India's consumer goods market is formalising at an accelerated pace. And nowhere is this shift as prominent as spices. Norway's Orkla ASA to cigarette-to-staples maker ITC Ltd., everyone wants a bigger share.
Hindustan Unilever Ltd., too, has jumped in. And India's largest consumer goods company may be ready to pay a premium for Mahashian Di Hatti Pvt. or MDH as consolidation gains steam in the fragmented spices category.
-
Indian Markets Turning Corner After Two Tough Years, Says Sandeep Tandon -
NDTV Profit Ignite 2026: Experts See Opportunity In Equities, Stay Bullish For Long-Term -
Buy Right, Sit Tight Does Not Work for Individual Stocks, Says Dinshaw Irani -
'Worst Is Behind': Quant MF Sees Market Bottom, Flags 'Extreme Euphoria' In Midcaps -
India's Mutual Fund Industry Could Become A $1 Trillion Opportunity, Say Fund Managers -
'Foreign Investors Are Baraatis': Raamdeo Agrawal's Take On LTCG Tax -
Stay Invested Through Market Cycles: Raamdeo Agrawal at NDTV Profit Ignite -
Ramesh Damani Remains Bullish On India For Next 20-30 Years, Sees Bargains Amid Market Weakness -
CAS Came After A Long Consultation Process: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFIT IGNITE -
Aim To Cut FPI Onboarding Time From Mth To Five Days: SEBI Chairman Tuhin Kanta Pandey AT NDTV PROFI
HUL is in talks to acquire a majority stake in MDH, the Mint reported citing unnamed people familiar with the development. The New Delhi-based spicemaker could be valued between Rs 10,000 crore and 15,000 crore, the report said.
Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay
That values MDH, which traces its origins to pre-Partition India, more than Sunrise Foods Pvt., a spicemaker that ITC acquired in May 2020. Analysts attribute the premium to MDH's brand, pan-India reach and assets.
HUL, in an emailed response to BloombergQuint, declined to “comment on market speculation".
Still, HUL's reported interest in MDH underscores the growth potential of the segment. According to a report by Avendus Capital, the Indian spices market is worth around Rs 70,000 crore annually, with the branded segment contributing 35% and estimated to double by 2025. In-home consumption dominates demand as Indians prefer to cook meals and are increasingly switching from loose to packaged black pepper and coriander to turmeric, driving consolidation.
What MDH Offers
In FY21, MDH reported Rs 319 crore in net profit on net sales of Rs 1,191 crore. And earnings before interest, taxes, depreciation, and amortisation stood at Rs 507 crore. Going by the deal report, HUL is valuing MDH at nearly 30 times its Ebitda.
In May 2020, ITC bought Sunrise Foods for Rs 2,150 crore, valuing the spice maker at nearly 25 times the previous year's operating profit of Rs 88 crore. Sunrise Foods' FY20 revenue stood at Rs 591 crore.
MDH will be more expensive than earlier deals in the spices market, largely dominated by regional players, Abneesh Roy, executive director–institutional equities at Edelweiss Securities, said in a note. It commands higher consumer trust and premium pricing than regional players, he wrote.
MDH also has "huge land parcels", including in the prime Delhi region, adding to its value, he said.
Spices also offer better margins. MDH generated an Ebitda margin of 42.5% in FY21 compared with HUL's 25.2%.
From a buyer perspective, spices are of very high strategic value, Abha Agarwal, executive director and co-head, consumer, Financial Institutions Group and Business Services, Avendus Capital, said in the report. "Blended spices, for instance, have material margins of over 50%, given the value add and brand stickiness."
Pan-India Reach
MDH is also one of the few brands to successfully build a pan-India presence while others are mostly regional players, said Roy. HUL, with a presence in 8 million outlets, can expand distribution much deeper, he said.
The Gulatis, the founding family of MDH, have been spice traders for decades, according to the company's website. Mahashay Chunnilal Gulati set up the masala company in 1919 in Sialkot, now in Pakistan's Punjab province.
After the Partition in 1947, his son Mahashay Dharampal Gulati moved to Delhi and set up a shop of grounded spices at Ajmal Khan Road, Karol Bagh. The business grew and over the decades Dharampal Gulati became its mascot, appearing in hoardings and TV commercials in a red turban and a white moustache.
MDH now operates five factories and sells a range of 62 grounded and blended spices, according to its website. The company also exports to the U.S., the U.K., Europe, and South-East Asia, among other nations, through a network of more than 1,000 stockists and 4 lakh dealers.
After Dharampal Gulati's death in December 2020, his son Rajeev Gulati and daughter-in-law Jyoti Gulati own 81.85% and 17.99%, respectively, in the company.
Consolidating Market
While Everest and MDH are national-level players, the packaged spices market is dominated by MTR in the south, Ashok and Goldiee Masale in the north, and the Sunrise and Cookme brands in the east. Badshah, Sakhti Masala, Suruchi and Catch are among the branded firms in the market.
Before ITC's buyout of Sunrise, edible oil producer Emami Agrotech launched Mantra-branded spices in 2019 in its quest to be among the top three spice makers nationally.
Norway's consumer goods maker Orkla ASA acquired a majority stake in Kerala-based spice maker Eastern Condiments Pvt. at about Rs 2,000 crore. It merged the local leader with its wholly-owned unit MTR Foods Pvt.
In June 2020, investment firm A91 Partners invested Rs 125 crore in Indore-based spice brand Pushp.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
