Tata Consumer, Hindustan Unilever in talks to buy tea major Girnar

Deal could be valued at Rs 1,000-1,500 crore

Top consumer product companies Hindustan Unilever (HUL) and Tata Consumer Products, among others, are believed to be in the race to acquire Girnar Food & Beverages, the Gujarat-based tea major, at a valuation of Rs 1,000-1,500 crore.

The discussions, however, are at an initial stage, according to two sources aware of the developments.

Viduit Shah, executive director at Girnar Food & Beverages, told Business Standard, “As a matter of company policy we do not comment or respond to speculation.”

He added that the firm was family owned and the promoters were committed to building the business. “Investment bankers approach us periodically to evaluate shareholder value creation avenues, including private equity fund raises, but there are no talks ongoing with any investors,” he added.

HUL and Tata Consumer Products said in separate email statements that they do not comment on market speculation.

While the sources indicated that Dabur was also interested in a deal, the company denied this. It said in an email: “This is not true. We have not evinced any interest nor held any such discussions for acquiring Girnar.”

HUL and Tata Consumer Products dominate the Indian tea segment while Dabur recently entered the category. It also recently forayed into the premium tea market with the launch of Dabur Vedic Tea.

The acquisition would strengthen the buyer’s hold in the western Indian market, said a source close to the development.

Girnar Food & Beverages was launched in 1987 and is promoted by the Shah and Bhansali families. According to ICRA, both families have equal shareholding in the company and are actively involved in all its major functions.

The report by ICRA also stated that Girnar Food & Beverages has a strong presence in Maharashtra, especially in Mumbai, from where it generates a majority of its domestic sales.

“It has a limited presence in Gujarat, Delhi, Karnataka, Jammu and Kashmir, Telangana and Rajasthan, among others. Domestic sales contribute 40-45 per cent to its total revenues, while exports account for the rest. In the overseas market, the company trades in bulk tea, with a strong presence in Russia, from where it generates 80-90 per cent of its total export sales,” ICRA said in its report on the company.

According to market intelligence platform Tracxn, Girnar’s revenue in FY21 stood at Rs 380.8 crore, compared with Rs 325.2 crore in FY20. It recorded a profit of Rs 22.8 crore in FY21, compared with Rs 13.52 crore in FY20.