The Indian Wire » Business » ITC to buy Sunrise Foods for scaling up its FMCG Business

ITC to buy Sunrise Foods for scaling up its FMCG Business

On May 24, ITC Limited announced that it is going to acquire Kolkata based Packaged Spice-maker Sunrise Foods as a strategy to rapidly scale up its FMCG business in a profitable manner and leverage its institutional strengths through deep consumer insight, a wide and deep distribution network, Agri commodity sourcing expertise, cuisine knowledge, strong rural linkages and packaging know-how. ITC Limited and Sunrise Foods has started initiating the deal negotiations from March 31. Law Firm Cyril Amarchand Mangaldas is the legal advisor to ITC and ‘Law Firm Khaitan and Co’ is of Sunrise Foods in this deal. Investment Bank JM Financial has facilitated the sale process for Sunrise Foods.

ITC is one of India’s leading producers and exporters of high-quality food-safe spices. Popular food brands like Sunfeast Biscuits and Yippee Noodles belong to its FMCG segment. Its Ashirvaad range of spices business is already going well in Telangana and Andhra Pradesh.

Sunrise Foods is a leading brand in the spices business in eastern India. It’s a well-established business for 70 years and now has a very loyal consumer franchise, based on a differentiated product portfolio, both in the basic and mixed spice category. Sunrise Foods’ deep consumer connect and its distribution strength have the potential to bolster the value creation for ITC in the focus markets. Sunrise Foods acquisition is moreover beneficial for ITC as it can help it to generate synergies from the sourcing and supply chain capabilities of its agri-business and its distribution network all over India.

ITC has now finally entered into a share purchase agreement with Sunrise Foods, though the price of the deal has not been disclosed publicly. The deal will help ITC to bolster its food business and compete with its rivals Hindustan Unilever, Pepsico and Britannia in a better way. According to ITC, this deal will help to augment the company’s product portfolio and is aligned with its aspiration to significantly scale up its spice business and expand its footprints across the country.

Spice Foods owns four factories in Bikaner, Jaipur, Agra and Kolkata and has its presence across nine states. The company has also expanded its business outside India to Bangladesh and Nepal. Sales of its product in FY19 was about Rs 1,000 crore.

ITC’s founder Sanjiv Puri has told company’s shareholders in July 2019 that to accelerate growth in the FMCG Business, the endeavour is not only to fortify the existing categories towards delivering industry-leading performance but to also to foray into newer categories and sub-segments. He has told them that this would be supported by multi-dimensional investments as well as strategic opportunities for acquisition. And like mentioned Sunrise Foods Acquisition is part of that strategy of ITC to scale up its FMCG Business.

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