Tata Takeover Puts Ching's Secret Distributors In Turmoil, Says Industry Body
In January, Tata Consumer Products Ltd. agreed to buy Capital Foods Pvt., the owner of Ching’s Secret and Smith & Jones, in a phased manner.
Thousands of distributors of Capital Foods are faced with job losses and resultant financial setbacks after Tata Consumer Products Ltd. acquired the company in January, according to the apex body of FMCG distributors.
In a letter addressed to Dnyaneshwar Mulay, a member of the National Human Rights Commission, on April 13, the All India Consumer Products Distributors Federation has alleged that the Tata Group company has abruptly terminated about 3,000 Capital Foods distributors.
"This has resulted in widespread unemployment of 70,000 people across various roles such as sales staff, delivery personnel, etc.," AICPDF President Dhairyashil Patil said in the letter, a copy of which was seen by NDTV Profit. "The move has also caused financial setbacks, including pending market credit and unresolved claims, significantly impacting their livelihoods."
TCPL declined to comment on NDTV Profit's queries on this matter.
In January, TCPL agreed to buy Capital Foods Pvt., the owner of Ching’s Secret and Smith & Jones, in a phased manner. The acquisition is in line with the company's strategic intent of entering into new adjacent high growth categories in the food and beverage space. The acquisition is likely to have resulted in a restructuring of the organisation, leading to potential redundancies among the workforce.
Patil alleged that TCPL's move is "unusual" in comparison to standard industry practices. "When Hindustan Unilever had acquired Horlicks from GSK [GlaxoSmithKline Consumer] way back in 2018, they had retained most of the distributors. Similar practices have been followed by other companies as well. The Tata's should also give the distributors a safe exit."
The AICPDF has also reached out to TPCL Chairperson N Chandrasekaran regarding this issue, however, they have not received a response yet.
The federation, which represents over 4 lakh distributors and the stockists, has appealed to the commission to intervene and safeguard the rights of distributors from further adversities. It has also urged the NHRC to facilitate a "fair" and "smoother" transition for the affected distributors and to alleviate the severe financial repercussions they are currently facing.
"Such aggressive actions by multinational companies, reminiscent of hostile takeovers, fail to acknowledge the tireless efforts and dedication of the entire distributor fraternity in nurturing and establishing the brands they represent," the AICPDF said.