ITC Targets 47% Stake in Prataap Snacks for Regional Expansion | Latest News
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| ITC Pratap Snacks Merger |
In a bid to bolster its presence in regional markets, ITC is eyeing a significant stake in Prataap Snacks, the maker of the popular "Yellow Diamond Chips", according to a report by the Economic Times dated February 22.
Reports initially surfaced in December, with Moneycontrol indicating that the promoters of Prataap Snacks were considering selling a controlling interest in the company. Spearheading these discussions was Sequoia Capital, an integral part of the promoter group, which presently holds around 47% of the Indore-based snack manufacturer.
For ITC, this potential acquisition represents a strategic maneuver to tap into Prataap's stronghold in regional markets. The move aligns with ITC's broader strategy of expanding its footprint across diverse geographies.
Beyond its flagship product, Prataap Snacks boasts a portfolio of traditional Indian namkeens under the Avadh brand, further enhancing its appeal to consumers.
On the stock market front, Prataap Snacks concluded trading at Rs 1,176.55 per share, while ITC closed at Rs 403.35 per share. This move by ITC follows failed negotiations between Prataap Snacks and Haldiram's, as well as Bikaji Foods, attributed to disparities in valuation.
Should the stake acquisition proceed as planned, it would trigger an open offer for an additional 26% of Prataap Snacks. Despite experiencing a negative return of approximately 8.34% since its debut on the stock market in 2017, Prataap Snacks reported encouraging financials for December 2023.
During this period, the company recorded net sales of Rs 408.31 crore, marking an 8.08% increase from the previous year. Moreover, its net profit for the December quarter surged to Rs 10.79 crore, reflecting a substantial growth of 215.39% compared to December 2022.
ITC's strategic approach, embodied in the ITC Next strategy, aims to cultivate a forward-looking product portfolio that resonates with evolving consumer preferences. By integrating Prataap Snacks into its fold, ITC stands to leverage its robust distribution network, amplifying the visibility and reach of Prataap's brands and solidifying its position within the market landscape.
FAQs (Frequently Asked Questions)
1. What is the significance of ITC's interest in acquiring a stake in Prataap Snacks?
- ITC's pursuit of a substantial stake in Prataap Snacks underscores its strategic objective to expand its presence in regional markets, capitalizing on Prataap's established foothold in these areas.
2. What prompted Prataap Snacks to consider selling a controlling interest in the company?
- Discussions regarding the sale of a controlling stake in Prataap Snacks were initiated by Sequoia Capital, a key member of the promoter group, indicating a strategic reevaluation of the company's direction.
3. What other products does Prataap Snacks offer besides the "Yellow Diamond Chips"?
- In addition to its flagship product, Prataap Snacks markets a range of traditional Indian namkeens under the Avadh brand, catering to diverse consumer preferences.
4. What led to the breakdown of negotiations between Prataap Snacks and Haldiram's and Bikaji Foods?
- Negotiations with both Haldiram's and Bikaji Foods faltered due to disparities in valuation, prompting Prataap Snacks to explore alternative partnerships.
5. How has Prataap Snacks performed financially in recent years?
- Despite experiencing a negative return since its stock market debut, Prataap Snacks reported encouraging financial results for December 2023, including a significant increase in net sales and net profit compared to the previous year.
6. What strategic approach does ITC employ in its business endeavors?
- ITC's strategic framework, known as the ITC Next strategy, focuses on developing a future-ready product portfolio aligned with evolving consumer preferences, positioning the company for sustained growth and relevance in the market.