Tata Consumer Products Ltd (TCPL) has signed definitive agreements to acquire 100% equity shares of Capital Foods and Organic India in separate deals. The acquisition of Capital Foods will be in a phased manner, while TCPL will acquire 100% of Organic India in an all-cash deal.
TCPL will pay an enterprise value of ₹5,100 crore for 100% stake in Capital Foods on a no-cash-no-debt basis. The acquisition of 75% of the equity shareholding will be upfront, with the remaining 25% to be acquired within the next three years. For Organic India, TCPL will pay ₹1,900 crore, along with an additional earnout for the shareholders linked to FY26 audited financials of the company. Organic India is estimated to have a turnover of ₹360 – 370 crore for FY24, up from ₹324.4 crore in FY23.
The signing of the share purchase agreement with Capital Foods has ended months of speculation over the latter’s ownership that saw rivals such as Nestle and ITC bid aggressively. The acquisition aligns with Tata Consumer’s strategic intent to expand its product portfolio and target addressable market.
Capital Foods has strong umbrella platform brands with a portfolio of unique products for in-home consumption in fast-growing categories. In FY23, Capital Foods reported revenue from operations of ₹705.5 crore, with an estimated turnover of ₹750 to 770 crore for FY24.
Ching’s Secret, a market leader in Desi Chinese, and Smith & Jones, catering to in-home cooking of Italian and other Western cuisines, are part of Capital Foods’ portfolio. The acquisition will enable Tata Consumer Products to expand its product portfolio and strengthen its pantry platform, with significant synergy benefits expected in distribution, logistics, exports, and overheads.
Sunil D’Souza, MD & CEO of Tata Consumer Products, expressed excitement about the acquisition, stating that it is a good strategic and financial fit that will open up significant market opportunities in the fast-growing non-Indian cuisines segment.
Regarding the acquisition of Organic India, D’Souza highlighted its alignment with Tata Consumer’s strategic objectives and its potential in the rapidly growing health & wellness segment. Organic India has a strong presence in over 48 countries, with a product portfolio focusing on herbal supplements, tea & infusions, and organic packaged foods.
The overall size of the categories in which Capital Foods operates is estimated at ₹21,400 crore, while the total addressable market for the categories in which Organic India is present is ₹7,000 crore in India and ₹75,000 crore in international markets. The acquisitions are expected to leverage continued growth in income levels, evolving consumer preferences, and increasing demand for convenience, especially post-COVID.
Capital Foods, a 25-year-old company with manufacturing facilities in Nasik, Kandla, and Vapi, is jointly owned by US private equity group General Atlantic, Artal Asia Pte., Wildflower Family Trust, and founder chairman Ajay Gupta. Organic India, backed by FabIndia, has relationships with 12,000+ farmers and a product portfolio focused on sustainable living.
William Bissell, Managing Director of Fabindia, expressed confidence that Organic India will continue to thrive under Tata’s leadership, highlighting Tata’s reputation as a dynamic and venerable brand that aligns with Organic India’s mission.
