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Tag: Sunil D’Souza

  • Tata Consumer Q2 FY25: Revenue rises, profit margins face cost pressures

    Tata Consumer Q2 FY25: Revenue rises, profit margins face cost pressures

    Mumbai: Amidst an evolving landscape in the fast-moving consumer goods (FMCG) sector, Tata Consumer Products Limited (TCPL) Q2 FY25 results paint a picture of growth tempered by cost challenges. The company’s revenue from operations surged by 13 per cent year-over-year to Rs 4,214.45 crores, driven largely by a stronger performance in the non-branded business segment and international markets. However, cost inflation, particularly in tea prices, and rising finance costs weighed on profitability, leading to a 16 per cent drop in profit before exceptional items and tax to Rs 424 crores.

    The results were significantly influenced by recent acquisitions, including the integration of Tata Coffee Limited and other subsidiaries. While these strategic moves aimed to bolster the company’s portfolio, they also contributed to higher finance and amortisation expenses, impacting margins. “Our focus remains on navigating cost pressures while accelerating growth across key markets,” said Tata Consumer Products, MD & CEO, Sunil D’Souza.

    The company reported an exceptional expense of Rs 27.17 crores for legal, professional fees, and restructuring costs related to these acquisitions, marking an increase from Rs 14.55 crores in the same period last year. Despite these headwinds, a one-time tax credit of Rs 74 crores on the merger of subsidiaries helped support the bottom line, resulting in a consolidated net profit of Rs 367.21 crores, a modest 1 per cent improvement compared to Q2 FY24.

    The Indian branded business segment faced notable pressure, with a 2 per cent growth largely offset by tea cost inflation. Conversely, the international branded and non-branded segments exhibited stronger performance, with growth rates of 5 per cent and 19 per cent, respectively. The non-branded business, which includes plantations and extractions, achieved a notable revenue increase to Rs 462.28 crores. The segment’s profitability improved substantially to Rs 106.13 crores, reflecting better commodity price realisation and efficiency gains.

    Tata Consumer’s recent amalgamations, including Tata SmartFoodz and Tata Coffee, have reshaped its business structure, aiming for operational synergies. The restructuring has also brought significant changes to the company’s debt profile. The debt-to-equity ratio has climbed from 0.09 in Q2 FY24 to 0.14, signalling a rise in leverage due to acquisition-related financing.

    The company’s earnings before interest, tax, depreciation, and amortisation (EBITDA) margin slipped from 12.71 per cent in Q2 FY24 to 11.39 per cent, as cost pressures from raw materials and acquisition expenses weighed heavily. “We are focused on cost mitigation initiatives while ensuring that we invest in our brands and strategic priorities,” D’Souza added.

    Looking ahead, Tata Consumer aims to balance growth with cost containment, particularly in managing the impact of raw material inflation. The FMCG giant is also eyeing expansion in high-potential markets while consolidating its position in core categories.

  • TCPL to fund combined acquisitions by cash reserve & bridge financing

    TCPL to fund combined acquisitions by cash reserve & bridge financing

    Mumbai: Tata Consumers Products Limited (TCPL) would fund its acquisitions of Capital Foods Limited and Organic India Limited having a combined enterprise value of Rs 7000 crores. Through internal cash reserve and bridge financing, MD CEO Sunil Dsouza said on Sunday. ‘Both acquisitions operate in areas which offer’ far attractive ‘ and business is growing at a healthy pace,’ he said.

    Besides, TCPL will continue to strengthen its portfolio in the food and beverage segment organically to fill the gaps but also scout for inorganic growth opportunities if someone offers a better brand, technology, and team, he added.

    Last Friday TCPL announced the complete acquisition of Capital Foods which owns brands like Ching’s Secret and Smith & Jones at an enterprise valuation of Rs 5100 crore and Fab India backed organic India, which operates in the health and wellness category at an enterprise value of Rs 1900 crore.

    TCPL board is scheduled to meet on 19 January to consider the proposal for fundraising by debt issues in the form of commercial papers/debentures and equity issues.

  • Tata Consumer Products to acquire Organic India

    Tata Consumer Products to acquire Organic India

    Mumbai: Tata Consumer Products has announced that it has signed definitive agreements to acquire up to 100 per cent of the issued equity share capital of Organic India, one of the strongest ‘better for you’ organic brands spanning food & beverages and herbal & traditional supplements. 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. This acquisition will create a Health & Wellness platform for Tata Consumer Products.

    Organic India is a 25-plus years established brand with a geographical footprint covering over 48 countries, substantially from India and the USA. Its product portfolio spans premium and high-growth categories focused on sustainable living – herbal supplements, tea & infusions and organic packaged foods. Organic India has strong, long-standing relationships with 12,000 plus farmers and unparalleled end-to-end organic certifications across the supply chain. It pioneered commercial cultivation of tulsi and introduced high-value medicinal crops for farming in India. It has a portfolio of over 100 products in the Health & Wellness space.

    The total addressable market for the categories that Organic India is present in is Rs 7,000 crores in India and Rs 75,000 crores in international markets where Tata Consumer has a strong presence. This acquisition will provide significant synergy benefits in distribution, logistics and overheads apart from driving portfolio premiumisation and unlocking additional channels and new markets. Structural growth drivers for this portfolio include increasing demand for health & wellness products, growing consumer awareness around wellness and changing consumer preferences.

    Tata Consumer Products MD & CEO Sunil D’Souza said, “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. In addition, Organic India has built very strong relationships with farmers to create a robust organic supply chain with a trusted brand and a loyal consumer base. Organic India’s differentiated products and robust supply chain together with Tata Consumer’s distribution strength across channels in India and specific geographies globally makes us confident of accelerating momentum in the business while improving our margin profile.”

    Fabindia MD William Bissell 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.

    We at Fabindia echo Jamsetji Tata’s vision that ‘The community is not just another stakeholder in business but is in fact the very purpose of its existence.’ Organic India works with a community of tens of thousands of farmers who work only with socially and ecologically sustainable methods. We are confident that Organic India will continue to thrive with the Tatas’ leadership.”

    Kotak Investment Banking, Trilegal and Sidley Austin have been TCPL’s exclusive financial and legal advisors for this transaction respectively.

  • Tata Consumer Products to acquire Capital Foods

    Tata Consumer Products to acquire Capital Foods

    Mumbai: Tata Consumer Products has announced that it has signed definitive agreements to acquire 100 per cent equity shares of Capital Foods, owner of the brands ‘Ching’s Secret’ and  ‘Smith & Jones’, in a phased manner. 75 per cent of the equity shareholding will be acquired  upfront and the balance 25 per cent shareholding will be acquired within the next three years.  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 first or second positions in five large categories.  

    This acquisition will enable Tata Consumer Products to expand its product portfolio and further strengthen its pantry platform. There are significant synergy benefits with the existing businesses of Tata Consumer Products in areas spanning distribution, logistics,  exports and overheads. The overall size of the categories in which Capital Foods operates in is estimated at Rs 21,400 crores. 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.  

    Tata Consumer Products MD & CEO Sunil D’Souza 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.”

    Capital Foods founder Ajay Gupta 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 multi

    conglomerate 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 multi-national culinary brand that includes multiple food categories. The journey ahead is  going to be a giant leap for us, full of endless possibilities and definitely exhilarating!”

    Invus, the global advisor of Artal (a European evergreen family investor) MD Francis Cukierman said, “We are thrilled to have worked closely with Ajay Gupta and contributed to the journey of Capital Foods since 2013. Artal Asia, the Singapore  subsidiary of Artal Group, has decided to continue for the compelling next chapter of  growth of Capital Foods with Tata Consumer for the next few years.”

    General Atlantic managing director and head-India Shantanu Rastogi 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.”

    Kotak Investment Banking and Khaitan & Co have been TCPL’s exclusive financial and legal advisors on this transaction respectively.