ITC Ltd on Sunday said it is set to acquire Kolkata-based spice maker Sunrise Foods Pvt. Ltd (SFPL), in a move that will help the company cement its position in the country’s fast-moving consumer goods (FMCG) market.
ITC entered into a share purchase agreement on 23 May 2020 to acquire 100% of the equity share capital of SFPL, a company primarily engaged in the business of spices under the trademark ‘Sunrise’, ITC said in a press release on Sunday.
The move will help ITC expand its FMCG business, which at present spans packaged foods to personal care products.
“The proposed acquisition is aligned with ITC’s strategy to rapidly scale up its FMCG businesses in a profitable manner, leveraging its institutional strengths through deep consumer insight, a deep and wide distribution network, agri-commodity sourcing expertise, cuisine knowledge, strong rural linkages, and packaging knowhow," the company said.
The acquisition will also help ITC ramp up its spices business in the country. ITC already sells spices under its Aashirvaad brand, popular in markets such as Telangana and Andhra Pradesh. “The proposed acquisition will augment the company’s product portfolio and is aligned to ITC’s aspiration to significantly scale up its spices business and expand its footprint across the country. The deep consumer connect and distribution strength of SFPL in the focus markets, together with synergies arising out of the sourcing and supply chain capabilities of the company’s agri business and its pan-India distribution network, will provide significant value creation opportunities for the company," ITC said.
The company has set a turnover target of ₹1 trillion from its FMCG business by 2030 as it moves to expand revenues beyond its cigarettes business. It already sells popular FMCG brands like Aashirvaad flour, Bingo! chips, B Natural juices, Vivel and Yippee! noodles.
Mint had earlier reported that Sunrise Foods has received interest from global private equity firms to purchase a stake in the company.
“This is a positive development for ITC as among its diversified portfolio… Branded spices is an exciting and high-growth segment as consumers shift from unbranded to branded due to higher focus on safety, trust and quality," said Abneesh Roy of Edelweiss Research.
Sunrise Foods is run by the Kolkata-based Sharma family, which has been in the spice business for more than 100 years. It recorded a net profit of ₹41 crore on a total revenue of ₹400 crore in the year to 31 March 2018, according to a May 2019 note by rating agency Crisil.
