FMCG major Hindustan Unilever is looking to buy a majority stake in Mahashian Di Hatti, the maker of MDH Spices, LiveMint reported on Tuesday citing two people familiar with the development.
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The consumer goods company is reportedly in talks with MDH to reach a deal. According to the report, MDH could be valued between Rs 10,000 crore and Rs 15,000 crore, given its pan-India appeal.
Commenting on the LiveMint report, HUL told CNBC-TV18, "We do not comment on market speculation.”
Financial services firm Avendus estimated the branded spices market size will be doubled to Rs 50,000 crore by 2025, however, the market is dominated by regional champions.
Spice business has been a tough market to crack for bigger companies, as consumer preferences and cooking habits differ from state to state. The MDH brand is, however, has a wider presence in the country through its innovative TV commercials.
MDH Spices sells more than 60 products across the country and deals with at least 1,000 wholesalers and hundreds of thousands of retailers. Its website claims the company can produce 30 tonnes of spices a day.
According to a moneycontrol report, in the past spice makers saw quoting valuations worth 12-15x the Ebitda. For example, ITC bought Kolkata’s Sunrise Foods for Rs 2,150 crore upping its valuation 25x the previous year’s operating profit.
Sunrise’s FY20 Ebitda was Rs 88 crore on a revenue of Rs 591 crore; for comparison MDH earned Rs 507 crore in FY21 on net sales of Rs 1,191 crore.
