Tata rejects price as it eyes control of Indian snack-maker Haldiram’s

Mumbai/New Delhi — Tata Group’s consumer unit is in talks to buy at least 51% of popular Indian snack food maker Haldiram’s but is not comfortable with the $10bn valuation sought, two people briefed on the matter said.

If successfully concluded, a deal would cause the Indian conglomerate to directly compete with Pepsi and billionaire Mukesh Ambani’s Reliance Retail.

Haldiram’s, a household name in India, is also talking with private equity firms including Bain Capital about the sale of a 10% stake, they said.

Tata Consumer Products, which owns UK tea company Tetley and has a partnership with Starbucks in India, has balked at the $10bn valuation given that Haldiram’s annual revenue is about $1.5bn, the sources said.

Tata Consumer shares surged and closed nearly 4% higher in Mumbai trade after Reuters reported news of the talks.

A third person with direct knowledge of the discussions said Tata wants to buy more than 51% but has told Haldiram’s that its “ask is very high”.

The potential acquisition represents an exciting opportunity for Tata, the person said, adding: “Tata [Consumer] is seen as a tea company. Haldiram’s is huge in the consumer space and has a wide market share.”

The sources spoke on condition of anonymity.

A spokesperson for Tata Consumer Products said it “does not comment on market speculation”. Haldiram’s CEO, Krishan Kumar Chutani, and Bain declined to comment.

Family-run Haldiram’s traces its origins to a tiny shop founded in 1937 and is well-known for its crispy “bhujia” snack sold for as little as 10 rupees (R2.31) across mom-and-pop stores.

Overseas markets

It has an almost 13% share of India’s $6.2bn savoury snack market, according to Euromonitor International. Pepsi, famous for its Lay’s chips, also has about 13%.

Haldiram’s snacks are also sold in overseas markets such as Singapore and the US. The company has about 150 restaurants selling local food, sweets and Western cuisine.

Purchasing Haldiram’s would significantly expand Tata’s consumer products reach.

“If you want to suddenly grow big in size, no-one better to provide access than Haldiram’s. No other brand attacks packaged food, and food services, with equal panache,” said Ankur Bisen, head of consumer and retail at Indian consultancy Technopak.

Tata’s consumer unit, which also sells salt, pulses and mineral water, had revenue of $1.7bn in the past financial year. It is a relatively small part of the Tata Group, whose businesses span cars, aviation and hotels and which had combined revenue last year of about $144bn.

Haldiram’s chair Manohar Lal Agrawal last year told CNBC TV18 in an interview the company wanted to attract private equity investors and debut on the stock market in two to three years.

Haldiram’s — which has multiple registered companies in the country — had revenue of at least $981m in the financial year ended March 2022, according to regulatory filings. The first two sources, however, said its revenue is now close to $1.5bn and annual operating profit is about $200m.

The $10bn valuation sought by Haldiram’s for the deal translates to 6.6 times its annual revenue of $1.5bn, sources said.

Haldiram’s smaller listed rival in India, Bikaji Foods International, has a market capitalisation of $1.5bn, six times its annual revenue. Shares in Bikaji also rose on Wednesday, climbing about 3% during trade. 

Reuters