homebusiness Newscompanies NewsExclusive: Tata Consumer's blockbuster acquisitions to boost shareholder value, says CEO
Exclusive: Tata Consumer's blockbuster acquisitions to boost shareholder value, says CEO
Sunil D'Souza, Managing Director and Chief Executive Officer at the Tata Group firm, speaks in an exclusive interview with CNBC-TV18, outlining Tata Consumer's ambitious plans and recent acquisitions.
Tata Consumer Products Ltd is poised for significant growth and value creation for its shareholders, said Sunil D'Souza, Managing Director and Chief Executive Officer at the Tata Group firm. Speaking in an exclusive interview with CNBC-TV18, D’Souza outlined Tata Consumer's ambitious plans and recent acquisitions.
TCPL had recently announced that it will acquire a 100% stake in Capital Foods, the owner of 'Ching's Secret' and 'Smith & Jones', for ₹5,100 crore. This acquisition, structured as a phased acquisition, involves securing 75% of the equity shareholding upfront, with the remaining 25% to be acquired over the next three years.
D’Souza revealed that this move completes the entire breadth of TCPL’s portfolio and is expected to significantly scale up Capital Foods’ revenues, given that TCPL’s reach is 10 times that of Capital Foods. He also highlighted an immediate margin synergy of 400 basis points with Capital Foods, which could see a steady-state margin of upwards of 25%.
Tata Consumer has also disclosed its intention to acquire a 100% stake in Organic India through an all-cash transaction valued at ₹1,900 crore. This acquisition includes an additional earnout for shareholders linked to Organic India’s audited financials for the fiscal year 2025–26.
D'Souza stated that Organic India’s presence is currently at 24,000 stores, compared to TCPL's direct reach of 1.5 million. He expects a significant scale in organic foods through their presence in both India and overseas markets, with organic foods potentially reaching high teen margins on a steady state, excluding synergies.
He said, “I can say that we are going to grow aggressively on the top line, high strong double-digit growth, and EBITDA would be significantly accretive to our portfolio. So, we would see a significant increase in the EBITDA margins for ourselves. I would say a significant change in the growth trajectory of TCPL with these brands and EBITDA accretive.”
D'Souza also shared plans to raise funds via either CPS or a rights issue for these acquisitions to raise enough capital for future inorganic growth. While the company is not currently in talks with any prospective acquisitions, it remains open to more.
The CEO expects the deal to be EPS-accretive in the second year and anticipates the current businesses of Tata Consumer to scale well. He also confirmed that the Starbucks target of 1,000 stores is well on track and that UK margins and market share have improved.
(Edited by : Vivek Dubey, Ajay Vaishnav)
First Published: Jan 14, 2024 10:04 PM IST
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