FMCG distributors raise concerns on Tata Consumer acquisition of Capital Foods

The All India Consumer Products Distributors Federation (AICPDF) has raised concerns about the treatment of distributors by Tata Consumer Products Ltd (TCP) after the acquisition of Capital Foods Ltd.

The federation alleged that the company terminated 1,600 distributors, leaving existing distributors struggling to manage Capital Foods products, specifically Ching’s Chinese products. Allegations include unsettled claims for damages and expired goods. Managing the merged operations of Tata Tea, Tata Sampann, and Capital Foods products has proven challenging for distributors.

Huge inventory

“After the merger of Tata Tea and Tata Sampann (masala) into a single division, many distributors struggled to manage the increased volume, resulting in significant operational challenges. One-third of the distributors found it difficult to handle the bulky business of salt. Following the takeover of Capital Foods, all existing distributors were asked to leave, leading to a substantial disruption. Distributors were left with unsold stock and pending market credit, facing enormous claims for damages and expired goods. The transition of the distribution network has resulted in expired stock getting stuck in the market, hindering credit recovery. Despite assurances from TCPL officers that these issues would be addressed by the former management of Capital Foods, claims and damages amounting to crores of rupees remain unsettled after more than a year. The HoReCa (Hotel, Restaurant, and Catering) division continues to be supplied under Capital Foods’ network, indicating a fragmented and inefficient distribution strategy,” the association said in a statement.

Further, the association pointed out that there has been no response from the company’s end on the issues being faced by distributors.

“We urge the government and relevant authorities to take immediate action to protect the interests of distributors and ensure that their claims are settled promptly. The current situation underscores a worrying trend in India’s capital market, where wealth consolidation occurs at the expense of ethics and the livelihoods of countless individuals,” said Dhairyashil Patil, National President of AICPDF.