HUL eyes major stake in masala brand MDH
MDH could be valued between ₹10,000 cr and ₹15,000 cr given its pan-India appeal
NEW DELHI: India’s largest packaged consumer goods company, Hindustan Unilever Ltd. (HUL), is in talks with popular spices brand Delhi-based Mahashian Di Hatti Pvt Ltd (MDH Spices), to pick up a majority stake in the company to foray into the spices category, two persons familiar with the development told VCCircle.
MDH Spices could be valued between ₹10,000 crore and ₹15,000 crore given its pan-India appeal and operations, both the individuals said on condition of anonymity.
Email queries sent to HUL and MDH Spices on Saturday remained unanswered till press time.
The spices category typically commands earnings before interest, tax, depreciation and amortization (EBITDA) multiples of 12-15 times in terms of valuation. MDH Spices had registered ₹507 crore in EBITDA in fiscal year 2020-21, while its net sales stood at ₹1,191 crore during the same period.
In comparison, ITC Ltd, one of the fiercest rivals of HUL, bought Kolkata-based packaged spices maker Sunrise Foods Pvt Ltd in May 2020 for ₹2,150 crore. Sunrise got an almost 25 times valuation over its EBITDA in FY20. Its EBITDA was ₹88 crore and revenue ₹591 crore.
MDH Spices has been in talks with some other large conglomerates in India also, especially after the death of founder Mahashay Dharampal Gulati. The persons mentioned above, however, did not reveal the identity of other suitors who evinced interest.
Gulati, the iconic face of MDH ads who died in December 2020, had migrated from Pakistan’s Sialkot region during Partition as a refugee. After a few years, he bought a small shop in the Karol Bagh area of Delhi and started his family business of ground spices. After it gained popularity, Gulati added another shop. He later started a factory in Kirti Nagar area of the city to produce ground spices.
Since then, there has been no looking back. MDH became a familiar taste among many households as it was one of the pioneers to introduce packaged masala.
The company sells more than 60 products and has lakhs of retailers and at least 1,000 wholesale dealers across the country. The company has the capacity to produce 30 tones of spices in powders packed in consumer packs of different sizes (from 10 gm to 500 gm) in a day, according to its website.
That said, the highly unorganized spices sector has not witnessed too many deals recently.
HUL has, however, not shied away from acquisitions that align with its larger product and market penetration goals. In March 2020, the fast moving consumer goods major had signed an agreement with Glenmark Pharmaceuticals Ltd to acquire its woman-oriented hygiene brand VWash.