Orkla India IPO: MTR Parent Prioritises Dividend Over Growth Capital
Orkla management clarified that the payout decision was driven by a lack of capital allocation plans for the next 12–18 months, especially with the company headed for a public listing.
Just days before its upcoming initial public offering (IPO), MTR Foods’ parent company, Orkla India Ltd., distributed a hefty Rs 600-crore dividend for fiscal 2025 — its first-ever dividend payout in 17 years and one that exceeds the company’s annual profits for any previous year.
According to the company’s prospectus, foreign promoter Orkla Asia Pacific Pte Ltd, which holds a 90% stake in Orkla India, received Rs 540 crore from this distribution. The remaining two promoters — Navas Meeran and Feroz Meeran, who each own a 5% stake — pocketed about Rs 30 crore apiece.
Dividend Exceeds Annual Profit
What is interesting is that the total dividend payout far surpasses Orkla India’s recent earnings. The company reported a net profit of Rs 255.69 crore in fiscal 2025, up from Rs 226.33 crore in financial year 2024.
Financial statements show that Orkla India’s retained earnings fell sharply from Rs 1,072 crore at the end of financial year 2024 to Rs 727 crore by March 2025, indicating that the Rs 600-crore dividend was drawn primarily from accumulated reserves rather than current profits.
Management Justifies Payout
Responding to concerns about the unusually high dividend, Orkla’s management described dividends as a “sensitive topic”, particularly for multinational corporations. “People think MNCs want to take high dividends because money will go abroad,” the management said at the press conference on Friday.
The management further clarified that the payout decision was driven by a lack of capital allocation plans for the next 12–18 months, especially with the company headed for a public listing. “The Board of Orkla India will now decide on future dividends,” it added.
IPO Around the Corner
The Norway-listed Orkla ASA-backed entity, which houses well-known brands such as MTR and Eastern Spices, is set to open its IPO on Oct. 29, with the anchor book opening a day earlier on Oct. 28 and the offer closing on Oct. 31.
The issue is structured entirely as an offer-for-sale (OFS) of 2.28 crore equity shares by Orkla Asia Pacific and the two other promoters, meaning no new capital will be raised for the company itself.
Orkla India operates in the spices and convenience foods category, offering ready-to-cook and ready-to-eat products under its portfolio of around 400 items. The company has built a dominant presence across Karnataka, Kerala, Andhra Pradesh, and Telangana, with MTR and Eastern continuing to be household names in southern India.
