IGI Logo

 In two back to back deals, Tata Consumer Products on Friday stated it will acquire up to 100 per cent stake in Organic India, a Fabindia-owned business that sells tea, infusions, herbal supplements and packaged foods, for Rs 1,900 crore in an all cash deal.

"The Board of Directors approved the acquisition of up to 100 per cent of the equity share capital of Organic India Private Ltd. The company, thereafter, has entered into a share purchase agreement (SPA) with Fabindia Ltd to acquire up to 100 per cent of the company's equity share capital," Tata Consumer Products said in an exchange filing.

The announcement came shortly after Tata Consumer Products' first acquisition of the day, where it said it will buy 100 per cent stake in Capital Foods, which markets its products under Ching's Secret and Smith & Jones brands, for Rs 5,100 crore in an all cash deal.

Estimated turnover of Organic India for FY24 is approximately Rs 360 to Rs 370 crore. In the last three fiscals, the company has seen a gradual decline in sales from Rs 394.8 crore in FY21 to Rs 324.4 crore in FY23.

The deal values the company at a little over five times its FY24 sales. Against FY23 sales, the company is valued at nearly six times its sales. Tata Consumer is valued at 12 times its FY23 sales and 11.5 times its FY24 (annualised) sales.

The Total Addressable Market (TAM) for the categories that Organic India is present in is Rs 7,000 crore in India and Rs 75,000 crores in international markets where Tata Consumer has a strong presence, the company said.

Fabindia, which said that its story began 60 years ago as a celebration of India, and the company remains committed to its core mission of bringing authentic Indian crafts to the discerning customer, said that over the past ten years, it has worked diligently to turn Organic India (OI) into one of India’s leading wellness brands.

Since the start of their partnership in 2013, Fabindia and OI have empowered thousands of farmers to transition to sustainable methods, and have built India’s largest network of certified organic farming clusters. OI has created a vertically integrated supply chain connecting farmers to a devoted customer base across the world, FabIndia said.

OI has evolved to a point where its growth prospects can be greatly enhanced by a dedicated FMCG distribution and sales network. In Tata Consumer Products Ltd (TCPL), we have found a partner who can elevate OI into a new phase of growth. With its extensive institutional network and global footprint, TCPL is ideally placed to unlock the full potential of what Fabindia and OI have built together.

OI co-founder Bharat Mitra said: "By the grace of our Sathguru, Papaji, and our great love for Mother India, we have been inspired to create a purpose-driven company that is uncompromisingly committed to the wellbeing of humanity and the earth. We were called from within our hearts to build a business model that transcended the tension between core human values and financial prosperity. Over 25 years, we created a thriving ecosystem that sought to harm none and benefit all—from mother nature, to the farmers and employees, to the customers and the wider public."

"Ten years ago, we partnered with Fabindia, whose support made it possible to advance our dream further than we ever thought possible. We are now delighted that Tata, India’s most storied conglomerate, is embracing Organic India, and we are inspired by their commitment to carry its mission to new heights. It is a day of fulfillment, contentment, and gratitude. We will always remain in awe of what is possible when we trust in the intelligence of the heart."

Sunil D’Souza, MD & CEO of Tata Consumer Products, 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."