Tata Consumer Products Ltd Considering Majority Stake in Haldiram’s

Tata Consumer Products Ltd (TCPL) is reportedly in discussions to acquire a majority stake of at least 51 per cent in the well-known Indian snack food manufacturer, Haldiram’s. However, the proposed $10 billion valuation has raised concerns within the industry.

Private Equity Firms Also Exploring Haldiram’s Stake

Simultaneously, Haldiram’s is engaging in talks with private equity firms, including Bain Capital, regarding the potential sale of a 10 per cent stake in the company. This development comes as Haldiram’s explores opportunities to expand and attract strategic partners.

Tata Consumer Products, which owns UK tea company Tetley and has a partnership with Starbucks in India, has baulked at the $10 billion valuation given that Haldiram’s annual revenue is around $1.5 billion.

Despite Tata Consumer Products’ interest in acquiring more than 51 per cent of Haldiram’s, they have expressed reservations about the high valuation proposed by Haldiram’s. The sources indicate that Tata Consumer Products considers the valuation disproportionate to Haldiram’s annual revenue.

Haldiram’s: A Legacy of Savory Success

Haldiram’s, a family-run business with its origins dating back to a humble shop established in 1937, has gained widespread recognition for its signature “bhujia” snack, which is available for as little as 10 rupees in local mom-and-pop stores.

In India’s burgeoning savory snack market, Haldiram’s holds a substantial market share, accounting for nearly 13 per cent of the $6.2 billion industry, as reported by Euromonitor International. Notably, Pepsi, renowned for its Lay’s chips, also commands a similar market share.

Haldiram’s products have also made their mark in international markets, including Singapore and the United States. The company’s diverse offerings extend beyond snacks, with approximately 150 restaurants offering a variety of local delicacies, sweets, and western cuisine.

Tata’s Strategic Move

If the acquisition materializes, it would significantly broaden Tata Consumer Products’ consumer goods portfolio. Ankur Bisen, head of consumer and retail at Indian consultancy Technopak, commented, “If you want to suddenly grow big in size, no one better to provide access than Haldiram’s. No other brand approaches packaged food and food services with equal panache.”

While Tata’s consumer unit encompasses products ranging from salt to pulses and mineral water, it reported revenue of $1.7 billion in the last fiscal year. However, it represents a relatively modest segment within the broader Tata Group, a conglomerate with interests spanning automobiles, aviation, hotels, and other industries, and boasting a combined revenue exceeding $144 billion in the previous year.

Haldiram’s Ambitious Plans

Chairman Manohar Lal Agrawal of Haldiram’s expressed the company’s ambition to attract private equity investments and eventually debut on the stock market within the next 2-3 years. This move reflects Haldiram’s desire to secure additional resources for expansion and innovation.

While regulatory filings for the financial year ending March 2022 indicate a revenue of at least $981 million for Haldiram’s, insiders suggest that the company’s revenue has since surged to approximately $1.5 billion, with an annual operating profit of approximately $200 million.

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