ITC Ltd, one of India’s largest consumer products makers with a pan-India presence and dozens of major brands under its belt, has invested Rs 20 cr to get a 16% stake in a Kolkata-based company that makes baby and mother care products.
The deal values ‘Mother Sparsh’ at Rs 125 cr after investment, or Rs 105 cr prior to it. The company had sales of Rs 15.4 cr in the year ended March, and Rs 3.4 cr in the year before that.
The deal is unlike those typically carried out by large brands like IT and Hindustan Lever.
Typically, these behemoths — who have the best distribution and marketing infrastructure in the country, simply buy out the current owners from their target companies, and almost never settle for a tiny stake.
They then scale up the acquired product or business using their manufacturing, distribution and marketing muscle.
Mother Sparsh sells such items as baby wipes, stretch-mark removal creams, kids hair oil, baby shampoo and so on. ITC too is present in the baby care and personal care business, and can therefore be considered a competitor.
ITC said it had taken this step because Mother Sparsh focuses on Ayurvedic and natural solutions-based personal care products and has deep knowledge of Ayurveda.
“It has a wide range of baby and mother care products that leverages the wisdom and knowledge of Ayurveda for potent product delivery,” said the company, which makes products such as SunFeast, Fiama, Ashirwad Atta etc.
The company said Mother Sparsh holds ‘a lot of promise’ and it did not want to miss out on the growth of the company.
“Recognising the significant potential of naturals and Ayurveda, ITC has taken this strategic step forward to invest in this segment.”
ITC said it is keen on companies that are focused on the digital space, like Mother Sparsh, which is focused on selling its wares online.