Diversified conglomerate ITC is increasing its bet on the rapidly growing frozen foods market. The Kolkata-based entity, which has been in the ready-to-cook (RTC) segment since 2019, has taken the inorganic route to scale the business as it gears up to acquire popular frozen foods maker Prasuma against some Rs 300 crore.
The deal, planned to be completed over three years will see ITC picking up a 43.8% stake by March 2025 in the company in the first tranche.
ITC plans to raise its stake in Prasuma to 62.5% by April 2027 and the rest of the stake will be acquitted by the conglomerate by June 2028 based on pre-defined valuation criteria and subject to other conditions as stated in the definitive agreements.
The company has not revealed the total cost of the acquisition but according to estimates ITC may have to spend close to Rs 300 crore to expand its presence in the frozen foods market that is increasingly gaining traction among urban consumers.
As per the ITC management, the company will initially acquire 62.5% stake in Prasuma for Rs 187 crore and the deal will help ITC build a frozen, chilled and RTC portfolio in the Rs 10,000 crore market segment that has high growth potential.
The move aligns with its ITC Next strategy coined by its Chairman Sanjiv Puri. The strategy primarily focuses on building a future-ready portfolio of products that serves evolving consumer needs.
“ITC’s valuation of Prasuma is close to Rs 300 crore and it is expected to close the deal by 2028 against the amount,” a source familiar with the developments said.
According to Hemant Malik, Wholetime Director, ITC, the addition of Prasuma into ITC’s portfolio will help it build a full stack of frozen and ready-to-cook foods portfolio. “With Good-for-You, first-to-market products, across cuisines, we believe that the combined portfolio will delight our discerning consumers. This investment reaffirms our commitment to building future-facing, best-in-class, innovative portfolios,” he said.
Malik’s enthusiasm is not without a rationale. ITC already has a wide range of frozen foods portfolio under its ITC Master Chef brand, comprising over 50 RTC items, frozen snacks and Indian breads with a reach of over 200 towns.
At a time when both segment-focused brands like Carnivor or Meatzza and traditional fast-moving consumer goods makers such as Godrej, are out to lure urban consumers, ITC’s move may prove to be crucial in its market presence.
“With the industry at an inflexion point, this acquisition will help strengthen and expand ITC’s presence in the aforesaid categories by gaining entry into high growth segments, viz. Pan Asian foods, Deli meats, etc. With the proposed acquisition, ITC will become the first full-stack player in the segment with an unparalleled portfolio, offering meals and snacking options across multiple occasions throughout the day for the discerning consumer. ITC Master Chef and Prasuma shall also benefit from significant synergies through well-designed institutional mechanisms and enablers,” the company said.