Orkla India Ltd, the local unit of Norwegian company Orkla ASA and the company behind MTR Foods and Eastern Condiments, has filed draft documents to float an initial public offering.
The IPO will comprise a complete offer for sale of 2.28 crore shares by Orkla India's parent and brothers Navas Meeran and Feroz Meeran, according to the draft red herring prospectus filed with the Securities and Exchange Board of India.
Orkla ASA unit Orkla Asia Pacific Pte Ltd currently holds a 90% stake in the Indian unit while the Meeran brothers hold a 5% stake each. Out of the total offer, Orkla Asia Pacific will sell 2.01 crore shares while the brothers will sell the remaining. Orkla India will not receive any proceeds from the share sale.
The IPO plan comes 18 years after the Norwegian conglomerate acquired MTR to enter India in 2007. Orkla had acquired MTR for about Rs 350 crore from founder Sadananda Maiya and other shareholders including private equity investor JP Morgan Partners.
In 2020, Orkla, through MTR, bought a 67.8% stake in Eastern Condiments from the Meeran family and US-based McCormick & Company at a valuation of Rs 2,000 crore, implying a deal value of around Rs 1,356 crore. The two companies subsequently merged, with Orkla Asia Pacific holding a 90% share in the combined entity Orkla India.
Under the MTR brand, the company offers breakfast mixes and ready-to-eat meals, beverages, spices, pickles, and sweets. The Kerala-based Eastern Condiments, set up in 1983 by ME Meeran, makes spices, blended spice powders, pickles, and rice-based products.
Orkla India posted revenue from operations of Rs 2,394.7 crore, compared with Rs 2,356 crore the year before. Profit rose to Rs 255.7 crore from Rs 226.3 crore, according to the draft prospectus.
In February, a few media outlets had reported citing unnamed sources that fast-moving consumer goods conglomerate ITC Ltd was in talks to buy Orkla for $1.4 billion, or approximately Rs 11,000 crore by current exchange rates.
According to an analyst, the spices and condiments sector commands a revenue multiple of 4-5x. This would indicate that the company’s valuation is likely to have risen to around Rs 9,000 crore-Rs 11,000 crore.
Orkla India has appointed as ICICI Securities, Citigroup Global Markets India, JP Morgan India, and Kotak Mahindra Capital Company as the book-running lead managers to the issue.