| | | Question of the Week In 1996, Ajay Gupta founded Capital Foods, which is synonymous with the Chinese food ingredients brand Ching’s Secret. What was Gupta’s first entrepreneurial venture? | | |  | Here's a great value proposition A digital subscription to Mint premium can be yours at just ₹213 per month. Check out the convenient and affordable plans we have for you here. | | Good Morning | | The News in Summary The markets turned bullish on Adani group stocks after a Sebi-appointed special panel appeared ambivalent about perceived violations in their trading following the report by US short-seller Hindenburg. Meanwhile, food major Nestle India Ltd and ITC Ltd emerged as frontrunners to acquire Capital Foods Pvt. Ltd, the maker of Ching’s Secret and Smith & Jones food ingredients. Elsewhere, Tata Consultancy Services bagged a multibillion-dollar order from state-run Bharat Sanchar Nigam Ltd (BSNL) to help set up its 4G network, while Nusli Wadia faced further concerns as CARE Ratings cast doubts about Bombay Dyeing’s ability to repay its debts. Finally, India’s pharma market leader Sun Pharma is looking to acquire the 21.52% stake it does not own in Israeli subsidiary Taro, over and above the 78.48% it already has. | | | | Sebi Reprieve Recharges Adani Stocks Buoyed by the initial report of the Supreme Court-appointed expert panel, which did not find evidence of regulatory failure in terms of Sebi’s failure to spot any violations as alleged by Hindenburg, along with a “buy” rating for Adani Ports and Adani Transmission by Jefferies, shares of Adani group firms climbed through the week. The biggest gainer was investor Rajiv Jain’s GQG Partners LLC which in March had acquired almost $2 billion worth of shares in four of Adani’s firms from a family trust and has raised its stake in the conglomerate by another 10% this week. Rising prices of shares also meant that Gautam Adani, the chairman of the group, re-entered in the list of the top 20 billionaires in the world. However, Adani Green Energy’s plans to raise Rs 5,000-6,000 crore from global fund managers through a qualified institutional placement (QIP) received a minor setback after the board meeting to consider the fundraising was called off at the last moment. | | | | Nestle and ITC Compete to Stir Ching’s Secret Pot The race to acquire Capital Foods Pvt. Ltd, the maker of Ching’s Secret and Smith & Jones food ingredients, is narrowing down to two major contestants, Nestle India Ltd and ITC Ltd. Over the last few months, marquee names such as Kraft Heinz, Hindustan Unilever and Tata Consumer Products have shown interest in Capital Foods, which claims to be India’s largest culinary food ingredient maker but a deal, expected to value the company between Rs 4,000 crore and Rs 5,000 crore, has been elusive. But indications are that either Nestle or ITC could reach an agreement soon in one of the largest buyouts of a homegrown consumer brand in the food space. Capital Foods, a 25-year-old company, is jointly owned by Artal Asia Pte, which holds a 39.94% stake; US private equity group General Atlantic, which holds 35.43%; a European family office and investment arm; Wildflower Family Trust with 22.08% and founder chairman Ajay Gupta who has a 2.55% stake. | | |  | | | | | | | | TCS Bags Bulk of Multibillion-Dollar Order from BSNL A bonanza for TCS, as a consortium headed by the country’s top IT services company, bagged a Rs 15,000 crore ($1.8 billion) advance purchase order from the government-owned BSNL for implementing a nationwide 4G network in India. At a time when market leaders Reliance Jio and Bharti Airtel are rolling out 5G networks for their customers, it is debatable whether a 4G network will draw customers to BSNL, which introduced pilot-mode 4G services in certain areas of Punjab in April. But for TCS, buffeted by a slowdown in its key US and Europe markets, the jumbo order will be a shot in the arm. The consortium contracted by BSNL will also include Tata Group’s telecom gear-making company Tejas Networks, which it acquired in March 2022 and the state-owned enterprise ITI Ltd. Separately, Tejas Networks had earlier secured another order valued at Rs 696 crore from BSNL for enhancements to its network. | | | | After Go First, Nusli Wadia Has a New Headache - Bombay Dyeing It has been a stressful time for Nusli Wadia. Close on the heels of his airline, Go First, filing for voluntary insolvency proceedings, the 79-year-old chairman of the Bombay Dyeing group faces a fresh challenge with CARE Ratings raising concerns over his flagship company Bombay Dyeing’s ability to service its debt repayments worth Rs 3,597 crore during fiscal years 2024 and 2025. The agency has also cut its ratings on Long-term Bank Financing to BBB- while revising its outlook to Negative. CARE’s concerns stem from delays the company has faced in raising Rs 940 crore through rights issues and asset monetization, a proposal approved by the company’s board in September last year. Bombay Dyeing’s consolidated net loss in the quarter ending March 2023 widened to Rs 246.1 crore from Rs 41.74 crore in the year-ago period. For Wadia, who has successfully faced many challenges throughout his long and illustrious career, the latest setbacks cap a difficult five-year period during which three of his four businesses—Bombay Dyeing, Bombay Burmah and National Peroxide—have averaged negative returns of 10-22% a year. | | | | Ten years ago, the Bombay Dyeing group looked poised to grow rapidly, driven by a combination of old and new businesses. Here’s an old interview with Jeh Wadia, then managing director of Bombay Dyeing and Go Air, where he talks about the group’s plans: | | | | Sun Proposes Buying Out Remaining 21.52% Stake in Taro Sun Pharmaceutical Industries, which already has a 78.48% stake in generics maker Taro Pharmaceutical Industries, has proposed to buy out the rest of the Israeli company’s shares at $38 each in an all-cash deal that could be worth $300 million. In accordance with Israeli Companies Law, the acquisition will be made through a reverse triangular merger, in which Sun Pharma will be required to establish a wholly owned subsidiary that will engage in a merger agreement with Taro. If the deal goes through, Taro will become a fully owned subsidiary of Sun and will be delisted from the New York Stock Exchange. The move comes 10 years after Sun abandoned a six-year-long battle to acquire these shares. Sun Pharma’s board has also approved the appointment of Aalok Shanghvi, the son of company promoter Dilip Shanghvi, as a whole-time director for five years from 1 June. | | | | Last Word  The bad news on hiring continues with one of the country’s largest private sector employers, Reliance Industries, looking to slash hiring and fire underperformers across its units, Reliance Retail and Reliance Jio Infocomm, as part of a cost-efficiency drive. The two units, which have nearly 500,000 people, had hired in large numbers last year. But with the rollout of its 5G network complete and the acquisition of Metro AG’s India business leading to excess capacity in the retail business, there is an attempt to rationalize the numbers. Last week, JioMart laid off over 1,000 employees as part of its cost-cutting initiative, which includes reducing its wholesale division’s workforce by two-thirds. Earlier, Amazon India was reported to be laying off approximately 500 employees, spanning various businesses and functions, even as the e-commerce giant delayed the joining dates of its campus recruits in India by six months. The job cuts reflect the intense competition in the Indian e-commerce industry, with companies forced to reevaluate their strategies to stay ahead in the market. | | | | Answer to the Question When Ajay Gupta was still in college, he set up an advertising agency, Forefront, which created, among its other work, an award-winning campaign for a rice brand in the US market. Buoyed by the success of that venture, he launched Capital Foods in 1996. | | | Do you have any questions? Send in your queries to sundeepkkhanna@gmail.com Were you forwarded this email? Did you stumble upon it online? Sign up here. | | Written by Sundeep Khanna. Edited by Saikat Chatterjee. Produced by Shad Hasnain. 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