Wipro Enterprises eyes more acquisitions in the food space

Raghav Swaminathan, CFO of Wipro Enterprises, emphasized the company's focus on spices, citing substantial opportunities in both spices and South Indian snacks.

Wipro Enterprises, the privately held non IT consumer and food business of Wipro founder, Azim Premji, has set its sights on the food sector for future acquisitions, banking on the success of its recent ventures in the industry.

Over the past year, the company has made significant strides in its Foods business with two notable acquisitions. In December 2022, Wipro Enterprises acquired Nirapara, a renowned spice brand, followed by the acquisition of Brahmins, another established brand from Kerala, in April 2023. These strategic moves aim to bolster the company's presence in the spices, breakfast, and Ready-to-Cook categories.

Raghav Swaminathan, CFO of Wipro Enterprises, emphasised the company's focus on spices, citing substantial opportunities in both spices and South Indian snacks. "Our strategy is to tap into the large unorganised market in India by acquiring assets in this sector, thereby shifting some of this market into the organised sector," Swaminathan stated.

There have been  a number of acquisitions in the food sector. In January, Tata Consumer revealed plans to acquire Capital Foods, which owns Ching's Secret and Smith & Jones brands, for Rs 5,100 crore. Additionally, the company will purchase Organic India, backed by Fabindia, for an enterprise value of Rs 1,900 crore, with potential additional payments based on the company's financial performance in FY 2025-26. Similarly, ITC has invested Rs 175 crore to acquire 39.4 percent of Yoga Bar by February , 2023, and an additional Rs 80 crore for the remaining stake by March 31, 2025, according to a BSE filing.

Anticipating significant growth potential, Wipro Enterprises aims for double-digit growth of between 15 and 20 percent in the food business n the fiscal year 2025. Leveraging its robust distribution network, particularly in the southern region, the company seeks to expedite penetration into both general and modern trade channels, a capability lacking in the acquired companies.

Despite challenges in other sectors, such as slower growth in rural areas and stagnant pricing in the consumer segment, Wipro Enterprises has experienced notable growth in its industrial automation business. Swaminathan highlighted a substantial annual growth rate of 40-50 percent in industrial automation business.

Regarding the outlook for Wipro Enterprises, Swaminathan expressed cautious optimism, particularly in observing demand trends on the consumer side. However, he noted positive indicators in the industrial sector, citing continued government support for infrastructure projects.

Wipro Enterprises derives more than 50 percent of its revenue from the global market, with plans to potentially increase its overseas revenue in the coming years. While maintaining a dominant market share in India, the company sees opportunities for further growth in markets such as the US.

CARE Ratings Limited has a stable outlook on the company, anticipating that the strong brand recall and financial liquidity will persist in the near future. The company has diverse businesses and sales went up by 23 percent in FY23 due to increased demand in key areas. With inflation easing, CARE Ratings predicts a 10-14 percent growth in the company's income for FY24, mainly because of higher sales volume.