ITC To Buy 24 Mantra Organic To Grab Slice Of Rs 10,000-Crore Market

ITC Ltd. has signed agreements to acquire Sresta Natural Bioproducts Pvt. and Mother Sparsh Baby Care Pvt., the company announced on Thursday.

Following the approval by its board, the company has executed share purchase agreements for acquisition of 100% of the share capital of Sresta Natural Bioproducts Pvt., according to an exchange filing. Sresta Natural Bioproducts is engaged in the business of manufacturing and selling organic food products under the '24 Mantra Organic' brand.

The diversified conglomerate will acquire Sresta Natural Bioproducts for about Rs 472.5 crore on a cash-free debt-free basis. Of the total, ITC will pay Rs 400 crore upfront at the closing of the deal. The remaining Rs 72.5 crore will be paid over a period of two years, the company stated.

The transaction is expected to be completed by the first quarter of the current financial year.

During the two years after closing of the deal, Sresta Natural Bioproducts founder Raj Seelam will remain associated with the business and assist in its transition, according to the agreement.

The company said its acquisition of Sresta Natural Bioproducts is "in line with the strategy to augment the company's future-ready portfolio". The FMCG major believes that the deal will fortify its presence and market standing in the high growth organic products segment in both Indian and overseas markets. The Indian organic market (domestic and exports) is currently estimated to be Rs 10,000 crore in size, according to the release.

According to ITC, the acquired company is a "pioneer and leading player in the organic packaged staples category". It pointed to the acquired company's network of about 27,500 farmers and approximately 1.4 lakh acres of certified organic land spread across 10 states.

Sresta Natural had sales of Rs 306 crore as of 2023-24 and has a portfolio of over 100 products across staples, spices, condiments, edible oils and beverages. It also has an international presence primarily in the US which accounts for half of its sales.

ITC said the proposed acquisition of the shares of Mother Sparsh will be "made through a combination of primary subscription and secondary share purchase from the existing shareholders".

Mother Sparsh, being an associate company, the primary infusion will be a related-party transaction. But this will be done at an "arm's length". However, ITC stated its group companies do not have any interest in Mother Sparsh.

On Thursday, ITC executed transaction documents — share subscription and share purchase agreement and shareholders' agreement — to acquire the balance 73.5% of the share capital of Mother Sparsh.

This will be done on a fully diluted basis and will be carried out in one or more tranches over a period or two to three years, the filing added.

The acquisition of the premium ayurvedic and natural personal care start-up will help ITC build a future-ready suite of products that serve evolving consumer needs. The move will help ITC augment its personal care products business, the disclosure stated.

Mother Sparsh's turnover for FY24 was Rs 58.7 crore, while for FY23, it stood at 48.4 crore.

Shares of ITC closed 0.73% higher at Rs 427.25 apiece on the BSE, compared to a 1.96% advance in the benchmark Sensex.