Nestle, Tata Consumer, Kraft look to spice up race for Ching's Secret

Mumbai | New Delhi: Nestle SA, the world's biggest food group, is competing with Tata Consumer Products and The Kraft Heinz Co to buy Capital Foods Pvt Ltd, the maker of condiments, food products and ingredients under the Ching's Secret and Smith & Jones brands, said people with knowledge of the matter.

ITC is another potential contender that is also being considered by the sellers and their advisers from the initial screening list of potential candidates.

Capital Foods' three main shareholders decided to put the company up for sale late last year. The three are Invus Group, a European family office and investment arm, with a 40% stake, US private equity group General Atlantic (35%) and Ajay Gupta (25%), founder chairman of Capital Foods and a former advertising boss turned food entrepreneur. ET was the first to report on the sale plan November 14, 2022.

Goldman Sachs is running a sale mandate valuing the company at $500-800 million. Close to a dozen global and local consumer food companies including Norway's Orkla, Hindustan Unilever, Nissin Foods and General Mills among others, were approached to buy the company. The three have emerged top contenders after non-binding bids were submitted recently.

One of the people cited above said Nestle is working on an all-cash offer while some of the others like Kraft have suggested acquiring up to 75% of the company and taking it public. While General Atlantic is looking at a complete exit, Invus and Gupta are open to staying on for future value upside, depending on the offers on the table.

"Capital Foods' brands Ching's and Smith & Jones are fast growing across India. We get approached by investors to invest in the business and participate in this exciting growth story. However, we would not like to respond to market speculation, gossip and rumours," Gupta told ET. Spokespersons for GA and Invus Group could not be reached for comment.

Nestle India chairman Suresh Narayanan had said in a recent interview with ET late last month that acquisition opportunities are a "constant process of evaluation."

An ITC spokesperson said in an email that the company does not comment on market speculation.

A spokesperson for Nestle said: "We would not like to comment."

Email queries sent to Tata Consumer, Kraft did not elicit a response till press time.

Capital Foods is expected to close FY23 with a ₹900 crore top line and an ebitda margin of 25%. The core business is growing at a compounded annual growth rate (CAGR) of 30% while peer brands are expanding in single digits, said executives close to the company.

Capital Foods appointed S Raghunandan as chief executive officer in February. The consumer industry veteran is known for turning around operations before selling them or buying out their foreign partners. His previous stints include HUL, Dabur India, Paras Pharmaceuticals, Reckitt Benckiser India and Jyothy Laboratories. While Paras was sold to Reckitt, Jyothy bought the loss-making India business of German company Henkel in India.