Tata Consumer To Acquire Capital Foods, Organic India For $844 Mln

Tata Consumer Products Ltd. agreed to acquire Capital Foods Private Ltd., the owner of Ching’s Secret and Smith & Jones brands, as well as organic products manufacturer Organic India Private Ltd. for a total enterprise value of 7,000 crore rupees ($844 million).

Tata Consumer signed agreements to buy a 100% stake in Capital Foods in a phased manner from its existing promoters and shareholders at an enterprise value of 5,100 crore rupees on a no cash/no debt basis, the Tata Group company said in a stock exchange announcement.

The Indian fast-moving consumer goods company also signed an agreement with Fabindia Ltd. to acquire a 100% stake in Organic India at an enterprise value of 1,900 crore rupees on a no cash/no debt basis, along with an additional earnout for the shareholders linked to FY26 audited financials of the company.

Tata Consumer, which will pay the consideration in cash for both the acquisitions, said the move is in line with the company's strategic intent of entering into new adjacent high growth/attractive margin categories in the food and beverage space.

CAPITAL FOODS

Tata Consumer agreed to acquire a 75% stake in Capital Foods upfront and the balance 25% stake within the next three years.

Capital Foods, founded by Ajay Gupta, is primarily engaged in the business packaged food and condiments. The company primarily manufactures and sells chutney, masala, sauces, noodles and soups under the trademark Ching’s Secret and Smith & Jones.

Ching’s Secret is a market leader in Desi Chinese across its product categories, while Smith & Jones is a fast-growing brand catering to in-home cooking of Italian and other western cuisines, according to the statement.

“The strong brand recall of Ching’s Secret and Smith & Jones coupled with our operational strength across channels makes us extremely confident of driving topline growth and realizing cost synergies,” said Tata Consumer Managing Director and Chief Executive Officer Sunil D’Souza. “This transaction will accelerate momentum in our business and is margin accretive to our business.”

Capital Foods’ revenue from operations stood at 705.5 crore rupees in FY23, compared with 574.2 crore rupees a year earlier.

Tata Consumer said the acquisition of Capital Foods -- which operates in the categories estimated to be at 21,400 crore rupees -- will enable the company to expand its product portfolio and further strengthen its pantry platform.

There are also significant synergy benefits with the existing businesses of Tata Consumer in areas spanning distribution, logistics, exports and overheads, it added.

The acquisition of 75% stake in Capital Foods is expected to be completed on or before 31 March 2024, subject to completion of certain conditions.

Kotak Investment Banking and Khaitan & Co were Tata Consumer’s exclusive financial and legal advisors.

ORGANIC INDIA

Organic India is an established brand for over 25 years with a geographical footprint covering over 48 countries. The company’s product portfolio spans premium and high growth categories focused on sustainable living - herbal supplements, tea & infusions and organic packaged foods.

The New Delhi-based company, which has strong relationships with over 12,000 farmers and end-to-end organic certifications across the supply chain, offers over 100 products in the health & wellness space.

“Organic India’s differentiated products and robust supply chain together with Tata Consumer’s distribution strength across channels in India and specific geographies globally makes us confident of accelerating momentum in the business while improving our margin profile,” D’Souza said.

Organic India’s consolidated revenue from operations stood at 324.4 crore rupees in FY23, compared with 361.8 crore rupees a year earlier.

Tata Consumer said the total addressable market for the categories that Organic India caters is 7,000 crore rupees in India and 75,000 crore rupees in international markets. The acquisition will provide significant synergy benefits in distribution, logistics and overheads apart from driving portfolio premiumization and unlocking additional channels and new markets, it added.

The company noted the health & wellness space is witnessing increasing demand amid growing consumer awareness around wellness and changing consumer preferences and the acquisition will enable creation of health & wellness platform.

The acquisition is likely to complete within three months, subject to fulfilment of certain terms of the agreement.

Kotak Investment Banking, Trilegal and Sidley Austin were Tata Consumer’s exclusive financial and legal advisors.

Note: $1 = 82.9249 Indian rupees

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