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.
With the acquisition of Tatas, TCPL will now compete directly with Nestle’s Maggi, which commands a 60% market share and dominates the Rs 5,000 crore branded instant noodle industry. Nestle offers prepared foods and kitchen tools as part of its franchise system, which includes Maggi. Wai Wai, Patanjali, and Top Ramen are some of the other participants in the category.
In the research titled ‘Indian Organic Sector Vision 2025’, the commerce ministry projects that the market for organic and wellness goods will reach 75,000 crore by 2025, with growth in the high double digits, particularly after the Covid-19 pandemic.
Up until 2026–2027, this market is predicted to expand by up to 16–18% annually. Tatas has been buying up companies; in 2021, they acquired Soulfull, a manufacturer of millet-based snacks and breakfast cereals. The business has a history of acquisitions; in 2021, it acquired Soulfull, a manufacturer of millet-based snacks and breakfast cereals. Through new product releases and brand extensions at minimal additional cost, it achieved a 50% increase in sales.
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 exceeding1 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.
“As it grows into a bigger consumer packaged goods (CPG) company with goals beyond F&B, Tata Consumer offers a lengthy growth runway. Along with scaling up the India growth businesses, there would be significant room for expansion in market share gains in the core tea and salt areas, which would underpin the trajectory of growth. Other possible positive drivers include the chance to leverage BigBasket and other Tata Group assets, strong free cash flow, rising return ratios, and appealing long-term prospects for Starbucks, according to Latika Chopra of JP Morgan.
