Tata Consumer plans to raise funds for Capital Foods acquisition via CPS/ rights issue, says Sunil D'Souza

Tata Consumer Products, which on January 12 announced its plans to acquire a 100 percent stake in Capital Foods, is looking to raise funds for the acquisition via CPS/ rights issue, said Sunil D'Souza, Managing Director and Chief Executive Officer of Tata Consumer Products, in an interview to CNBC-TV18.

Capital Foods' revenue is likely to scale in "high double-digits" over the next few years, he said, adding, "We expect the current businesses of Tata Consumer to scale well."

The company expects to fortify its pantry platform and increase the scope of its product line through the acquisition, the CEO & MD said.

Commenting further on the acquisition of Capital Foods, which markets its products under Ching’s Secret and Smith & Jones, D'Souza said: "The acquisition of Ching’s, Smith & Jones completes the entire cuisine breadth of TCPL’s portfolio, there is an immediate margin synergy of 400 bps with Capital Foods."

“We believe this is a good strategic and financial fit. It will open up significant market opportunities in the fast-growing non-Indian cuisines segment, leveraging the sales and distribution platform that we have built. The strong brand recall of Ching’s Secret and Smith & Jones coupled with our operational strength across channels makes us extremely confident of driving topline growth and realizing cost synergies," he added.

D'Souza said he expects the deal to be EPS accretive from the second year.

Earlier this week, TCPL announced the acquisition of Organic India, a health and wellness company supported by Fab India, for an enterprise value of Rs 1,900 crore. "Organic Foods can be at a high-teens margins on a steady state, ex-synergies," he said.