Haldiram’s, a renowned snacks manufacturer, is currently engaged in discussions to secure a controlling interest in Prataap Snacks, a listed rival valued at $350 million. This strategic move aims to enhance Haldiram’s footprint in the potato chip market, as disclosed by two individuals familiar with the situation.
The discussions are in their initial phases, and as of now, no valuation has been deliberated upon. However, there is a possibility that the valuation might be set at a premium compared to Prataap’s current stock price. According to undisclosed sources, Haldiram’s is targeting a majority stake of at least 51%, but the final percentage remains undetermined. The sources have opted to remain anonymous due to the confidential nature of the discussions.
Prataap is renowned for its Yellow Diamond brand of chips, challenging competitors such as Pepsi’s Lay’s brand and other snack-makers in a market where local, unorganized food sellers continue to dominate the fried chips segment.
Peak XV Partners, previously identified as Sequoia Capital India, currently holds approximately 47% ownership in Prataap Snacks. Sources indicate that Peak XV Partners is actively seeking a complete divestment of their stake in Prataap.
Haldiram’s CEO Krishan Kumar Chutani, along with Prataap CEO Amit Kumat and representatives from Peak XV, all declined to provide comments on the matter.
Entering the stock market in 2017, Prataap recorded annual revenues of approximately $200 million last year. The company boasts a daily sale of over 12 million packets of its affordable salty snacks, priced as low as INR 5.
On the other hand, Haldiram’s, a privately-owned business founded in 1937, has grown into a significant player in the packaged snacks sector, amassing a revenue of over $1 billion. With operations spanning 150 restaurants nationwide, the family-run enterprise aimed for a $10 billion valuation in discussions with conglomerate Tata Group and other strategic investors last year. However, these talks failed to materialize, primarily due to concerns related to the company’s valuation.
Continue Exploring: Tata Consumer Products and Haldiram’s deny reports of potential stake acquisition
“A deal (with Prataap) will help Haldiram’s tap the potato chips segment. Consumers often prefer western flavored snacks over local ones,” said one of the sources.
Prataap operates 14 manufacturing plants spread across nine Indian states. While smaller, unorganized companies currently dominate India’s fried snacks sector, there has been a surge in demand for branded products in recent years. This trend is attributed to the increasing health consciousness among consumers and their higher disposable incomes, allowing them to invest in packaged goods.
On December 19, it was reported that Prataap’s founders and Peak XV were exploring the sale of a stake to investors and conglomerates. However, the buyers were not disclosed in the report.
Local snack manufacturers such as Prataap have faced challenges amid inflationary pressures and increasing competition in India, a market known for its price sensitivity. Despite these difficulties, the company’s stock price continues to linger close to its 2017 listing level.
In its November earnings report, Prataap projected that the snacks market in India was valued at $5.2 billion, with an annual growth rate of 14%.