FMCG giant Hindustan Unilever Ltd is in discussions with Mahashian Di Hatti (MDH) Pvt Ltd to buy a majority stake in the spice maker, reported Mint on March 22. Considering MDH’s national presence, it could be valued between Rs 10,000 crore and Rs 15,000 crore, the report said, quoting people familiar with the development.

According to sources, MDH Spices has also been in talks with other conglomerates after founder Dharampal Gulati’s death but did not specify who showed interest.

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Financial firm Avendus Capital estimates India’s branded spice market will double in size to Rs 50,000 crore by 2025. Notably, the spice market is dominated by regional players and has been a tough space to crack for bigger companies, as consumer preferences and cooking habits differ from state to state. However, the MDH brand has a wider presence in the Indian market due to its innovative TV commercials.

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MDH sells over 60 products in India and deals with around 1,000 wholesalers and over four lakh retailers. Its website claims the company can produce 30 tonnes of spices per day.

According to a MoneyControl report, other such acquisitions have seen spice makers quoting valuations at 12-15x the EBITDA. ITC acquired Kolkata’s Sunrise Foods for Rs 2,150 crore, at a valuation of 25x the previous year’s operating profit.

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Sunrise’s EBITDA for FY20 was Rs 88 crore on revenue of Rs 591 crore; for comparison, MDH earned Rs 507 crore in FY21 on net sales of Rs 1,191 crore.

Shares of HUL opened slightly higher at Rs 2,055 against the previous close of Rs 2,051.45. However, the stock plunged over 4% to hit an intraday low of Rs 1,969.25 on the BSE. The market cap of the company fell to Rs 4,63,574.36 crore.

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Recently, the FMCG giant had announced a major management reshuffle. The company designated two top officials to its management committee.

HUL posted a 16.8% year-on-year rise in standalone net profit at Rs 2,243 crore in the quarter ended December 31, 2021, as compared to a net profit of Rs 1,921 crore in the year-ago period.

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Revenue from operations rose 10.2% to Rs 13,183 crore compared to Rs 11,959 crore in the corresponding quarter last fiscal, it said in a regulatory filing.