Tata Consumer Products on Friday announced that its board of directors have considered and approved the fundraising of up to Rs 6,500 crore. In a regulatory filing, the company said that it has approved raising of funds through the issuance and allotment of Commercial Papers, for an amount not exceeding Rs 3,500 crore, and also raising of funds by way of issue of equity shares of the company of face value Re 1 each through rights issue for an amount not exceeding Rs 3,000 crore.
“For the purposes of giving effect to the rights issue, the detailed terms to the rights issue including but not limited to issue price, rights entitlement ratio, record date, timing and terms of payment will be determined in due course by the Board, or the ‘Capital Raising Committee’ constituted by the Board, in accordance with applicable laws, subject to receipt of necessary approvals, as may be required,” it said in the exchange filing.
Tata Consumer Products said that the funds amounting to Rs 3,500 crore is to be utilized for bridge funding to facilitate the payment of consideration for proposed acquisition of stakes in Capital Foods Private Limited and Organic India Private Limited.
Earlier on January 12, Tata Consumer Products had 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, it had said. The acquisition is aimed at enabling Tata Consumer Products to expand its product portfolio and further strengthen its pantry platform. The overall size of the categories in which Capital Foods operates is estimated at Rs 21,400 crore.
Sunil D’Souza, MD & CEO, Tata Consumer Products, had said, “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 realizing cost synergies. This transaction will accelerate momentum in our business and is margin accretive to our business.”
On the same date, Tata Consumer Products had also announced that it has signed definitive agreements to acquire up to 100% of the issued equity share capital of Organic India, 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. The Total Addressable Market for the categories that Organic India is present in is Rs 7,000 crore in India and Rs 75,000 crore in international markets where Tata Consumer has a strong presence.