Tata Consumer, the front-runner in the battle to become Ching's Secret's manufacturer, values the company at Rs 5,500 crore

21 Sep 2023 , 01:01 PM

After weeks of drawn-out discussions, Tata Consumer Products Ltd (TCPL) has emerged as the front-runner to purchase Capital Foods Pvt Ltd, the manufacturer of condiments, food items, and ingredients sold under the Ching’s Secret and Smith & Jones brands.

The company will be valued at Rs 5,500 crore if TCPL purchases 65-70% of it from its three investors, with a plan for acquiring the remaining 30% over time. The largest food corporation in the world, Nestle SA, as well as The Kraft Heinz Co. are the other competitors in the race.

Capital Foods has introduced a number of goods with ‘desi’ flavours over the years. Along with the Smith & Jones line of ginger-garlic paste, specialty sauces, and baked beans, they include Ching’s Secret quick noodles, soups, condiments, curry pastes, and frozen dinners.

To determine the stake the existing shareholders will rollover or whether they will completely quit, the legal paperwork and final rounds of negotiation are still in progress.

Kotak Mahindra is TCPL’s advisor.

The possible acquisition would pit TCPL against Nestle’s Maggi, which has a 60% market share in the Rs 5,000 crore market for branded instant noodles. The Maggi franchise is a division of Nestle’s prepared food and kitchenware division. Top Ramen, Wai Wai, and Patanjali are further competitors in the market.

Several international conglomerates and domestic consumer firms, including ITC, Hindustan Unilever, Orkla, Nissin Foods, and McCormick, had expressed interest in the selling process. Nearly $1.5 billion (Rs 12.45 crore) was the original ask, which was significantly larger.

Despite not having yet submitted its FY23 financial information to the Registrar of Companies (RoC), sources close to Capital Foods predict that sales would reach Rs 900 crore with a 25% ebitda margin. 

According to individuals close to the company, the core business has been rising at a compound annual growth rate (CAGR) of 30% while competitors are growing at a single digit pace.

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