Tata Group In Talks To Buy 51 Per Cent Stake in Haldiram's, Snack Maker Seeks $10 Billion Valuation: Report

The consumer unit of Tata Group is currently in discussions to acquire at least 51 per cent stake in popular Indian snack food maker Haldiram's.

However, the Tata Group is not comfortable with the valuation of $10 billion sought by Haldiram's, Reuters reported citing sources.

If the deal is successfully completed, Tata Group would directly compete with Pepsi and Reliance Retail, owned by billionaire Mukesh Ambani.

In addition to Tata Group, Haldiram's is reportedly also engaged in talks with private equity firms, including Bain Capital, regarding the potential sale of a 10 per cent stake.

Tata Consumer Products, which holds ownership of UK tea company Tetley and has a partnership with Starbucks in India, has expressed hesitation towards the $10 billion valuation.

This is due to the fact that Haldiram's annual revenue is around $1.5 billion.

Tata is interested in acquiring more than 51 per cent of Haldiram's but has reportedly conveyed that their "ask is very high".

This potential acquisition presents an exciting opportunity for Tata, as Haldiram's holds a significant market share in the consumer space.

Tata Consumer Products' spokesperson declined to comment on market speculation, while Haldiram's CEO Krishan Kumar Chutani and Bain also refrained from providing any comments.

Haldiram's, a family-run business, can be traced back to a small shop established in 1937. The company is renowned for its affordable "bhujia" snack, which is sold for as low as 10 rupees in local stores.

According to Euromonitor International, Haldiram's holds around 13 per cent of India's $6.2 billion savoury snack market, a share comparable to Pepsi, famous for its Lay's chips, that also has nearly 13 per cent share in the segment.

In addition to its presence in India, Haldiram's snacks are also sold in international markets such as Singapore and the United States. The company operates around 150 restaurants that offer a variety of local food, sweets, and western cuisine.

Purchasing Haldiram's would greatly expand Tata's consumer products reach.

Tata's consumer unit, which includes products such as salt, pulses, and mineral water, generated $1.7 billion in revenue in the previous financial year.

Although relatively small compared to other businesses within the Tata Group, which operates in sectors like autos, aviation, and hotels, the consumer unit has shown promising growth. The Tata Group as a whole recorded a combined revenue of around $144 billion in the last year.

In an interview with CNBC TV18 last year, Haldiram's Chairman Manohar Lal Agrawal expressed the company's intention to attract private equity investors and go public within the next 2-3 years.

Haldiram's, a company with multiple registered entities in the country, reported revenue of at least $981 million for the financial year ending March 2022, as per regulatory filings.

However, its revenue has now reached close to $1.5 billion, with an annual operating profit of around $200 million, according to the sources cited in the Reuters report.

Haldiram's is seeking a valuation of $10 billion for the deal, which translates to 6.6 times its annual revenue of $1.5 billion.

Haldiram's smaller rival in India, Bikaji Foods International, has a market capitalisation of $1.5 billion, which is six times its annual revenue.