In a monumental development, Tata Group’s consumer arm has entered into intense negotiations to secure a controlling stake in the revered Indian snack behemoth, Haldiram’s. However, sources indicate that Tata is grappling with the hefty $10 billion valuation proposed by Haldiram’s.
If the agreement materializes, Tata will embark on a direct rivalry with industry giants like Pepsi and the retail empire of billionaire Mukesh Ambani, Reliance Retail. Haldiram’s, a household name in India, is contemplating the sale of a 10% stake to private equity firms, including Bain Capital.
Tata Consumer Products, which boasts ownership of UK-based tea company Tetley and holds a strategic alliance with Starbucks in India, has voiced reservations about the $10 billion valuation. This scepticism arises despite Haldiram’s annual revenue hovering around $1.5 billion, as per insider accounts.
Tata Consumer shares experienced a robust surge, surging more than 4% during late Wednesday trading in Mumbai following the revelation of these talks.
A reliable source with direct insights into the discussions disclosed that Tata aspires to secure more than 51% of Haldiram’s but has conveyed to the snack giant that their valuation expectations are exceedingly lofty.
This potential acquisition promises a thrilling expansion opportunity for Tata as it ventures beyond its conventional identity as a tea company. Haldiram’s, on the other hand, wields considerable influence in the consumer sector and enjoys a substantial market share.
All sources have chosen to remain anonymous, and neither Haldiram’s Chief Executive Krishan Kumar Chutani nor Bain Capital have offered any comments thus far. Tata Consumer, in a clarifying statement to stock exchanges, asserted that it is “not in negotiations as reported.”
Family-run Haldiram’s, tracing its roots back to a modest shop established in 1937, is renowned for its delectable “bhujia” snacks, which can be savoured for as little as 10 rupees at corner stores.
According to Euromonitor International, the company commands an impressive 13% share of India’s $6.2 billion savoury snack market, placing it on par with Pepsi, renowned for its Lay’s chips.
Haldiram’s snack offerings are also found on international shelves, including markets like Singapore and the United States, and the company operates approximately 150 restaurants, serving local cuisine, sweets, and Western delicacies.
An acquisition of Haldiram’s would undeniably amplify Tata’s presence in the consumer products domain. Ankur Bisen, the head of consumer and retail at Indian consultancy Technopak, noted, “If you want to suddenly grow big in size, no one is better to provide access than Haldiram’s. No other brand attacks packaged food and food services with equal panache.”
Tata’s consumer unit, which encompasses products ranging from salt and pulses to mineral water, amassed revenue of $1.7 billion in the previous fiscal year. Although relatively modest within the broader Tata Group, whose diversified interests encompass automobiles, aviation, and hospitality, the conglomerate boasted a combined revenue of approximately $144 billion last year.
Haldiram’s Chairman, Manohar Lal Agrawal, indicated in an interview with CNBC TV18 last year that the company intends to attract private equity investors and embark on an initial public offering within the next 2–3 years.
According to regulatory filings, Haldiram’s, with multiple registered entities in India, reported revenue of at least $981 million for the fiscal year ending March 2022. However, insider sources now suggest that its revenue has surged to nearly $1.5 billion, with an annual operating profit of approximately $200 million.