ITC Exits Delectable Technologies: Strategic Shift Marks New Chapter

In a major development, ITC Limited has exited its entire stake in Delectable Technologies Private Limited, marking a strategic streamlining in its fast-moving consumer goods (FMCG) portfolio. This follows years of building investments in the Bengaluru startup, which runs the Azgo app and a vending machine network dispensing snacks and other FMCG items.

 

Important Points:

 

Complete Exit Following Incremental Stake Build-Ups

ITC's journey with Delectable Technologies started in 2019, when it bought an initial 11.15% stake, with an intention to increase its holding to 33.42% over multiple tranches. The company gradually raised its shareholding, which reached 27.34% by the end of 2021 and finalized a further acquisition to 33.42% in December 2022.

 

Strategic Rationale Behind the Exit

The divestment is a significant turn of events, as ITC had previously used its holding in Delectable as a means to enhance its footprint in the new distribution platform of vending machines-a segment perceived as a growth opportunity for its differentiated FMCG portfolio.

 

Financial Performance and Market Context:

In its collaboration with ITC, Delectable Technologies registered a turnover of INR 3.1 billion in 2022-23. ITC itself has experienced strong growth, with both its own net profit and revenue increasing strongly over the last few quarters, highlighting good performance by its core businesses.

 

Consequences for the FMCG Scenario:

The exit implies that ITC is possibly re-prioritizing other high-growth spaces or rationalizing its investment base to focus on core businesses and more synergistic opportunities. This action might also reflect a reconsideration of the scalability of the vending machine channel or alignment with ITC's long-term vision.

 

Industry Reaction:

The divestment is being monitored closely by industry observers, who view it as part of a larger pattern of big conglomerates rethinking their wagers in the fast-changing Indian startup space.

 

What's Next?

As ITC's withdrawal from Delectable Technologies brings one chapter to a close, it brings forth new opportunities for both the firms. ITC should continue innovating distribution channels and collaborations, while Delectable Technologies could look for new investors or strategic options to drive its next leg of growth.

 

Sources: Business Standard, Economic Times, CNBC-TV18