Tata Consumer to acquire Capital Foods for Rs 5,100 cr, Organic India for Rs 1,900 cr

Tata Consumer Products Ltd on Friday announced two mega deals to augment its product portfolio. Tata Consumer announced that it has signed definitive agreements to acquire 100% equity shares of Mumbai-based Capital Foods, owner of the brands ‘Ching’s Secret’ and ‘Smith & Jones’, in a phased manner for Rs 5,100 crore. It has also announced that announced that it has signed definitive agreements to acquire Fabindia-backed Organic India, which is in the business of packaged organic teas, herbal products and health supplements, for Rs 1,900 crore.

75% of the equity shareholding will be acquired upfront and the balance 25% shareholding will be acquired within the next three years, said Tata Consumer about Capital Foods' acquisition.

"This move is consistent with Tata Consumer’s strategic intent to expand its product portfolio and its target addressable market in fast growing/high margin categories. Capital Foods has strong umbrella platform brands with a portfolio of unique products for in-home consumption in fast growing categories. Ching’s Secret is a market leader in Desi Chinese across its product categories - Chutneys, Blended Masalas, Sauces and Soups. Smith & Jones is a fast-growing brand catering to in-home cooking of Italian and other western cuisines. Overall, Capital Foods has #1 or #2 positions in five large categories," said Tata Consumer in a stock exchange filing.

The overall size of the categories in which Capital Foods operates in is estimated at Rs 21,400 crore. Structural growth drivers for the category include continued growth in income levels, evolving consumer preferences leading to increased salience of global cuisines in in-home cooking and increasing need for convenience, added the Tata group firm.

Estimated turnover of Capital Foods for FY24 is approximately Rs 750 to 770 crore, said Tata Consumer. Estimated turnover of Organic India for FY24 is approximately Rs 360 to 370 crore.

Sunil D’Souza, MD & CEO, Tata Consumer Products, said: “We are excited to welcome Capital Foods into Tata Consumer Products. We believe this is a good strategic and financial fit. It will open up significant market opportunities in the fast-growing non-Indian cuisines segment, leveraging the sales and distribution platform that we have built. 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 realising cost synergies. This transaction will accelerate momentum in our business and is margin accretive to our business. We are excited about bringing Organic India into Tata Consumer Products. This transaction aligns well with Tata Consumer’s overall strategic objectives and presents exciting market opportunities in the rapidly growing Health & Wellness segment."

The Total Addressable Market for the categories that Organic India is present in is Rs 7,000 crore in India and Rs 75,000 crore in international markets where Tata Consumer has a strong presence.

Ajay Gupta, Founder of Capital Foods said, “Today is a historic day for Capital Foods. To be associated with the iconic Tata Group is a dream come true for me. Just the name, ‘Tata’, instils a sense of trust and pride in every Indian. Like Capital Foods, Tata is a home-grown brand that is globally recognised. Tata Consumer Products is a multiconglomerate that spans the globe with quality food ingredients and products. In 28 years, from 3 bottles of sauces, to an entire ‘Desi Chinese’ cuisine block, Ching’s Secret has become a brand to be reckoned with. Smith & Jones covers another food block with tremendous potential. Together, Tata and Capital Foods can create a multinational culinary brand that includes multiple food categories.”

Investors in Capital Foods include General Atlantic, which bought a stake in the company in 2018.

Shantanu Rastogi, Managing Director and Head-India for General Atlantic, said: “We have had a great partnership with Ajay Gupta in scaling Chings and Smith & Jones into the most adored brands in their categories. We wish Ajay and Tata Consumer Products the best in the next phase of development of Capital Foods.”

William Bissell, Managing Director of Fabindia said: “Tata is India’s most venerated and dynamic brand. For over a hundred and fifty years, it has stood as the visionary exemplar of Indian values: fairness, preservation of civilizational traditions, harmony with the natural world, and social uplift for all. That is why we are immensely excited that they will be guiding Organic India through its next chapter and stewarding the vital mission for which Organic India stands.”

On Friday, Tata Consumer's scrip was trading 3.5% higher at Rs 1,158.7.