In a stock exchange filing, ITC said the objective of this cash deal is to strengthen presence of its FMCG products in the emerging distribution channel of vending machines.
The cigarette-to-FMCG-to-hotel major ITC on Wednesday said it has entered into agreements to pick up to 33.42% stake in Delectable Technologies, a Bengaluru-based startup, which is engaged in fabricating vending machines and app-based sale of FMCG products through such machines.
The diversified conglomerate, in a stock exchange filing, said the objective of this cash deal is to strengthen presence of its FMCG products in the emerging distribution channel of vending machines. ITC will pay up a maximum of Rs. 7.50 crore in four tranches over a period of 12 months for this stake acquisition.
“The company has entered into Share Subscription Agreement and Shareholders’ Agreement to acquire up to 33.42% of the share capital of Delectable Technologies, subject to completion of agreed conditions precedent and milestones,” ITC said in the stock exchange filing. Bengaluru-based Delectable Technologies was founded by Satvik Sarwarde, an IITian, in 2014. Its turnover for the last fiscal stood at Rs. 69.15 lakh, up 256% year-on-year from Rs. 19.42 lakh for the previous fiscal. Its net worth as on March 31, 2019 stood at Rs. 1.48 crore.
Notably, addressing a media conference after the conglomerate’s 108th annual general meeting here in July, chairman Sanjiv Puri said ITC had put in money into alternative investment funds which in turn would be investing in start-ups. “The company is also open to make direct investment in start-ups, primarily in the FMCG segment… it is currently working closely with some start-ups and if required we may take a decision to invest in them directly,” he had added.
Notably, the company is looking at an “eight-fold jump” in its turnover from its non-cigarette FMCG business. Currently, around 25% of ITC’s segment revenue comes from non-cigarette FMCG business. Significantly, an eight times jump would take the company closer to its target amount of Rs. 100,000 crore turnover from its non-cigarette FMCG business. ITC currently has as many as 25 FMCG brands in foods, personal care products, stationary, agarbatti, safety matches and other segments.