TATA CONSUMER PRODUCTS LIMITED has informed the Exchange about Investor Presentation
January 12, 2024
National Stock Exchange of India Limited Exchange Plaza, C-1, G Block Bandra Kurla Complex, Bandra (E) Mumbai 400 051 Scrip Code – TATACONSUM
BSE Limited Phiroze Jeejeebhoy Towers Dalal Street Mumbai 400001
Scrip Code – 500800
The Calcutta Stock Exchange Limited 7 Lyons Range Kolkata 700 001 Scrip Code – 10000027 (Demat) 27 (Physical)
Sub: Investors Presentation on proposed acquisitions- Capital Foods Private Limited and Organic India Private Limited
Dear Sir/Madam,
In accordance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), we are submitting the Investors Presentation pertaining to the Company's announced proposals for acquiring stakes in Capital Foods Private Limited and Organic India Private Limited.
Additionally, the above Investors Presentation is also being made available on the website of the Company at www.tataconsumer.com
We request you to take this on record and to treat the same as compliance with the applicable provisions of the Listing Regulations.
Thanking you,
Yours Sincerely,
For Tata Consumer Products Limited
Neelabja Chakrabarty Company Secretary & Compliance Officer
Encl as above
11/13 Botawala Building 1st Floor Office No 2-6 Horniman Circle Fort Mumbai 400 001 India Tel: 91-22-6121-8400 | Fax: 91-22-61218499 Registered Office: 1, Bishop Lefroy Road, Kolkata – 700 020 Corporate Identity Number (CIN): L15491WB1962PLC031425 Email: investor.relations@tataconsumer.com Website: www.tataconsumer.com
Proposed Acquisition of Capital Foods and Organic India
12th January 2024
Disclaimer
The contents of this presentation are for informational purposes only and are intended to provide only a broad overview of the proposed transactions. The presentation does not purport to be all inclusive or to provide the complete details of the proposed transactions, as may be required to make a full analysis of the Company or the proposed transactions. Certain statements made in this presentation relating to the Company’s objectives, projections, outlook, expectations, estimates, among others may constitute ‘forward-looking statements’ within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections etc., whether express or implied. These forward- looking statements are based on various assumptions, expectations and other factors which are not limited to, risk and uncertainties regarding fluctuations in earnings, competitive intensity, pricing environment in the market, economic conditions affecting demand and supply, change in input costs, ability to maintain and manage key customer relationships and supply chain sources, new or changed priorities of trade, significant changes in political stability in India and globally, government regulations and taxation, climatic conditions, natural calamity, commodity price fluctuations, currency rate fluctuations, litigation among others over which the Company does not have any direct control. These factors may affect our ability to successfully implement our business strategy. The company cannot, therefore, guarantee that the ‘forward-looking’ statements made herein shall be realized. The Company, may alter, amend, modify or make necessary corrective changes in any manner to any such forward looking statement contained herein or make written or oral forward-looking statements as may be required from time to time on the basis of subsequent developments and events. Recipients of this presentation are not to construe its contents, or any prior or subsequent communications from or with the Company or its representatives as investment, legal or tax advice. Recipients of this presentation should each make their own evaluation of the Company and of the relevance and adequacy of the information and should make such other investigations as they deem necessary. This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, an invitation or an advertisement or an offer document under the Indian Companies Act, 2013 together with the rules and regulations made thereunder, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended, or any other applicable law in India. By accessing this presentation, you accept that this disclaimer and any claims arising out of the use of the information from this presentation shall be governed by the laws of India and only the courts in Mumbai, India and no other courts, shall have jurisdiction over the same.
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Glossary
Term
3P
Description
Third Party Manufacturer
Company
Tata Consumer Products
CF
Capital Foods Private Limited
Desi Chinese
Desi Chinese refers to Chinese cuisines adapted to Indian tastes
Gross Margin (“GM”)
GT
MT
Net Revenue less manufacturing costs includes material cost of goods sold, processing fees and other factory related costs
General Trade
Modern Trade
Net Revenue
Revenue from operations
SKU
TCPL
Stock Keeping Unit
Tata Consumer Products Ltd.
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Agenda
Overview
Capital Foods
Organic India
Synergies
Financials/Transaction Overview
Annexure
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We are Tata Consumer Products
In a nutshell
Integrated F&B company with rich heritage of Tata, aspiring for a larger share of the FMCG World
#2 branded tea player globally
₹ 13.8K crore consolidated revenue in FY23 with a market cap of ~ ₹ 1 Lac Cr.
Reach of 200mn+ households in India and distribute to 3.8mn retail outlets
Largest salt brand in India
2nd Largest tea brand in India
3rd largest tea brand in UK & largest tea brand in Canada
4th largest R&G coffee brand in USA
National brand in pulses, spices, dry fruits and other staples
#1 natural mineral water brand in India
* As of 5th Jan 2024
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Among the top 10 FMCG companies in India
~3500+ employees worldwide
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Over the past 3 years, TCPL has invested significantly in building a strong foundation to drive accelerated growth
Rapid expansion of distribution footprint
Investment in infrastructure
Strengthened digital capabilities
1.5x
2.5
3.8
3x
0.5
1.5
FY20
FY23
FY20
FY23
Total reach (mn outlets)
Direct reach (mn outlets)
India – Contribution of alternate channels (MT / Ecom)#
FY23
FY22
FY21
73
76
27
24
81
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General Trade
Alternate
# India business
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Channel partners including distributors and sub-distributors
Shifted to Cloud
Single Instance of SAP
Feet on Street
Integrated S&D Backbone
CFAs
IBP
Clearview Analytics
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In line with our stated strategic priorities
Strengthen & accelerate core business
Drive Digital & Innovation
Unlock synergies
Create Future Ready Org
Explore new opportunities
Embed sustainability
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Announcing the acquisition of Capital Foods and Organic India…
Acquisition of Capital Foods
Acquisition of Organic India
Massive potential to drive synergies by leveraging Tata Consumer’s distribution network, increasing scale along with scope to deliver significant operating efficiencies
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…which add strong complementarity to Tata Consumer’s F&B platforms and fill stated whitespaces…
Current core
Pantry platform
Liquids platform
Mini-meals platform
Horizon 3
Tea, Coffee
Pulses, spices
Sauces, Chutney
Water
Breakfast cereals
Protein platform
Salt
Besan, poha, other staples
Noodles
RTDs
Organic Tea & Infusions
RTCs
Chinese masalas, Pasta Masala, Ginger Garlic Paste
Dry Fruits
RTD – Ready to drink RTE – Ready to eat
Organic Packaged Food
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RTEs
Snacks
Soups
Instant Noodles
Herbal Supplements
Tata Consumers Existing Products
Capital Foods Products
Organic India Products
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…and turbocharge our progress towards becoming a premium F&B platform…
What we are/have
What we become
✓Portfolio of market leading F&B brands
✓Strong momentum in expansion of S&D
network
✓Potential to deliver steady growth over the
medium-to-long term
✓Mid-teens EBITDA margin
✓A strong innovation backbone with state-of-
the-art R&D facilities
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Unique platform that is synonymous with the largest single cuisine block in India…
Umbrella platform brands with a diverse portfolio of unique products for “in-home” consumption
FY24E: ~INR 936/750 Cr Gross/Net revenue; ~50% GM; 20%+ EBITDA Margin
Fast-growing F&B player: 20% CAGR in Net Revenue (FY20-23), improving EBITDA margin, with scope to drive further expansion
Scalable manufacturing capabilities: three owned plants and four 3P plants with significant scope for higher levels of utilization
~350K stores
Distribution reach1,2
~17%
Revenue from Exports
25+ years
Established Brands
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Market Leader in Desi Chinese across product categories
Created Schezwan Chutney market
#1 brand in Ginger Garlic Paste (“GGP”)
Note: 1. As of Jan’23; 2. Nielsen data for urban reach
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…with a product portfolio that has market leadership across categories…
Chutneys (Schezwan)
Blended Masala (Desi-Chinese)
Sauces
Ginger Garlic Paste
87%
55%
27%
12%
Soups
27%
#1
#1
#1
#1
#2
# Market position
Market Share in respective categories as of 2022. Sauces include green chilli, red chilli and soy sauces.
Source: Management estimates, Industry sources
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…and strong brand recall…under-indexed on distribution…
Capital Foods enjoys strong brand recall
Massive potential to leverage TCPL’s distribution to scale up Capital Foods1….
Significant investment to drive brand awareness
Incremental GT unlock
Awareness*
Consideration* Top 2
Ever Used*
88%
84%
79%
3.8
Total retail reach (mn stores)
~10X
0.4
Category 1
Category 2
Maximize growth in premium GT and MT through key account relationships
… and increase focus on E-commerce throughput
640K+
80%+ aided awareness
YouTube subscribers
in Chinese Masala, GGP, and Chinese Sauces
E-grocery market to grow at 30%+ CAGR for next few years
Leverage in-house E-commerce expertise
Increase online channel saliency
4%
Potential to drive strong double-digit revenue growth significantly higher than TCPL's current trajectory
*For Schezwan chutney; similar brand metrics for Chinese masala over the same period
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…and under-penetrated “in-home” consumption segment…
The Chinese Food Service (FS) market is expected to grow at 12-14% CAGR, indicating strong consumer preference
“Desi Chinese” transcends regional flavors, unlike the high diversity of Indian cuisines across regions
“Desi Chinese” has a dominant presence across food service, both online and offline
(INR Cr)
Indian cuisines are highly fragmented with no single dominant cuisine block
Others 120,000
Chinese 48,000
Indian 64,000
2022
~80,000 – 88,000
2027F
While, “In-home” cooking is highly underpenetrated, providing large headroom for growth
Mexican Cuisine (USA)
30%
Ratio of in-home Mexican market to organized FS industry
Desi Chinese (India)
3%
Ratio of in-home Desi- Chinese market to Chinese organized FS industry
Quality Control
Lower cost
Packaged products and ingredients availability
“In-home”
Desi-Chinese
segment
expected to
grow ~24%
CAGR
Source –Management Estimates
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Ching's Secret has become synonymous with the category
Capital Foods introduced Desi Chinese in India
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…providing category leading growth opportunities across sub- segments with high gross margins…
CF focus categories to grow at ~2x of relevant market
…with high gross margin
Relevant market* to grow at ~13%
Market Growth (CAGR CY22-27)
(INR Cr)
41,600
Overall
~24%
21,400
Chinese Sauces
~17%
Blended Masalas
~38%
~50%
Chutneys
~26%
GGP
~16%
2022
2027F
Instant Noodles
~14%
* Includes Chutneys, Chinese Sauces, Instant Noodles, Blended Masalas, GGP and soups; Blended masala includes Indian and western blended spices
Capital Foods
Gross Margin
Key Growth Drivers
Evolving preference for new cuisines and tastes
Growth in rural/Tier 2+ consumption
Increased salience of “in- home” cooking
Increase occasion of Desi- Chinese consumption
Increase in income levels with higher younger population salience
Source –Management Estimates
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…along with potential to cross synergize Capital Foods’ export strengths for Tata Consumer’s packaged foods products…
Combined international presence
Leverage CFs’ retailed relationships and presence to sell its own brands
Canada
UK
Poland
USA
Middle East
UAE
South Africa
Australia
*Major presence
TCPL*
Capital Foods*
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In summary
Facilitates entry into high-growth categories with significant potential – INR 21,400 Cr TAM; with rapidly growing business – Capital Foods’ Net Revenue grew at ~20% CAGR between FY20-23
In line with our strategic priority to expand total addressable market into adjacent, high-margin, high-growth categories; With Sampann, Ching's Secret, and Smith & Jones, we will cater to a wide gamut of the Indian culinary palate
Strong brand synonymous with Desi Chinese with market leadership across categories
Fast growing brand catering to “in-home” cooking of western cuisines
Product categories and Margin accretive: Operates in complementary categories with no overlap to TCPL’s existing product portfolio; High margin business: 50%+ gross margin
Strengthen exports: Strong retailer relationships in key export markets to be leveraged for growth including manufacturing of white label products for key international accounts
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The leading platform of “better for you” organic products with a truly organic supply chain…
TCPL to acquire upto 100% stake in Organic India
► Leading “better for you” organic brand of F&B and herbal supplements
products
► Caters to booming, highly fragmented INR 82,000 Cr market; Winning
customer trust is key to success
► Omni-channel presence across GT, E-comm, stores, own website and exports
► INR 350+ Cr. brand with high quality products focused on “sustainable living”;
55%+ gross margin
► Aligns with Tata Consumer’s strategy to expand Horizon 3 segment, providing
substantive growth opportunities
Unparalleled end-to-end organic supply chain
Rigorous product testing procedure and certification valid for major global markets
Unique, robust, hard to replicate and scalable back-end infrastructure
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25+ years Established Brand
~40%+ Revenues from USA
~12k+ Organic Farmers Reach
100+ Healthy Products
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…with an established brand across premium and emerging categories…
Product Portfolio (Revenue Split%)
Herbal Supplements (~40%)
Tea & Infusions (~40%)
Organic Packaged Food (~20%)
Condition Specific
Daily Nutrition
Psyllium
Green Tea
Wellness Tea
Infusion
Ghee
Honey
Jaggery Powder
Premium brand
Organic India Tea & Infusions – priced at 15-20% premium over Tetley
55%+
Gross margin; Margin accretive to TCPL’s portfolio
Source: Management Estimates 1. Organic India exports to 48+ countries
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…with a strong supply-chain moat and end-to-end certifications for organic products…
Long-standing relationships with farmers enables flexible sourcing
End-to-end certifications for organic products
~130 members strong operations team including Agri development and procurement division
International certifications
Works directly with ~2,500 farmers across ~11,000+ acres of Organic Certified Land in ~120 villages with low teens utilization
European Commission
USDA
HACCP
Japan Agricultural Standards
Non GMO
Fair Trade
COSMOS
National certifications
Quality certifications
Indirectly associated with an additional 12,000+ farmers
National Program for Organic Production (NPOP)
Jaivik Bharat
GMP
(ISO- 9001:2008)
FSSC 22000
Pioneered commercial cultivation of Tulsi Introduced high value medicinal and non-medicinal crops cultivation
State of the art manufacturing with low utilization
Organic India is the preferred buyer
Manufacturing, Procurement, Processing and Warehousing
Uttar Pradesh
Rajasthan
Madhya Pradesh
Uttarakhand
Empowers OI to procure high-value crops effectively
Enables entry into other key organic products categories globally such as quinoa, pulses, etc.
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…providing a unique opportunity to strategically develop a “high- growth”, “high-margin” health and wellness platform
TCPL TAM to expand by ~82K Cr globally
(INR Cr.)
12,000
(INR Cr.)
110,000
7,000
75,000
FY23
FY28E
FY23
FY28E
Growth Drivers
Rising number of health-conscious individuals
Increasing awareness Higher demand for
Natural and traditional herbal Products
Preference of Preventive over Curative approach
Increasing Research & Product Development
Rising lifestyle ailments and obesity leading to wellbeing management
Source: Management Estimates
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Operates in high growth and highly fragmented market
Winning customer trust is key to its success
Premium and organic products that command higher margin
Diversify geographically with exports contribute 50%+ revenue at higher margins
Potential to add products in allied categories like protein nutrition, child nutrition, etc.
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…by leveraging Tata Consumer’s existing distribution strength and unlocking the pharma channel with a relevant product basket
Massive potential to leverage Tata Consumer’s domestic distribution prowess with...
…Opportunity to unlock pharma channel and maximize export potential
OI in 24k outlets
Deliver higher growth in MT (~3%1) and E-commerce (22%1)
Drive expansion in export countries
with strong Tata Consumer presence
TCPL to develop the pharma channel with OI’s robust product portfolio and cross-sell other brands
and maximize export potential through cross-synergies
Organic India’s products are listed in premium outlets chains in the US (Whole Foods, Sprouts and Natural Grocer, etc.)
TCPL and OI are present
TCPL presence significant; OI’s presence limited
OI’s presence is significant; TCPL presence is limited
Tata Consumer to drive exponential revenue growth for Organic India
1. of domestic revenue
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In summary
Provides an opportunity to develop a high-growth, high-margin health and wellness platform with the leading “better for you” organic brand
In line with our strategic priority to expand TAM by expanding into adjacencies with high-growth and high-margin categories; INR 82,000 Cr TAM globally and Horizon 3 segment with substantive growth opportunity
Robust sourcing and scalable back-end infrastructure for organic products combined with farmer network enabling procurement of current and new crops
Unparalleled end-to-end organic certifications, domestic and international, across the supply chain leading to high customer trust
Product categories and Margin accretive: Operates in complementary categories with no overlap to TCPL’s existing product portfolio; High margin business: 55%+ gross margin
Strengthen exports by cross leveraging TCPL’s and Organic India’s export presence
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Potential to capture significant revenue and cost synergies
Revenue Synergies
Cost Synergies
Increase GT footprint
Optimize trade margins
Deliver high growth in MT and E-commerce
Optimize selling expenses
Fixed cost optimization
Enhance export footprint
Higher capacity utilisation
Significant synergies to boost growth and enhance EBITDA Margin
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Transaction Overview
Transaction Structure
TCPL to acquire 75% stake upfront; balance 25% to be acquired within 3
years
Upfront purchase of upto 100% stake
TCPL to have full operating control and majority in board representation
Potential earnout linked to FY26 financial performance
Ajay Gupta to continue as consultant
Upfront purchase of 75% stake at an Enterprise Value of INR 5,100 Cr
Enterprise Value of INR 1,900 Cr
Transaction Value
—
—
Translates to 6.8x FY24E Net Sales
Expect strong sustained double-digit top line growth
—
—
Translates to 5.2x FY24E Net Sales
Expect strong sustained double-digit top line growth
Impact on financials
EPS breakeven in second year of operations and accretive thereafter
Cash EPS accretive in first full year of operations
Financing
Combination of cash reserves available to TCPL, debt and equity issuance through Rights Issue or any other mode (subject to Board approval)
Transaction Timelines
Closing anticipated in Q4FY24
Operational integration to commence shortly after Closing; to be completed within 3-4 months
Significant double-digit growth and margin accretion expected in near term
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Advisors to TCPL
Financial Advisor
Legal Counsel
Due Diligence Advisors
Technical Due Diligence Advisor
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