From Tea to Turmeric: Tata Consumer Charts New Flavor Path

12 Jan 2024 , 10:28 AM

After months of negotiations, Tata Consumer Products Ltd (TCPL) is expected to announce two significant transactions: the acquisition of Organic India, the company that makes health products and organic teas backed by Fabindia, and Capital Foods Pvt Ltd, which produces condiments, food products, and ingredients under the Ching’s Secret and Smith & Jones brands.

Through the purchases, the business will be able to acquire products with a broader range of tastes, break into new markets, and expand its line of organic products to cater to customers looking for healthier options.

Early next week is when the official announcement is anticipated to occur.

TCPL has agreed to purchase 75% of Capital Foods from current investors Invus fund, a European family office and investment arm, which currently has a 40% share; General Atlantic, a US private equity fund, controls 35% of the company and values it at Rs 5100 crore. The stake value would then be fixed at Rs 3,825 crore. A European family office and investing arm is called Invus. Ajay Gupta, the founder and chairman of Capital Foods and a former advertising executive turned food entrepreneur, will keep his 25% ownership for the time being, but Tatas will eventually buy him out as well, enabling him to generate additional value.

Additionally, TCPL will purchase a majority interest in Organic India from Fab India at a price of Rs 1800 crore. Supported by Premji Invest and Lighthouse Capital, Fabindia holds more than 40% of the shares of Lucknow-based Organic India.

Acquisition of Organic India allows Tata Consumer to enter new markets. It is likely the only source of ‘real & kosher’ organic items in India. These will be high margin infusions with supplements and organic foods. According to an informed source, the brand consequently receives enormous distribution opportunities both domestically and internationally.

As the sixth company to reach this milestone, Tata Consumer Products became a listed company on December 29th, joining the ranks of Tata Group companies with a market valuation exceeding Rs1 lakh crore. With a market value of Rs 1,04 lakh crore, it closed on Thursday. The last three months have seen a 26.52% increase in stock value.

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