Tata Consumer Products to acquire Tata SmartFoodz for Rs 395 cr

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November 12, 2021 3:34 PM

TCPL has signed a definitive agreement to acquire 100 per cent equity shares of TSFL, a deal which will help the Tata group FMCG arm to enter into the ‘Ready to Eat' category, said a joint statement.

TCPL was formed by merging the consumer products business of Tata Chemicals with Tata Global Beverages and has ambitions to be a leader in the FMCG segment.TCPL was formed by merging the consumer products business of Tata Chemicals with Tata Global Beverages and has ambitions to be a leader in the FMCG segment.

Tata Consumer Products Ltd (TCPL) on Friday announced to acquire Tata SmartFoodz Limited (TSFL) from its group firm Tata Industries for a cash consideration of Rs 395 crore. TCPL has signed a definitive agreement to acquire 100 per cent equity shares of TSFL, a deal which will help the Tata group FMCG arm to enter into the ‘Ready to Eat’ category, said a joint statement.

“This move is consistent with TCPL’s strategic intent to expand into value-added categories,” it said, adding “the acquisition will enable TCPL to expand its product portfolio and enter the RTE segment”. TSFL, under the brand name Tata Q, offers a range of differentiated products manufactured using MATS technology in India.

It had commenced operations in 2019 and became the second-largest player in the RTE market. TSFL also has a manufacturing facility in Sri City, Andhra Pradesh.

TCPL expects the RTE category to grow at a significant pace, benefitting from demographic tailwinds such as urbanisation and high disposable income nuclear families looking for convenience, nutrition and hygienic food on the go.

“The category is already large and growing strongly in the international markets that TCPL already operates in. Tata Consumer Products will leverage its existing domestic and international distribution and focus on operational excellence to maximise value,” said TCPL.

Moreover, TSFL is using MATS technology, which will also enable TCPL to create a strong pipeline of value-added products in other parts of the foods business.

Microwave-assisted thermal sterilisation (MATS) is a food processing technology that uses long-wavelength microwave energy together with heat to sterilise packaged food. It retains sensitive nutritional components, along with flavour, texture and appearance.

TCPL MD and CEO Sunil D’Souza said: “Tata SmartFoodz is a good strategic fit for us given the nature of its business and it will also allow us to expand our portfolio into the Ready to Eat segment. RTE is a fast-growing segment in India and a sizeable opportunity in the international markets”.

The acquisition will give TCPL access to unique technology and the product portfolio synergizes well with its existing distribution infrastructure both in India and internationally, he said.

“We believe Tata Consumer Products is well-positioned to help unlock the market potential of this technology and scale up this business to meet the growing consumer need for wholesome, trusted and convenient food offerings,” D’Souza added.

Tata SmartFoodz CEO Balark Banarjea said: “Being part of Tata Consumer Products will enable us to strengthen our market presence and scale up the business. It will allow us to leverage Tata Consumer’s strength in modern trade and e-commerce channels in India and also its global presence to target key international markets for RTE exports”.

TCPL, earlier known as Tata Global Beverages Ltd, had earlier this year in February had announced to acquire Bengaluru-based Kottaram Agro Foods, engaged in the business of healthy breakfast cereals and millet-based snacks under the trademark Soulfull, for Rs 155.8 crore to expand its product portfolio.

Last month, the company had said it will transfer its tea cafe business ”Tata Cha” to group firm IHCL, which operates Taj group of hotels. TCPL is already operating Tata Starbucks, a 50:50 joint venture with Starbucks Corporation, and operates around 224 stores in 18 cities.

TCPL was formed by merging the consumer products business of Tata Chemicals with Tata Global Beverages and has ambitions to be a leader in the FMCG segment.

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