benefits, encompassing distribution, logistics, exports, and overheads. The company is poised to create a multinational culinary brand with a diversified presence across multiple food categories.
TCPL's recent acquisitions of Capital Foods and Organic India mark a significant chapter in the company's growth story. With an expanded product portfolio and a strengthened market presence, Tata Consumer Products is well-positioned to capitalize on evolving consumer preferences and emerging market opportunities. The strategic acquisitions align with TCPL's vision for sustained growth, innovation, and leadership in the FMCG sector.
© Copyright 2023. All Rights Reserved Powered by Vygr Media.
