Indias Tata Group consumer unit is in talks to buy at least 51% of famous Indian snack food maker Haldirams. Still, it is uncomfortable with the $10 billion Valuation sought, two people briefed on the matter said. If successfully concluded, a deal would see the Indian conglomerate directly compete with Pepsi (PEP.O), the world’s biggest soft drink company, and billionaire Mukesh Ambanis Reliance Retail.
According to Euromonitor International, the family-run business, famous for its crispy bhajia snacks sold at mom-and-pop shops, has around 13% of India’s $6.2 billion savory snack market. A purchase could significantly expand Tata’s reach in the category, which currently lags at only 7% of the category.
Tata’s consumer business includes the UK tea brand Tetley and a partnership with Starbucks in India. It is also the maker of Tata Nano cars and operates hotels, among other things. The conglomerate, which owns Indian oil and gas giant Reliance Industries, wants to boost its presence in the fast-growing consumer sector to increase incomes.
To do so, it has started talking with private equity investors about a possible investment in Haldirams. WestBridge Capital and TA Associates are among those that have made overtures, the Times of India reported. Other potential investors include Capital International, Everstone Capital, and General Atlantic Partners.
According to regulatory filings, Haldirams has multiple registered companies in India and had revenues of at least $981 million for the fiscal year that ended in March 2022. The company is based in the northern city of Delhi. Its branches run operations primarily within North India, Nagpur for Western and Southern markets, and another division called Haldiram Bhujiawala for the Eastern market. Its products are sold nationwide and available in international markets like Singapore and the United States.
The company has about 150 restaurants that offer regional cuisine, sweets, and Western foods. Purchasing Haldirams would significantly increase the number of such outlets in the country.
The sources said that a deal is likely to be structured as a combination of fresh equity allotment and secondary share purchases. They added that private equity investors would prefer to plow funds into the combined entity rather than separate businesses.
The Indian snack food industry has been increasing by over 12% in the last couple of years, driven by consumers shifting from packaged foods to more healthy options, per a recent CARE Ratings report. The industry also benefits from increased disposable incomes and rising demand for convenience food. Moreover, snack-makers have stepped up product innovation to meet these changing preferences. The market research firm expects these trends to continue for several years. It added that the global market for savory snacks is projected to reach $645 billion by 2022 from $488 billion in 2016. Reuters’ Nitin Varma contributed to this story from Mumbai.
