Biscuits-to-cigarettes maker ITC Ltd has agreed to acquire a stake of up to 33.42% in Delectable Technologies Pvt. Ltd, which operates the Azgo app and vending machines that sell snacks and other fast-moving consumer goods.
ITC will pay up to Rs 7.50 crore ($1.04 million) in four tranches over a period of 12 months for the stake, the Kolkata-based company said in a stock-exchange filing on Wednesday.
The company said that the deal will strengthen the presence of its FMCG products in the emerging distribution channel of vending machines.
Bengaluru-based Azgo, earlier known as goSnacker, provides Internet of Things-enabled vending machines that are set up in offices and apartment complexes.
Users can connect to the vending machines, order snacks and make payments via the Azgo app and later pick snacks from the machine. The startup has around 150 vending machines across Bengaluru.
The startup was founded in 2014 by Satvik Sarwade, an IIT-Kharagpur alumnus. Sarwade had earlier worked with AquaSafi Purification Systems and Headstrong before launching his own venture.
Azgo’s revenue rose to Rs 69.15 lakh for the year through March 2019 from Rs 19.42 lakh the year before, according to ITC’s filing.
ITC is India’s biggest cigarette maker but has been expanding its other businesses including FMCG, apparel and hotels to reduce reliance on tobacco products.
ITC’s FMCG business includes food staples, spices, biscuits and snacks, confectionery and gums, juices, noodles and pasta, among others.
Some of its products are the Bingo snacks brand, which competes directly with PepsiCo Inc.’s Lays and Kurkure brands, Sunfeast biscuits and B Natural fruit juices.