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Orkla Explores IPO for Indian Unit as Spices Market Growth Accelerates

Strategic Insights

— 1 min read

Orkla, the Norwegian investment company, is exploring a possible initial public offering (IPO) for its Indian unit, which owns leading spices and condiments brands MTR and Eastern. The company's assessment of the Indian market's potential, particularly in the spices segment, is upbeat, driven by growing demand for branded products. As Orkla focuses on southern India, where it derives three-fourths of its sales, the company is likely to capitalize on this trend. The IPO move, while still in its early stages, could value Orkla India at between Rs 15,000 crore and Rs 20,000 crore, based on the unit's net profit of Rs 340 crore and growth rate in the low double-digit range.

Key Takeaways:

  • Orkla, a Norwegian investment company, is exploring a possible IPO for its Indian unit, which owns MTR and Eastern brands.
  • The Indian spices market is projected to be over Rs 90,000 crore, with branded products accounting for just a third of it.
  • MTR gets 70% of its revenues from spices and masalas, while Orkla restructured its Indian operations under one business entity, Orkla India, last year.
  • The company plans to focus on southern India, where it derives three-fourths of its sales, and leverage its combined business capabilities to drive growth.
  • The brand valuation could range from Rs 15,000 crore to Rs 20,000 crore, based on the unit's performance.
  • Orkla's decision to focus on southern India sets it apart from other FMCG companies trying to expand across the country.

Statistics:

  • Sales of Orkla India: Rs 2,300 crore (last calendar year)
  • Revenue share from spices and masalas for MTR: 70%
  • Total Indian spices market size projected: over Rs 90,000 crore
  • Branded products in the Indian spices market: a third of the total market
  • Orkla India's net profit: Rs 340 crore
  • Growth rate of Orkla India: low double-digit

Sources:

  • [1] "Orkla explores option of listing Indian unit through IPO" - Economic Times, 2023 (no date available)
  • [2] "Orkla eyes IPO for its Indian unit; values it at Rs 1.5-2 lakh crore" - Hindustan Times, 2023 (no date available)
  • [3] "Orkla to focus on southern India, drives growth through MTR and Eastern" - Bloomberg Quint, 2023 (no date available)

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