Indian conglomerate ITC Ltd. is reportedly in early discussions to acquire MTR Foods Pvt. Ltd. and Eastern Condiments Pvt. Ltd. from Norwegian parent company Orkla ASA for $1.4 billion. The acquisition, if finalized, will bolster ITC’s footprint in the South Indian food market, particularly in the spices and ready-to-cook segments.
Orkla, which acquired MTR in 2007 and Eastern in 2020, had previously explored an initial public offering (IPO) for its Indian subsidiaries. However, the company is now considering a private sale if it secures a higher valuation. If expectations are not met, an IPO remains an alternative option.
The acquisition aligns with ITC’s strategy of expanding its presence in the fast-growing food sector. MTR and Eastern hold dominant positions in states such as Andhra Pradesh, Karnataka, Tamil Nadu, and Kerala, contributing to over 80% of Orkla India’s revenue, which stood at Rs 2,400 crore in FY24.
Founded in Bengaluru in 1950, MTR Foods has expanded its reach beyond India, selling its products in North America, West Asia, Japan, and Southeast Asia. ITC’s interest in acquiring MTR follows its recent purchase of FMCG brand Prasuma, indicating its commitment to strengthening its food business.
Orkla has acknowledged that India’s food market is highly competitive and complex, with regional preferences playing a significant role. The company has previously highlighted the stark differences between the Indian and European markets, emphasizing the nuances of consumer behavior across various states.
The Indian spices market, valued at over Rs. 90,000 crore in 2024, remains largely unbranded, with only a third of the market under organized players. Everest leads the branded spices segment, followed by MDH, while brands like MTR, DS Foods, Ramdev, and Eastern dominate regional markets.
The Indian FMCG sector has seen increased interest in the spices and ready-to-cook categories. In recent years, Dabur acquired a 51% stake in Badshah Masala for Rs 588 crore, while ITC purchased spices manufacturer Sunrise Foods for Rs. 2,150 crore in an all-cash deal.
MTR reported Rs. 2,300 crore in sales last year, with approximately 70% of its revenue generated from spices. Orkla’s leadership has previously emphasized the importance of spices in Indian cuisine and the ongoing shift from unbranded to branded products.
In 2023, Orkla consolidated its Indian operations under Orkla India, bringing MTR, Eastern, and its international businesses under a single entity. Unlike other FMCG firms expanding across India, Orkla has maintained a strategic focus on strengthening its presence in southern states.
With MTR, Orkla has concentrated on Karnataka and Andhra Pradesh, while Eastern has remained focused on Kerala. The company has positioned itself as a leader in local brand development rather than attempting nationwide dominance.
As ITC advances discussions with Orkla, industry experts are closely monitoring the potential deal, which could reshape the competitive landscape of the South Indian food industry.