The proposed acquisition is aligned with ITC's strategy to rapidly scale-up its FMGC business in a profitable manner, leveraging its institutional strengths viz. deep consumer insight, a deep and wide distribution network, Agri-commodity sourcing expertise, cuisine knowledge, strong rural linkages, and packaging know-how, "the hotel to tobacco conglomerate said in a late evening announcement on May 24.
Sunrise food is a market leader in eastern India in the fast-growing category. Over the last 70 years, it has built a loyal customer franchise, based on a differentiated product portfolio, both in the basic and blended spices segment.
ITC added that the deal would "augment the company's product portfolio and is aligned to ITC's aspiration to significantly scale up its spices business and expands its footprint across the country".
The firm also sees significant value creation opportunities in the deep consumer connect and distribution strength of sunrises foods in the focus markets. Additionally, ITC can generate synergies from the sourcing and supply chain capabilities of its agri-business and its pan-India distribution network. The valuation of the deal was not disclosed.
ITC's "Ashirvaad" range of spices is already a market leader in Telangana and Andhra Pradesh. The company is one of India's leading producers and exporters of high-quality food-safe spices.
Law firm Cyril Amarchand Mangaldas acted as the legal advisors to ITC while investment bank JM Financial managed the sales process for Sunrise Foods.
Law firm Khaitan and Co advised Sunrice Foods & it's promoters.
The Sharma family promoted Sunrise Foods counts brands such as Everest Spices and MDH Masala as rivals and offers a range of products such as whole spices, basic ground spices, blended or mix spices, instant mix, compounded asafoetida, mustard oil, and pappadums. Founded in 1902, the company owns four factories in Bikaner, Jaipur, Agra, and Kolkata and is present across nine states. Sunrise's operations are largely centered in east India, including the northeast states. It has also expanded to Bangladesh and Nepal sales in FY19 are estimated at around Rs 1000 crore.
ITC has been looking to tilt the revenue mix from its mainstay tobacco to FMCG across categories. "To accelerate growth in the FMCG businesses, the endeavor is not only to fortify the existing categories towards delivering industry-leading performance but also to foray into newer categories and sub-segments. This would be supported by multi-dimensional investment as well as strategic opportunities for acquisitions," ITC's Sanjiv Puri told shareholders in July2019 during his debut AGM address as chairman.
ITC posted net revenue of Rs 44,415 crore and profit after tax of Rs 12,464 crore for FY19. Revenue from FMCG and related businesses at Rs 12,505.28 crore. Under its FMCG segment, ITC sells packaged foods, personal care, and stationary housing brands like Sunfeast biscuits, Yippee noodles, B Natural juices, Vivel soaps, and Bingo chips.
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