HUL in discussion to buy MDH

MDH Spices founder (late) Dharampal Gulati (Photo: HT)
MDH Spices founder (late) Dharampal Gulati (Photo: HT)


  • Spice firm may be valued at up to 15,000 cr, given its pan-India presence
  • HUL has not shied away from acquisitions that align with its larger product and market penetration goals

Hindustan Unilever Ltd is in talks with Mahashian Di Hatti Pvt. Ltd (MDH) to buy a majority stake in the maker of MDH Spices, two people familiar with the development said.

MDH could be valued between 10,000 crore and 15,000 crore, given its pan-India appeal, the people said on condition of anonymity.

While the branded spices market size is large and estimated by Avendus to double to 50,000 crore by 2025, it is dominated by regional champions.

With consumer preferences and cooking habits differing from state to state, the spice business has been a tough market to crack for bigger companies.

The MDH brand is, however, among the few to carve out a wider presence in the country through its innovative TV commercials.

“There is a clear-cut synergy in terms of joint brand building. In fact, Hindustan Unilever, with its formidable network, can take MDH to territories where it has not touched to date," an analyst tracking the sector said on condition of anonymity.

Another analyst, however, said that the challenge would lie in the expansion beyond tier-II cities.

“In tier-III, IV and V, there are a lot of local brands that people have trusted for years," he said on condition of anonymity.

He also pointed out that many of the regional spice makers cater to local palettes through regional blends.

Email queries sent to Hindustan Unilever and MDH Spices on Saturday remained unanswered till press time.

Spice makers typically command valuations of 12-15 times the earnings before interest, tax, depreciation and amortization (Ebitda).

MDH reported 507 crore in Ebitda in 2020-21 on net sales of 1,191 crore.

In May 2020, rival ITC Ltd bought Kolkata-based packaged spices maker Sunrise Foods Pvt. Ltd for 2,150 crore, valuing the company at nearly 25 times the previous year’s operating profit.

Sunrise’s FY20 Ebitda was 88 crore on a revenue of 591 crore.

MDH Spices has been in talks with other large conglomerates in India after the death of founder Dharampal Gulati. However, the people cited above did not name the suitors who showed interest.

Born in Sialkot, Pakistan, Gulati took over his family’s spice business and turned it into one of the country’s top packaged spice makers.

After Partition, he arrived in Delhi with 1,500 in his pocket. Gulati, at first, ferried passengers in a tonga that he purchased for 650, before renewing his family business with a small shop in Delhi’s Karol Bagh.

He later became the face of the spice brand in his trademark red turban and elaborate moustache.

The company currently sells more than 60 products in India and has hundreds of thousands of retailers stocking its products and at least 1,000 wholesalers.

The company has the capacity to produce 30 tonnes of spices a day, according to its website.

The branded spices business has also seen a few other deals in the past three years.

In September 2020, Norwegian consumer goods maker Orkla acquired a majority stake in Eastern Condiments Pvt. Ltd and merged it with wholly owned unit MTR Foods Pvt. Ltd.

In June 2020, growth stage investor A91 Partners invested 125 crore in the owner of spice brands Pushp and Munimji.

In October 2019, Intergrow Brands Pvt. Ltd, a unit of spices maker Synthite Industries Pvt. Ltd, raised $11.3 million from Bahrain-based alternative investment firm Investcorp.

Hindustan Unilever, on its part, has not shied away from acquisitions that align with its larger product and market penetration goals.

In March 2020, the company signed an agreement with Glenmark Pharmaceuticals Ltd to buy its woman-oriented hygiene brand VWash.

In December 2018, it acquired GlaxoSmithKline’s Indian consumer nutrition business for 31,700 crore.

In August 2018, the company bought out the ice cream and frozen desserts business of Vijaykant Dairy and Food Products Ltd.

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