MUMBAI: Here’s globalisation’s latest twist to the carrying-coal-to-Newcastle theme: A Norwegian company will produce and sell the good ol’ sambar powder, idli and dosa mixes, chutney powder and a phalanx of pickles to you and me from tomorrow.
That’s because, on Friday, Orkla ASA, the $8.8 billion, Oslo-based diversified conglomerate with interests branded foods to finance, signed a $100 million deal to buy MTR Foods, the company whose name is a popular acronym for the legendary Bangalore eatery called the Mavalli Tiffin Room.
MTR is expected to announce the sale, which affords a good exit price for private equity investors JPMorgan Partners and Aquarius India Fund, on Tuesday.
Promoted by Sadanand Maiya, MTR Foods is expected to notch up a topline of around Rs 165 crore in the current financial year, with one-tenth of this coming from exports.
Six years ago, the promoters of MTR inducted Singapore-based private equity firm Aquarius, giving it a 20% stake. Two years later, in 2002, JPMorgan Partners invested over Rs 20 crore in the company for 28% stake. This money went to expand the packaged foods business.
JPMorgan steered the company’s nationwide rollout ready-to-eat foods, ready-to-cook ingredients and branded spices. Four years down the line, all these products have established brand equity, but the going is getting increasingly difficult due to severe competition.
According to an AsianInvestor/FinanceAsia.com report, the sale is driven by a number of factors, the obvious being that private equity was eager to realise a return on its investment.
“Indeed, there has been media speculation that JPMorgan Partners, in particular, forced the owner’s hand as it was seeking to liquidate what was, for the private equity firm, a small-sized investment. Further, with MTR Foods taking time to achieve profits an IPO exit was not feasible at the current juncture. But sources close to the deal say this was only one of a slew of reasons,” the report said.
