Tata's Bisleri International buyout may be biggest in India FMCG space

A majority stake for Rs 6K-7K cr to allow TCPL's expansion in beverage space

In what could be India’s largest fast-moving consumer goods (FMCG) deal yet, Tata Consumer Products (TCPL) is in discussions to buy a majority stake in packaged water major Bisleri International for Rs 6,000 crore-Rs 7,000 crore. If the deal is sealed, the ubiquitous Bisleri brand name would open up new avenues for Tata Consumer in the beverage space.

TCPL is talking to various parties, including Bisleri International, for growth and expansion opportunities, TCPL’s spokesperson said in a statement on Thursday.

“TCPL evaluates various strategic opportunities for growth and expansion of the business of the company, on an ongoing basis. TCPL remains in discussions with various parties, including Bisleri International Private Limited,” a company statement said.

The consumer arm of the Tata group also said that it would make appropriate announcements/ disclosures “as and when any such requirement arises”.

“At this point in time, there is no further information to be provided with respect to the said media report,” it said.

Ramesh Chauhan, the promoter and chairman of Bisleri International, told Business Standard that he is in discussion with TCPL to sell a majority stake in the company for Rs 6,000 crore-Rs 7,000 crore, and also said that he expects the deal to be completed in 7-8 months.

“I am 82 and now someone has to take over (business),” said Chauhan, who in the early 1990s sold carbonated drinks brands Thums Up, Gold Spot, and Limca to Coca-Cola.

Bisleri was originally an Italian company created by Felice Bisleri and it entered Mumbai in 1965 with the packaged drinking water brand. Four years later, Ramesh Chauhan, his brother Prakash Chauhan and his cousin brother Vijay Chauhan acquired the company for Rs 4 lakh, according to market rumours.

Currently, it has over 130 operational plants and 4,500 distributors across India and neighbouring countries.  

According to analysts, a decision to buy a majority stake in Bisleri would help strengthen Tata’s foothold in the beverage segment if it uses the Bisleri name to expand its drinks portfolio.

“Bisleri is a very strong brand name and Tata Consumer can use this brand name to enter other categories within the beverage space and give stiff competition to other players in the segment,” said Vishal Gutka, vice-president of research (consumer and retail sector), Phillip Capital India.

According to him, the proposed acquisition would help Tata Consumer push its entire portfolio of products into the retail channel with much ease if it uses the brand name to expand the product portfolio as this would also help the company push its own cooling systems into retail stores.

“Notably, the trade margins in packaged water are very high -- it is around 30-35 per cent between the distributor and the retailer. But there is a lot of competition from regional players,” he said.

Sachin Bobade, vice-president, Dolat Capital, said the acquisition would add Rs 1,400 crore-Rs 1,500 crore (according to FY20 net sales numbers) to TCPL’s top-line.

“This will also help the company enter the institutional sales business as Bisleri has a strong presence in that segment,” he said.

In FY22, TCPL’s revenue from operations stood at Rs 12,425 crore.

According to media reports, Bisleri is estimated to clock sales worth Rs 2,500 crore and net profit of over Rs 200 crore in FY23.

If this deal goes through, it would become the largest deal in the Indian fast-moving consumer goods space. 

The biggest deal, so far, in this space happened in 2019 when Zydus Wellness acquired Heinz India’s consumer wellness business for Rs 4,595 crore, this is followed by Hindustan Unilever acquired Horlicks from GSK for Rs 3,045 crore in April 2020. ITC also acquired Sunrise Foods which sells spices for Rs 2,150 crore in July 2020, according to data by collated by Tracxn and Business Standard. While, the deal is in the alcohol space, the largest deal was by Diego in 2012 when it announced it would acquire 53.4 per cent stake at Rs 11,166.5 crore in a multi structured in United Spirits.