The Haldiram story

In a sense, Haldiram has dominated the packaged and the ready-to-eat snacks industry in India. Established in 1937, it has dominated the snacking industry for close to 9 decades. Today, it is not only spread across India, but has a presence in over 80 countries, catering to the Indian and the non-Indian population’s snacking needs. Haldiram currently has market share of 13% in the $6.2 billion snacking segment in India. Experts are of the view that this is just the tip of the iceberg and this segment could explode.

Were valuations too steep?

This question becomes more relevant in the light of the fact that another major PE fund, Blackstone, had walked out of an acquisition deal with Haldiram. In fact, Blackstone had originally expressed interest to buy 20% stake in Haldiram but had later dropped out since the valuations did not fit into calculations. In fact, despite hard bargaining from both sides, the Haldiram management stood its side of the valuation story. In fact, the valuation of $10 billion Temasek has offered for Haldiram is slightly higher than the valuation that Blackstone had walked out of. Temasek is optimistic!

What is Temasek betting on?

In fact, Temasek’s bet on Haldiram is more than just an investment. It has been looking to buy a bigger share into companies that are catering to the food habits of people. Temasek already has a stake in Devyani International, which is already catering to the fast-food needs of young Indians. However, Temasek always believed that there was a huge potential to be tapped, provided it was packaged properly, with suitable types of product extensions. For example, the opportunity is big to get more young people to consume Haldiram products. Also, Haldiram could cater to the rapidly growing health-conscious customers in India, by launching tasty health foods that are millet or corn based. There are limitless opportunities to be tapped!

Capturing 3 big trends in India

Apparently, Temasek is trying to place its investment in Haldiram at a smart confluence of two points. Firstly, there is already a traditional market that is being tapped by the existing model. Secondly, there is a huge market that can easily be tapped if some health foods that can combine taste, health and aesthetics are added to the platter. Thirdly, the recent Kumbh Mela has shown that there is a very quiet and silent resurgence of pure national and Swadeshi feeling in India. Haldiram literally ticks all the boxes. For Temasek, that is the gap in the snacking segment that Haldiram can cater to!