ITC, one of India’s leading FMCG companies, is reportedly considering the acquisition of a 47% stake in Prataap Foods, currently owned by Peak XV Partners (previously known as Sequoia Capital). This move comes after unsuccessful negotiations with Haldiram’s due to disagreements over valuation. Prataap Foods, known for its popular ‘Yellow Diamond Chips’ and traditional Indian namkeen under the Avadh brand, presents an opportunity for ITC to expand its footprint in regional markets where it faces tough local competition.
Private equity firms including KKR, TA Associates, and Apax have also been approached following Peak XV’s decision to completely withdraw its investment in Prataap. Deutsche Bank has been appointed to oversee the sale of the company. Prataap Snacks, as per its FY23 annual report, operates 15 manufacturing units, with seven owned by the company and eight under contract manufacturing. The Indian snack market is projected to grow rapidly, reaching Rs 95,521.8 crore by 2032. Prataap Snacks reported a standalone net sales increase of 8% year-over-year to Rs 408.31 crore for the quarter ending December 2023. ITC’s interest in Prataap Foods aligns with its “Next” strategy, aimed at creating a portfolio that meets the evolving needs of consumers.
ITC Foods, known for its Bingo chips and namkeen, has surpassed Britannia and Parle Products to become the leading food manufacturer in India for the nine months up to September 2023. With food FMCG sales reaching Rs 17,100 crore, ITC sees the potential acquisition of Prataap Foods as an opportunity to leverage its distribution capabilities and enhance Prataap’s brand portfolio.
RTM Watch’s Take
ITC’s interest in acquiring a stake in Prataap Foods reflects its strategic intent to expand its presence in the FMCG market and strengthen its position as a leading food manufacturer in India. The potential acquisition of Prataap Foods would not only allow ITC to tap into regional markets but also leverage its distribution capabilities to enhance Prataap’s brand portfolio. This move aligns with ITC’s growth strategy and presents an opportunity for the company to further diversify its product offerings and capture a larger market share in the highly competitive FMCG sector.
