MTR Foods owner Orkla India files draft papers for IPO, to sell 2.28 cr shares
Orkla India, the parent company of food brands like MTR Foods and Eastern Condiments, has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for an initial public offering (IPO), which will consist solely of an offer-for-sale (OFS) of 2.28 crore shares by the promoter entity, Orkla Asia Pacific Pte and other shareholders, Navas Meeran and Feroz Meeran.
This means that the IPO will not raise any fresh capital for Orkla India and all proceeds from the share sale will go only to the selling shareholders. While the company has not officially disclosed the issue size, a person with direct knowledge of the matter said it could be in the range of ₹3,200-3,500 crore. Orkla India declined to comment on the projected issue size.
Orkla Asia Pacific Pte Ltd and Norwegian industrial investment firm Orkla ASA—collectively hold a 90% stake in the company. Navas Meeran and Feroz Meeran hold 5% stake each. Orkla ASA entered India by acquiring ready-to-eat food maker MTR in 2007 and spicemaker Eastern Condiments in 2020.
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There has been a significant consolidation in the packaged food market as large players acquire brands to expand their portfolio and enhance presence.
Patanjali Ayurved acquired a bankrupt Ruchi Soya Industries in FY20, ITC purchased Sunrise Foods in FY21, Orkla India acquired Eastern Condiments in FY2121, Tata Consumer Products bought Capital Foods and Organic India in FY24 and Wipro Consumer Care and Lighting acquired the Kerala-based packaged food brand Brahmins last fiscal.
Orkla has appointed ICICI Securities, Citigroup Global Markets India, JP Morgan India and Kotak Mahindra Capital Company to help manage the share sale. Orkla ASA's shares fell 2.87% to 111.6 Norwegian Krone (NOK) on Wednesday.
Orkla India's decision to launch an IPO, solely through an offer for sale, signifies a broader trend among MNCs in India. This move allows MNCs to monetize their investments and capitalize on the robust valuations currently prevalent in the Indian market, reflecting a strategic shift to unlock shareholder value.
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In recent times, long-time investor British American Tobacco (BAT) sold a partial stake in ITC while Hyundai's South Korean parent offloaded some stake in the Indian unit in its IPO last year.
Over the last year, Conagra Brands announced the sale of its controlling stake in India's Agro Tech Foods while Japan's Sumitomo Wiring Systems sold a 4.4% stake in Samvardhana Motherson International. Other transactions include Whirlpool's 24% stake sale in its Indian arm and Fairfax's group entity Fairbridge Capital (Mauritius) Ltd selling about 8.5% stake in Thomas Cook India.
In February, Mint exclusively reported that ITC Ltd is in early discussions with Orkla to acquire its Indian businesses—MTR and Eastern Condiments—for about $1.4 billion, citing people familiar with the matter. While it did not drop its IPO plans, the company was also exploring options in the private markets.
Formerly known as MTR Foods, Orkla India offers a range of products including spices, masalas, ready-to-eat sweets, and breakfast mixes under brands such as MTR, Rasoi Magic and Eastern. MTR Foods and Eastern lead the market for ready-to-cook foods and spices in Andhra Pradesh, Karnataka, Tamil Nadu and Kerala.
MTR Foods also sells several products in North America, West Asia, Japan and some South-East Asian countries. MTR's South Indian range of products is a key category in many international markets.
According to a Technopak report, the Indian packaged food market was estimated at ₹10.18 lakh crore in FY24, growing at a CAGR of 10.8% from FY19.
After the launch of the MTR brand in the food space in 1950 by the Bengaluru-based Maiya family, MTR Foods has gone through several rounds of diversification, before becoming a top player in the spices and ready-to-cook space in South India. MTR and Eastern are the two main businesses under Orkla India.
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In FY25, the company reported ₹2,455 crore in total income, higher than ₹2,387 crore a year earlier, according to the draft red herring prospectus. It posted a profit of ₹255 crore, up from from ₹226 crore in FY24.
MTR Foods and Eastern Condiments got three-fourths of their sales from southern states in 2024. However, competition in the spices and ready-to-cook space is increasing with more brands and unorganized players coming in.
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