Mother Sparsh Baby Care Pvt Ltd, a direct to consumer (D2C) ayurvedic and natural personal care startup, has raised Rs 20 crore ($2.6 million) from hotel-to-cigarette conglomerate ITC Ltd, which will pick up 16% stake through this transaction, the company said in a statement on Friday.
The company plans to infuse the fresh capital towards the enhancement of its research and development (R&D), digital capabilities, new product launches, and expanding its team.
ITC said the investment will enable access the fast-growing D2C space in the 'personal care' category, which it has identified as an area of interest.
“We are elated to be associated with a partner like ITC, whose ethos compliments our brand vision. ITC is in sync with what we envisioned as the future of Mother Sparsh. We expect to scale up our revenues to Rs 300 crore over the next three to five years,” Himanshu Gandhi, Mother Sparsh Co-founder and CEO said in the statement.
“The company, at present, registers over 85% of its sales through online channels and has, over the past 12 months, diversified its product portfolio by over 25%,” added Co-founder Rishu Gandhi.
Launched in 2016 by Dr Himanshu Gandhi and Rishu Gandhi, Mother Sparsh offers plant-based, natural and eco-friendly baby care products, said the statement. Dr Gandhi completed his Bachelors in Technology from YMCA, following which he pursued MBA from the FORE School of Management. Mrs. Gandhi has worked as a Java developer before starting Mother Sparsh.
ITI Capital Ltd acted as an exclusive financial advisor to Mother Sparsh for the fundraising transaction.
According to Avendus Capital’s report, the D2C food and beverage market stood at $5.5 billion in 2020, and is projected to grow at a compound annual growth rate (CAGR) of around 40% to touch $15 billion by 2025. India is one of the largest retail markets in the world, projected to surpass $1.7 trillion by 2025, it added.
2021 has seen homegrown D2C startup brands draw more than $250 million from venture capital (VC) investors in the first half of 2021, nearly as much as the total sum invested in such businesses through 2020. Investor appetite for D2C brands, whetted last year by pandemic tailwinds, has accelerated across categories, the statement said.
While these tailwinds have set the stage for D2C brands in India, COVID-19 has accelerated the online space amid the temporary closure of retail stores and growing wariness for public places.