Orkla India Bets On Eastern's Brand Strength To Fuel Export Growth, Says CEO Sanjay Sharma

MTR-parent Okkla India recently underwent an Offer for Sale, with the balance sheet holding close to Rs 350 crores of cash. Sanjay Sharma, Managing Director and Chief Executive Director of Orkla India, in a conversation with NDTV Profit on Tuesday offered a clear vision of the company, focusing on deep regional growth, strong volume performance despite soft pricing, and a lean capital expenditure strategy.

Orkla India is aggressively building its international footprint, primarily through its acquisitions of MTR and Eastern. The company is actively working to "merge the international segments of these companies too" to streamline operations.

Sharma affirmed, "As of now, we are the largest branded spice exporter for the last 24 years." He noted that 70% of exports stem from the Middle East, driven by the strong brand equity of Eastern, where "Every household has a Malayalee there, making it a strong brand there."

While demand in the US, which contributes only 3% of exports is softening, Sharma currently sees "no tariff impact."

The company's revenue mix is heavily skewed, with 66% of the business in spices and 33% in convenience foods. This makes the company highly sensitive to spice pricing, particularly since only 60% of the spices segment is organized.

Sharma acknowledged the challenge, "The prices of spices over two years have deflated at 20% and this has impacted topline.

"Despite the value pressure, the underlying business health remains strong. Sharma noted, "Our volume growth has been strong despite soft value growth." He is optimistic about the wider market, believing that consumption should improve the entire FMCG sector.

Addressing concerns about capacity, Sharma revealed that the company utilizes only 46% of its capacity across its nine manufacturing facilities, a legacy inherited during the acquisition Eastern acquisition.

The plan is to optimise this footprint, "Our vision is to build some strong factories and satellite the rest." This focus on optimisation means the company will maintain low capital expenditure, which "will not be greater than Rs 20 crore this year."

No proceeds of the IPO came into the company as it was an offer for sale, according to the CEO, thanks to the strong growth capital coming in. Sharma emphasised that in India, the food business is local.

"Food in India is a very local subject. We do believe that the food business is local," he said. Orkla India's strategy is built around catering to these distinct regional cultures by growing "deep into these states rather than shallow."

This hyper-local approach means there is "a huge scope of growth that we have got even within local geographies," according to Sharma.