SUMMARY
The conglomerate purchased 1,000 CCPS, or compulsorily convertible preference shares, of INR 10 each, investing INR 13.5 Cr in the startup
ITC acquired a 16% stake in Mother Sparsh for INR 20 Cr in November 2021
In May this year, ITC also acquired a 10.07% stake in Mylo, a D2C mom and babycare products brand, for INR 39.34 Cr
Indian FMCG conglomerate ITC has increased its stake in the baby and mother care D2C startup Mother Sparsh, regulatory filings show.
Per ITC’s filings with the National Stock Exchange, it has increased its stake from 16% to 22% in the D2C startup.
The conglomerate has purchased 1,000 compulsorily convertible preference shares (CCPS) of INR 10 each of Mother Sparsh. In all, ITC has invested INR 13.5 Cr in Mother Sparsh. The share acquisition is said to be completed by October 28.
The funding comes as part of the startup’s Series B round of funding.
“The said acquisition is in line with the Company’s continued interest in the fast-growing direct-to-consumer (D2C) space in the ‘personal care’ category,” said ITC in the filing.
Earlier, ITC acquired a 16% stake in Mother Sparsh for INR 20 Cr in November 2021.
Founded in February 2016 by Himanshu Gandhi and Rishu Gandhi, Mother Sparsh is a premium ayurvedic and natural, baby and mother care brand.
The startup offers products in the baby, beauty and hair categories, claiming to use organic materials in its products ranging from baby hygiene products to hair and skin care for mothers.
As of FY22, Mother Sparsh clocked in a turnover of INR 33.53 Cr, up 115% from the INR 15.57 Cr turnover it had in FY21. The startup claims to be omnichannel but does the majority of its business via its website.
ITC’s Growing Interest In D2C
Incidentally, Mother Sparsh is not ITC’s only investment in a baby and mother care D2C brand. In May this year, the conglomerate acquired a 10.07% stake in the D2C mother and baby platform, Mylo, for INR 39.34 Cr.
ITC owns over 25 brands such as Aashirwad, Savlon, Sunfeast, Yippee and Classmate in the traditional ecommerce space. However, it is looking to enter into a market dominated by Johnson & Johnson, with startup players such as Mamaearth and The Moms Co. also vying for market share.
The Indian conglomerate’s plans to invest in FMCG and D2C startups first surfaced in 2019, when media reports citing ITC chairman Sanjiv Puri said that while the conglomerate’s focus remains on AIFs, it would not rule out other opportunities.
India’s D2C segment is one of the fastest-growing within the country’s ecommerce ecosystem. Within D2C, FMCG is the largest category in terms of funding. According to an Inc42 report, there are 192 unique funded FMCG startups in India, which have raised $2.1 Bn between 2014 and Q2 2022.
The FMCG segment is slated to reach $21 Bn in market opportunity by 2025, per Inc42 analysis.
