Is Haldiram Up for Sale or Planning an IPO?

One brand that has been satisfying  India’s cravings for namkeen (savoury snacks) and sweet delights for more than three generations is Haldiram's. After turning its plain Bikaner ki Bhujia into a bestseller, Haldiram's now caters to over 80 countries.

This brand is a great example of starting from scratch and becoming a BIG name. So much so that foreign investors are desperately wishing to acquire it.

For those of you who aren’t aware, Haldiram’s has been in the news about a possible acquisition for half a year now. The list of the “supposed” buyers includes Tata, Blackstone, Bain Capital, and Temasek. This made me wonder: Why is everyone so interested in buying the food company?

That’s what we will be discussing in this article. Plus, I will throw in the foundation story of Haldiram’s, its financials, product line, and much more. After reading this, you will say 👇

For latest updates on Haldiram's, click here.

The Foundation Story of Haldiram's

If you visit the “About Us” page of Haldiram's website, you will see the mention of the term “tight-knit family business”. Haldiram's is a great example of a family business advancing & reigning in its fourth generation with a supposed valuation of $8.5 to $10 billion (around ₹80,000 crores).

Haldiram's had a humble beginning with a small namkeen shop you typically find in the nooks. As a young boy of 11 in 1919, Ganga Bhishen Agarwal, AKA “Haldiram Ji”, began working at his father's bhujia shop in Bikaner, Rajasthan. This was during a time when bhujia was a popular snack, and the competition was fierce.

After receiving tutelage from his father, Ganga Bhishen established his own shop in Bikaner. The shop's unique and delicious bhujia recipe quickly gained popularity. Its strength? A unique-tasting Bhujia which took over the entire Bikaner and soon became available throughout the nation.

Can you guess what was unique about this Bhujia Haldiram Ji developed?

Bikaner Special Bhujia had a strong presence of chickpea flour or besan. This pakoda-making ingredient made the bhujia a bit thicker. That’s what Haldiram Ji experimented with as he replaced Besan with moth flour. The new bhujia was thinner, lighter, and yummier, leading to a major success.

Timeline of Haldiram’s Expansion

The demand for this delicious Bhujia kept on increasing, making Haldiram Ji’s business boom and expand. After Bikaner, Ganga Bhishen and his children established manufacturing units in Kolkata (Calcutta) in 1950sand later in Delhi. Among all his successors, Haldiram Ji's grandson, Shiv Kishan Agarwal, took the family business to new heights and envisioned taking the brand beyond Bikaner's borders.

In 1968, the business expanded by opening a new branch in Delhi, marking the beginning of its journey beyond its hometown.

In 1970, a crucial step was taken: Haldiram’s set up its first large-scale manufacturing plant in Nagpur. This marked the beginning of a growth period. The Nagpur plant allowed Haldiram’s to introduce a wider variety of snacks and sweets, including popular items we know and love today.

In 1987, Bikaji was founded by Haldiram Ji’s grandson, Shri Shivratan Agarwal. He established Bikaji in Bikaner, Rajasthan, with the aim of producing high-quality traditional Indian snacks, focusing primarily on bhujia. Further details of Bikaji’s foundation are given ahead.

The 2000s saw Haldiram's embark on its international expansion journey, with the opening of outlets in several countries, including the United States, United Kingdom, Canada, Australia, and more. This marked the brand's foray into the global market, catering to the Indian palate and garnering a diverse customer base.

To cater to changing consumer preferences, Haldiram's ventured into convenience foods. This strategic move helped them stay relevant and cater to busy lifestyles.

In the 2010s, Haldiram’s witnessed exponential growth as the brand introduced new product lines, including ready-to-eat meals, frozen foods, and beverages, catering to evolving consumer preferences and lifestyles.

In the present decade, Haldiram's has expanded its footprint across new regions and markets, strategically targeting areas with high demand and growth potential. Haldiram's remains a dominant player in the global food industry, continuing to delight consumers with its diverse and delicious offerings.

But then, the usual family succession drama unfolded (like every other major family business). Haldiram Ji’s children and grandchildren started fighting for more control, leading to a territorial division by the founder Haldiram Ji.

As per the above image, Ganga Bhishen allotted each segment of his family specific territories in which to do business. This division gave independent recognition to all shops and units, avoiding interruption and promoting smoother operations.

The Connection Between Haldiram's & Bikaji

Innovation has been a big factor in Haldiram’s story, as expressed by its foundation and expansion. Not many are aware that the two popular food brands “Haldiram's” and “Bikaji", are actually part of the same family. As I mentioned above, Bikaji was founded by Shivratan Agarwal in 1987.  

Over time, Bikaji evolved as a separate brand from Haldiram's, although both have roots in the same family. While the exact reasons for the separation aren't widely publicised, it's common in family businesses for different branches to form separate entities. Usually, these separations are done due to factors like diverging visions, business strategies, or personal differences.

Over the years, Bikaji has built a legacy of trust and authenticity, earning a reputation for quality, taste, and consistency. The company even became public by launching an IPO on 16 November 2022 under the name “Bikaji Foods International Ltd.

Is Haldiram Going to be Sold to a Foreign Firm?

Haldiram's has been the subject of acquisition rumours in the past due to its significant market presence and brand recognition. Blackstone, a multinational private equity firm, and Tata Group, a prominent Indian conglomerate, are some of the names reported to be interested in buying the company.

As per May 2024 reports, a recent partnership between Blackstone, Abu Dhabi Investment Authority, and GIC was formed to acquire around 76% stake in Haldiram's Snacks Food Pvt. Ltd. However, competing with this consortium are Bain Capital and Temasek. These two firms have submitted a non-binding offer valuing Haldiram's at $8-8.5 billion (₹66,400-70,500 crore).

The status of Haldiram's being sold is a bit murky. Here are a few pointers explaining the acquisition news:

a. Big-Money Offers:

There have been reports of Private Equity (PE) firms like Blackstone and Tata Consumer Products being interested in acquiring a major stake in Haldiram's, valuing the company at billions of dollars.

Yes, many times fake news do rise, but multiple offers and the supposed $10 billion valuation of Haldiram’s do explain why the company might be looking to sell.  

b. Promoter Reluctance:

Haldiram's officials have publicly denied any intention to sell. They may be holding out for a higher price than what's currently offered. There have also been whispers of an upcoming IPO from Haldiram’s. Some might even think of it as an attention-seeking strategy to increase the demand for the IPO. 

c. Strong Presence:

Haldiram's strong brand recognition, large market share, and international presence make it an attractive target for investors. It has a good presence amidst the competition, making it a number-one candidate for interested parties. 

A SWOT Analysis: What Makes Haldiram’s an Attractive Investment?

Along with rejections and denials, many rumours also include reports of Haldiram’s willingness to go ahead with the sellout. If these rumours are true, what makes Haldiram’s such an attractive prospect? Let’s understand the appeal with a SWOT Analysis.

Strengths:

a. Brand Recognition: Haldiram's is a household name synonymous with quality and taste in India. This brand loyalty translates to consistent sales and a strong market position.

b. Product Variety: Offers a wide range of snacks and sweets, catering to diverse preferences. This diversification mitigates risk and allows them to capitalise on various market trends.

c. Distribution Network: A strong supply chain ensures product availability across India. Haldiram's dominates the Indian snack market, particularly in the namkeen (savoury snacks) segment with a 13% share of India's savoury snacks market. This dominance ensures a healthy revenue stream and potential for further growth.

Packaging: Attractive and convenient packaging enhances brand image. Maintaining the usual design, Haldiram’s has innovated its packaging very smartly.

Weaknesses:

a. Limited Focus on Health: Traditional snacks may be perceived as unhealthy, especially with rising health consciousness.

b. Innovation: Menu innovation might be slower compared to some competitors.

c. Dependence on Traditional Methods: Some processes might benefit from modernisation for efficiency. Addressing this weak point would definitely benefit the rising population and demand.

d. Limited International Presence: While present globally, Haldiram’s expansion, compared to some competitors, might be lagging. 

Opportunities:

a. Market Expansion: Potential for further growth within India and internationally. Haldiram's has established itself in a number of countries beyond India. This global reach opens doors for further expansion and increased profits.

b. Healthy Snack Options: Developing healthier snack alternatives to cater to changing consumer preferences.

c. Convenience Food Range: Expanding the convenience food range for busy lifestyles.

d. Digital Marketing: Leveraging digital platforms for stronger brand engagement and targeted marketing.

e. Restaurant Business: Potential to grow the restaurant business in India and abroad. The Indian snack market itself is booming, with increasing disposable income and changing consumer habits. As a major player in this market, Haldiram's is well-positioned to benefit from this growth.

Threats:

a. Competition: Increasing competition from local and international players in the snack market.

b. Rising Costs: Fluctuations in raw material prices and inflation can impact profit margins.

c. Changing Consumer Preferences: Evolving tastes and dietary needs might pose a challenge.

d. Negative Health Perception: Overall perception of Indian snacks as unhealthy could affect sales.

By leveraging its strengths, capitalising on opportunities, addressing weaknesses, and mitigating threats; Haldiram's can solidify its position as a leading snack brand and expand its reach in the ever-evolving food industry.

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Haldiram's Financials

In terms of financial performance, Haldiram's has historically shown strong growth due to its popular product offerings and brand recognition. The company has consistently expanded its product portfolio and distribution channels to cater to evolving consumer preferences and market demands.

The rise in revenue gives it a positive standing, but the reduction in PAT could be a sign of the firm's increasing expenses.

Haldiram's success can be attributed to its focus on quality, innovation, and traditional recipes, which resonate well with consumers across different demographics. Additionally, the brand's emphasis on hygiene and food safety standards has helped maintain consumer trust and loyalty over the years.

With Haldiram's alone valued at an impressive ₹7,000 crore, the enterprise has become well-known in India. The products are sold under various brand names such as Haldiram’s, Haldiram’s Prabhuji, Bikanervala, Bhikharam Chandamal, Bikaji, and Bikano.

Overall, Haldiram's stands as a key player in the Indian food market, with a solid financial track record and a well-established reputation for delivering quality products.

From one corner shop to another branch and more, Haldiram’s has evolved into a multinational sweets, snacks and restaurant company. Rumoured to be $10 billion (₹83,000 crore) in valuation, Haldiram's has received multiple offers (both local and international) of acquisition. 

WhileHaldiram's isn't currently confirmed to be sold, these factors paint a picture of a financially sound company with the potential for significant future growth. This makes it a tempting target for investors looking for a solid investment in the Indian food industry.

The Bottom Line

So, to summarise, a sale isn't confirmed, but there's definite interest. It'll likely depend on negotiations between potential buyers and Haldiram's owners.

Haldiram's strengthened its presence in existing markets while exploring new territories, further consolidating its position as a domestic and international leading food brand. .

If the sale doesn't take place, then the IPO rumours are more likely to gain traction with every passing day, leading to a sound investment possibility for investors in the future. So, would you be interested in investing in an IPO by Haldiram’s? Let us know in the comments!

What's the Latest?

The promoters of Haldiram Snacks Food Pvt Ltd have recently adjusted their strategy regarding the sale of company stakes. Initially contemplating the sale of a controlling 51% stake, they are now focusing on offloading a minority stake of 10-15%. This shift reflects a growing interest from leading global investors, including private equity firms such as Bain Capital, Blackstone, and Temasek Holdings, who are currently evaluating potential investments in the company.

Earlier discussions suggested that selling a majority stake would value Haldiram at approximately $8-10 billion (₹84,000 Crore). However, the latest developments indicate a preference for retaining control while still attracting investment. This decision may stem from the company's robust profitability and strong cash generation capabilities, which make a minority stake more appealing to potential investors.

Temasek Holdings has been notably active in preliminary discussions to acquire this minority stake, which could value Haldiram Snacks at around $11 billion (₹92,400 crore). Such an investment might also pave the way for an eventual initial public offering (IPO), enabling Haldiram to expand its market presence further. This comes at a time when the Indian snack market is projected to nearly double in size, reaching ₹95,521.8 crore by 2032.