Orkla India Ltd - IPO

The Orkla India IPO hits the markets on 29 Oct 2025. The Company is valued at Rs.10,000 Crore and the IPO is for Rs.1,667 Crore. The IPO boasts of two strong brands, viz, MTR, Bengaluru and Eastern Condiments, Kerala and also the minor brand Rasoi Magic.

Little of History

It would be interesting to note that MTR was founded in 1924 with the name Brahmin Coffee Club as a vegetarian restaurant in the place Mavalli, near Lalbagh, Bangalore, by Parampalli Yagnanarayana Maiya and his brothers, who were part of a traditional South Indian Brahmin family. In 1960, it was renamed Mavalli Tiffin Rooms (MTR) after the locality and known for its pure vegetarian South Indian fare, including dosas, idlis, and filter coffee. The Restaurant is also credited with the innovation of the famous Rava Idli using Semolina instead of rice, during World War II when there was severe rice shortages. MTR became a culinary institution in Bangalore, known for its quality, hygiene, and traditional recipes. In 1976, it began selling ready-to-use spice mixes and instant foods to meet growing demand from loyal customers. It expanded into packaged masalas, pickles, and ready-to-eat meals, in the 1980s targeting urban households and NRIs, exporting to the Middle East. Even now, the restaurant business remains under the Maiya family.

In 1996, as part of company restructuring, the new company, MTR Foods Pvt Ltd was formally incorporated to scale its packaged food business and introduced breakfast mixes, frozen foods, and sweets like Gulab Jamun and Rasgulla. As part of building its brand, it focused on authenticity, vegetarian purity, and convenience, positioning itself as a heritage brand with modern appeal. In 2007, the Maiya family sold the company lock, stock and barrel, to Orkla ASA, Norway at Rs.360 crore which found MTR as a readymade platform for its foray into the Indian FMCG market.

Eastern Condiments was founded in 1983 by M.E. Meeran in Kochi, Kerala. It's core business was blended and single spices, masalas, RTC (ready-to-cook) and RTE (ready-to-eat) products and had a strong presence in South India and export markets across the Middle East and South East Asia. Eastern Condiments built its reputation on quality spice blends and became one of Kerala’s most trusted food brands, with seven factories across four states and around 3,000 employees. In March 2021, Orkla ASA, Norway acquired Eastern Condiments through MTR Foods Pvt Limited at a valuation of Rs.2000 Crore. However, the Meerans sold only 90% stake and retained 10% with themselves.

Orkla ASA, Norway, in 2011, acquired Pune based Rasoi Magic Foods (India) Private Limited through MTR Foods Pvt Limited. Rasoi Magic focussed on ready-to-cook spice mixes and gravies, especially North Indian cuisine and “no onion, no garlic” variants for Gujarat and Maharashtra markets.

With these three companies in its pocket, it renamed MTR Foods Pvt Ltd to Orkla India Ltd. in 2023 and has valued it at Rs.10,000 crore. The company now has 90% ownership by Orkla India and 10% between Meeran brothers.

The IPO Offer for Sale

The IPO is full "Offer for Sale" for Rs.1667 Crore - Face Value per share is Re.1/- and offered at upper band premium price of Rs.730/-. This high premium over face value reflects the company’s strong brand equity, profitability, and market positioning in the Indian packaged food sector. After the IPO, promoter shareholding of Orkla ASA, Norway and the Meeran family in Orkla India will reduce from 90% to approximately 73.4%. The 26.6% Offer for Sale is allocated to QIBs upto 50%, 15% for HNIs and 35% for retail investors.

Orkla India’s CEO emphasized that the IPO is not an exit for the Meerans but a step toward broader market participation. The Meerans remain influential stakeholders, with deep operational and cultural ties to the Eastern brand and its South Indian market base.

Financial Highlights

- FY25 PAT: ₹255.69 crore
- EBITDA Margin: ~15%
- RoCE: 32.7%
- Cash Conversion: 124.8%
- Revenue Mix: ~65% from spices, ~33% from convenience foods

Cash Conversion Ratio (CCR) measures how effectively a company turns its operating profit (typically EBITDA) into free cash flow (FCF)
Free Cash Flow (FCF): Cash from operations minus capital expenditures (CapEx)

CCR greater than 100% means the company is generating more cash than its reported operating profit.

124.8% implies that for every ₹100 of EBITDA, Orkla India generates ₹124.80 in free cash.

This can result from:

- Efficient working capital management
- Low capital expenditure
- Strong collections and inventory turnover
- Non-cash adjustments or timing benefits

High CCR signals robust internal cash generation, reducing reliance on debt or equity funding.
More free cash means greater ability to pay dividends or reinvest.
Investors often reward companies with high CCR due to predictable cash flows.

Valuation: Roughly half the valuation multiple of Tata Consumer Products, making it relatively attractive.

Finally, the Brahmin family which founded the MTR Foods Pvt Limited is nowhere to be found. The company ownership fully rests with Orkla ASA, Norway and Meeran brothers with 75% and 25% now offered for public float.

Orkla India’s Growth Strategy

1. “Go Deep, Not Wide” Market Focus

- CEO Sanjay Sharma emphasized a strategy to intensify regional dominance rather than chase pan-India expansion.
- Example: In Karnataka, per capita sales rose from ₹16 in 2007 to ₹110 in 2025, yet that’s just 1% of the packaged food market—indicating massive headroom.

2. Convenience Food Expansion

- Currently, 67% of revenue comes from spices, and 33% from convenience foods.
- Orkla plans to increase the share of ready-to-cook and ready-to-eat products, capitalizing on changing consumer lifestyles.

3. Export Growth

- Orkla India exports to 45+ countries, with the Middle East contributing 70% of international revenue.
- Plans include scaling exports to North America and Southeast Asia, leveraging MTR and Eastern’s brand equity

4. Strategic Acquisitions

- The company is open to acquiring regional brands that complement its portfolio, especially in underpenetrated categories or geographies.

5. Channel Optimization

- General trade contributes 79% of domestic sales, followed by modern trade (13%) and e-commerce (8%).
- E-commerce is growing at 40% YoY, and Orkla plans to scale digital channels aggressively.

6. Capacity Utilization & Efficiency

- With only 46% capacity utilization across nine manufacturing units, Orkla India has ample room to grow without major CapEx.

- High RoCE of 32.7% and cash conversion of 124.8% support organic growth without external funding

My opinion

The company is cash rich and doesn't need capex as it is presently at 46% capacity utilisation.

The only reason for the IPO is for increasing the liquidity of the existing shareholders through OFS.

Even after dilution of 26% shares, the Norway company still has significant stake at 76%.

Therefore, Invest in the IPO as the company commands market share and also financially strong.  

Bane of banning export of Agricultural Commodities

This is something weird every Government has done!

Since the prices of onion has hit a high, Government has banned export of Onions in the entire Country from 30 Sep 2019!! It is difficult to comprehend why the Government is unhappy with the farmer or the trader who seems to be getting a better price for onion! This is protectionism for the consumer at the cost of the producer.  This method of banning exports is also done in case of cotton.

What happens is when such sudden ban of commodities is declared, the agreements which have already been entered into for exports has to be reneged upon.  This would result in loss of trust on our exporters and consequently buyer countries would move away from India, some even permanently.

India Exports 2.2 million tonnes of Onion every year.. When there is a sudden ban, the markets in other countries also goes in a tizzy with spiralling Onion prices. In this price rise, the farmers of other countries producing onion will have windfall, which per se should have reached our farmers.  Double Whammy!!

While the Government is happy with the increase in petroleum prices (because it gets more taxes and cess) which is being imported, it is punishing the farmers by banning exports and also loses precious dollars. Why this Kolaveri!!! Just to protect the Urban Consumers...

Ideal thing for the Government to do would be to allow market forces to determine the prices and allow the farmers to profit, like how it profits in having higher Petroleum prices!

Will the prices of Onion come down just because it has banned exports?? I do not know!

By the way, Onion is not considered a nutritious component to make people weaker because of lack of its consumption.  Yes, it will make the food a bit lesser tastier! So what?  People who feel the pinch need not have their full quota of onion for a few days.

What say?

Late Latif - RBI

The RBI has become like a "Caretaker" of the Morgue in some ways.  For time immemorial, after all the frauds have been committed by top bank officials and after the owner of the bank has accepted that the fraud has been committed by him for last several years, the RBI steps in to do the last rights.  The last rights means appointing a set of its confidents as new Board Members to ensure that the bank is dissolved or merged with some other stronger entity, mostly by force.  

The Punjab & Maharashtra Cooperative Bank, Managing Director has today confessed that he has been committing the fraud of not disclosing NPAs (today it is 6500 crore exposure to one single entity - HDIL out of its total portfolio of 8800 crore) over the last 7 to 8 years to its Board, Auditors and RBI.  The total exposure is 73% of its total assets --- so much for RBI's Supervision and adherence to Exposure Norms.  That's a total failure by Board Members, Concurrent Auditors, Statutory Auditors, RBI Inspectors

Ultimately, it all boils down to the capacity of the Supervisory staff of RBI to identify such frauds.  Are they being professionally trained to do such forensic audit or are they totally dependent on the Statutory Auditor's Report who are ever compliant to the bank's demands lest they may not be given the job next time!!

My take is, the Home Ministry is professional enough to keep pace or move one step ahead of the terrorists and the Maoists in defeating their fissiparous tendencies.  However, the Ministry of Finance and the Reserve Bank of India do not even have a clue as to what types of frauds are possible in the messy world of Deposits and Credits in our financial systems.

Another meaninglessness in the circular of RBI in the case of PMC Bank imposting restrictions ban on withdrawals upto Rs.1000/- (which was later on increased to Rs.10000/- per day).  RBI has, in the interest of the depositors, has put the restriction on withdrawals.  However, in the same circular it has stated that salary of all staff has to be paid on due dates without fail.  Adding fuel to fire, it also stated that all Gratuity and superannuation benefits has to be paid to all those staff who retire even when there is a restriction on withdrawal by depositors.  What is the message that is conveyed?  While the bank staff who were party to the fraud or unable to stop this fraud will enjoy all the benefits, the poor depositors, with whose money the bank is being run, are imposed restrictions on withdrawal!!!  Is this even tenable during this age!!!

Time to Wake Up MoF & RBI!!

Two Steps Backward for the Environment

Six Single Use Plastic Items that were to be banned from 02 October 2019 in India were :

1. Plastic Carry Bags
2. Plastic Cups
3. Plastic Plates
4. Plastic Straws
5. Plastic Sachets
6. Plastic Small Bottles

The special day of 150th Gandhi Jayanthi was selected to impose the ban on use of the above plastic items.  This was purely to save our environment and our Prime Minister also made a statement of banning single use plastics in the UNGA.

However, it was unfortunate that the plastic lobby had a chest more than 56 inches to make the Prime Minister to withdraw this ban for the time being stating reasons of slow down in the economy.  

As Greta Thunberg said, money has won over the mind!!!

Use no polythene bags drive

Recently I saw a news item on paper encouraging the hawkers in Bittan Market to use paper bags rather than using Polythene bags. This was long overdue and I wish the NGO had got more publicity for sustaining what they had started. Unfotunately, this token initiative of the NGO has disappeared the same way it was started. Why not we start a community on Orkut and take up less polythene on a big way ?

test win of India

Oh God ! I am really surprised. You beat your breast for having won a test match against Australia as though you have won them in a final ! Fact is we have not even matched them. All the stuff that Aussies are bad gues is OK. Does it need a mention as a headline in almost all the newspapers.

We Indians are still to mature a lot.