Nestle rumoured to be in talks to acquire Ching’s Secret

As per the newspaper reports, Nestle is in discussions to acquire Mumbai-based Capital Foods Pvt Ltd (CFPL).

• CFPL makes the Ching’s Secret brand of spicy noodles and fusion chutneys infused with so-called “desi Chinese” flavors. It also sells Smith & Jones cooking pastes and masala mixes.

• The Company was promoted by the current Chairman, Ajay Gupta in 1995. Over the years it got interest from varied investors
  • In 2006, Biyani’s investment vehicle Future Ventures (later Future Consumers), had pumped in Rs 13 crore for a minority 33% stake in CFPL. Over the years, Biyani had increased the stake to 44%.
  • In 2013, Future sold it’s 44% stake to European family office Artal Investments together with its affiliate private equity fund Invus Group for Rs 180 crore.
  • In 2018, General Atlantic acquired 27% stake into Ching for Rs 370 crore, valuing the Company at around Rs 1,370 cr

• Currently, the shareholding pattern of the Company is – 40% Invus Group, 35% General Atlantic and balance 25% Ajay Gupta.

• Any potential deal is expected to be valued > $1 bn, i.e., approx 8,000 cr.

• The Company reported revenues of Rs. 580 crores for the FY 22, a 14% decrease from the previous year. It also slipped into losses of Rs 7.4 crore during FY22, compared to a net profit of Rs. 68.7 crore in FY21. The company’s current revenue run rate is reported to be Rs. 1,000 crore, and it is expected to close FY23 with a topline of Rs. 750–800 crore.

• It’s unclear whether the deal (if it happens) will be routed through Nestle Global or Nestle India.

• Other than Nestle, various other suitors are mentioned to be interested in the deal.