ORKLA INDIA LIMITED IPO Explain

Orkla India IPO Overview

MTR & Eastern parent raising ₹1,667.54 cr via 100% OFS of 2.28 cr shares. Price: ₹695-730. Min lot: 20 shares (₹14,600). No fresh issue – proceeds to promoter Orkla Asia Pacific. Listing: BSE/NSE Nov 6. Lead: ICICI Sec, Citi, JP Morgan, Kotak. GMP ₹105-114. Competes with Everest, MDH, Tata Consumer.

IPO DETAILED INFORMATION

Issue Details

Parameter	Details
IPO Type	Mainboard
IPO Open Date	29 October 2025 (Wednesday)
IPO Close Date	31 October 2025 (Friday)
Anchor Investor Bidding	28 October 2025 (Tuesday)
Allotment Date	3 November 2025 (Monday) – Expected
Credit to Demat	4 November 2025 (Tuesday) – Expected
Refund Initiation	4 November 2025 (Tuesday) – Expected
Listing Date	6 November 2025 (Thursday) – Tentative
Price Band	₹695 – ₹730 per share
Face Value	₹1 per share
Lot Size	20 shares
Min Investment (Retail)	₹14,600 (1 lot of 20 shares at upper band)
Max Investment (Retail)	₹2,04,400 (14 lots of 280 shares)
sHNI Investment	₹2,04,400 (14 lots minimum)
bHNI Investment	₹10,07,400 (69 lots minimum)
Issue Size	₹1,667.54 crore total
Fresh Issue	NIL
Offer for Sale (OFS)	₹1,667.54 crore (100% OFS)
Total Shares Offered	2,28,43,004 equity shares
Listing	BSE & NSE (Mainboard)
Post-Issue Market Cap	₹10,000+ crore (at upper price band)

Issue Break-up

Category	Allocation
QIB (Qualified Institutional Buyers)	Up to 50% of Net Offer
NII (Non-Institutional Investors)	Not less than 15% of Net Offer
Retail Individual Investors	Not less than 35% of Net Offer

Selling Shareholders

OFS Contributors (Total 2,28,43,004 shares):

1. Orkla Asia Pacific Pte. Ltd. (Promoter) – Primary selling shareholder (90% pre-issue stake holder)
2. Navas Meeran – Other selling shareholder
3. Feroz Meeran – Other selling shareholder

Post-Issue Promoter Holding:

• Orkla Asia Pacific’s shareholding will reduce post-OFS but remain substantial

Important Note: This is a 100% Offer for Sale. The company will NOT receive ANY proceeds from the IPO. All money goes to existing shareholders who are exiting.

Objects of the Issue

Since this is purely an OFS:

• Entire proceeds (₹1,667.54 crore) will go to selling shareholders
• Company receives ZERO funds for business operations, expansion, or debt repayment
• Purpose is to provide exit/liquidity to existing shareholders, primarily promoter Orkla Asia Pacific
• No capital infusion for company growth initiatives

Lead Managers & Registrar

Book Running Lead Managers (BRLMs):

• ICICI Securities Limited
• Citigroup Global Markets India Private Limited
• J.P. Morgan India Private Limited
• Kotak Mahindra Capital Company Limited

Registrar:

• KFin Technologies Limited
• Address: Selenium Tower B, Plot 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad – 500 032
• Phone: Toll Free: 1800-309-4001
• Email: [email protected]
• Website: www.kfintech.com

Promoters & Management

Parent Company:

• Orkla ASA (Norway-based, 375-year-old industrial investment company)
• Orkla Asia Pacific Pte. Ltd. (Direct promoter holding 90% pre-issue)

Key Management:

• Sanjay Sharma – Chief Executive Officer (CEO) of Orkla India
• Oversees all three business units: MTR, Eastern, and International Business

Company Contact:

• Registered & Corporate Office: No. 4, Jayachamaraja Wadiyar Road, Bengaluru – 560020, Karnataka
• Phone: +91-80-4205 2000
• Email: [email protected]
• Website: www.orklaindia.com

ORKLA INDIA LIMITED – COMPANY OVERVIEW

Establishment & Background:

• Incorporated in 1996 (originally as MTR Foods Private Limited in 1924)
• Industry: Multi-Category Indian Packaged Food Manufacturing & Distribution
• Headquarters: Bengaluru, Karnataka
• Legacy spanning over 100 years for MTR brand (founded 1924)
• Subsidiary of Orkla ASA, a 375-year-old Norwegian industrial investment company

Business Model:

• Multi-category Indian food company offering authentic South Indian packaged foods
• Two primary product categories:
  1. Spices (66.3% of revenue) – Blended spices, pure spices, masalas
  2. Convenience Foods (33.7% of revenue) – Ready-to-cook (RTC) and ready-to-eat (RTE) products
• Operates through three business units: MTR, Eastern, and International Business
• Portfolio of approximately 400 products covering all meal occasions (breakfast, lunch, dinner, snacks, beverages, desserts)
• B2C focused business with strong distribution network across retail and modern trade

Market Position:

• One of India’s top four packaged spice companies by revenue in FY24
• Market leader in Karnataka with 31.2% market share in packaged spices
• Market leader in Kerala with 41.8% market share in packaged spices
• India’s largest branded spice exporter for 24 consecutive years with 22.2% export market share (Eastern brand)
• Among the most widely distributed spice brands in Karnataka (67.5% retail reach) and Kerala (70.4% retail reach)
• Sells approximately 2.3 million units daily as of June 30, 2025

Operations:

• 9 owned manufacturing facilities across Karnataka, Kerala, and Andhra Pradesh with total capacity of 182,270 TPA
• 21 contract manufacturing units in India and overseas
• Pan-India distribution network: 834 distributors, 1,888 sub-distributors, 42 modern trade partners, 6 e-commerce/quick commerce partners
• Exports to 45+ countries including GCC, North America, Southeast Asia, UK, and Australia
• International business contributes 20.6% of FY25 revenue
• Flagship brands: MTR (vegetarian focus), Eastern (non-vegetarian focus), Rasoi Magic, Wok N Roll (Pan-Asian)

Company Strengths

1. Iconic Heritage Brands with Deep Consumer Trust:
   • MTR brand established in 1924 – over 100 years of legacy
   • Eastern Condiments with 24 consecutive years as India’s leading branded spice exporter
   • Strong brand recall and emotional connection with consumers especially in South India
   • Authenticity in traditional recipes and local taste preferences
   • Brand equity built over generations creating formidable entry barriers
2. Market Leadership in Core Regional Markets:
   • Dominant 31.2% market share in Karnataka packaged spices
   • Commanding 41.8% market share in Kerala packaged spices
   • Highest distribution reach – 67.5% in Karnataka and 70.4% in Kerala (vs 30-40% industry average)
   • Regional stronghold provides pricing power and customer loyalty
   • Deep understanding of local culinary traditions and preferences
3. Dual Brand Strategy & Comprehensive Product Portfolio:
   • MTR positioned for vegetarian consumers (Karnataka, Andhra Pradesh focus)
   • Eastern positioned for non-vegetarian consumers (Kerala, coastal regions focus)
   • Complementary brands covering different consumer segments
   • 400+ products across all meal occasions – breakfast to desserts
   • Eliminates brand cannibalization while maximizing market coverage
4. Strong Financial Performance & Capital Efficiency:
   • Revenue growth of 3% YoY (FY24 to FY25) despite challenging FMCG environment
   • PAT growth of 13% YoY demonstrating margin expansion
   • EBITDA and PAT grew at 18.6% and 29.7% CAGR respectively (FY22-FY25)
   • Exceptional RoCE of 32.7% in FY25 (vs peer TCPL at 24.6%)
   • Cash conversion of 124.8% in FY25 indicating strong cash generation
   • Working capital cycle of just 21 days demonstrating operational efficiency
   • EBITDA margin of 16.6% (vs peer TCPL at 13.5%)
   • PAT margin of 10.7% (vs peer TCPL at 7.3%)
5. Robust Distribution Infrastructure & Network Effect:
   • Extensive network of 834 distributors and 1,888 sub-distributors
   • Presence across modern trade (42 partners) and traditional retail
   • E-commerce and quick commerce partnerships (6 partners)
   • Multi-channel strategy ensuring maximum market penetration
   • Deep regional networks difficult for competitors to replicate
6. Global Export Capabilities:
   • Exports to 45+ countries across North America, GCC, Southeast Asia, Europe, Australia
   • 20.6% of FY25 revenue from international markets
   • Eastern brand – #1 branded spice exporter from India for 24 years
   • Serves Indian diaspora globally with authentic products
   • Export markets provide growth diversification beyond domestic saturation
7. World-Class Manufacturing & Quality Standards:
   • 9 owned facilities with 182,270 TPA capacity
   • Modern facilities with IoT-enabled machinery and automation
   • BRCGS and ISO certifications for quality management
   • Bommasandra facility (Bengaluru) features largely automated processes
   • Hybrid model with 21 contract manufacturing units for scalability
   • Stringent quality control ensuring consistency
8. Backing of Global Parent Orkla ASA:
   • Orkla ASA – 375-year-old Norwegian conglomerate with deep FMCG expertise
   • Access to global best practices in R&D, governance, and brand building
   • Financial stability and strategic support from well-established parent
   • 6th largest portfolio company in Orkla ASA contributing 4% of group revenue
   • Parent’s credibility enhancing brand trust
9. Product Innovation & New Category Launches:
   • Recent launches: MTR Minute Fresh batters, Ready-to-Eat sweets, 3-Minute Breakfast range
   • “Wok N Roll” – Pan-Asian cuisine brand launched January 2025
   • Continuous innovation in recipes, formats, and preparation methods
   • ₹10 crore investment in Tumkur RTE sweets factory (30,000 sq ft)
   • Expanding beyond core categories into adjacent food segments

Key Risks & Challenges

1. Severe Geographic Concentration Risk:
   • 70-79.4% of domestic sales concentrated in South India (primarily Karnataka and Kerala)
   • Heavy dependency on regional markets creates vulnerability to local economic conditions
   • Limited penetration in North and West India despite pan-India ambitions
   • Regional consumption patterns and preferences may not translate nationally
   • Economic slowdown or competitive pressures in South India disproportionately impact business
2. Raw Material Price Volatility:
   • Raw materials constitute 53% of total expenses (Q1 FY26)
   • Heavy dependence on agricultural commodities: chilli, turmeric, coriander, skimmed milk powder
   • Subject to monsoon variability, crop yields, and global commodity price fluctuations
   • Food inflation running at 12-13% impacting volume growth
   • Limited ability to pass on cost increases immediately due to competitive pressures
   • Margin compression risk during inflationary cycles
3. Intense Competition in Fragmented Market:
   • Faces competition from established nationals: Everest, MDH, Tata Consumer Products, ITC, Catch
   • Regional players with strong local presence and pricing advantages
   • HUL, Nestlé, and other MNCs expanding in packaged foods
   • Private labels gaining share in modern trade
   • Commoditized nature of certain product categories limiting differentiation
   • Continuous need for innovation and marketing spend to maintain market share
4. Regulatory and Food Safety Compliance Burden:
   • 124 pending proceedings under Food Safety and Standards Act (FSSAI)
   • Issues primarily related to labeling and pesticide residue levels
   • Regulatory scrutiny on food products intensifying
   • Compliance costs increasing with stricter food safety norms
   • Any adverse outcome could damage brand reputation
   • Recalls or quality issues can have significant financial and reputational impact
5. Supplier Concentration & Dependency:
   • Top 10 suppliers contributed 37.9% of purchases (Q1 FY26) and 33.7% (FY25)
   • Vulnerability to supply disruptions from key suppliers
   • No long-term supply contracts with major suppliers
   • Dependency on continuous availability of quality raw materials
   • Supplier bargaining power in times of commodity shortages
6. Trademark and Brand Risk:
   • Company uses “Orkla” trademark under revocable Letter of Authorization from parent
   • Authorization can be terminated with 90 days’ notice
   • Loss of “Orkla” branding would require rebranding efforts
   • Dependency on parent company’s goodwill for trademark usage
   • Third-party MTR restaurant chain (not owned by company) using “MTR” name – any negative publicity affects company’s brand
7. No Fresh Issue – Purely OFS:
   • Entire ₹1,667.54 crore proceeds go to selling shareholders, not the company
   • No capital infusion for growth or debt reduction
   • Indicates promoter exit rather than business expansion
   • Company receives zero funds from IPO for capex or working capital
   • Investors paying for promoter exit rather than funding company growth
8. FMCG Industry Slowdown & Consumption Headwinds:
   • FMCG volume growth muted across industry
   • Industrial slowdown noted by management in FY24
   • Urban consumption slowdown affecting premium categories
   • Rural demand affected by inflation and income pressures
   • Discretionary food spending vulnerable in economic downturns
9. Integration and Execution Risks:
   • Recently consolidated three business units (MTR, Eastern, International) into single entity (2023)
   • Integration complexities in merging different brand cultures and operations
   • Execution risk in scaling nationally while maintaining regional strengths
   • Managing dual brands with distinct positioning requires careful resource allocation
10. Limited Digital and E-commerce Presence:

• Traditional distribution-heavy model
• E-commerce/quick commerce partnerships limited to 6 partners
• Digital-native competitors gaining ground with younger consumers
• Need for significant investment in digital infrastructure and marketing
• Changing consumer behavior towards online grocery shopping

11. Climate Change and Agricultural Risks:

• Extreme weather events affecting crop yields
• Water scarcity impacting spice cultivation
• Supply chain disruptions from natural disasters
• Long-term climate impact on agricultural productivity

Financial Performance Overview (₹ in Crore)

Particulars	FY 2023	FY 2024	FY 2025
Revenue (₹ crore)	2201.44	2387.99	2455.24
Profit (₹ crore)	339.13	226.33	255.69
Total Assets (₹ crore)	3101.96	3375.49	3171.30

Revenue Analysis

• The company’s revenue increased steadily from ₹2,201 crore in FY 2023 to ₹2,455 crore in FY 2025.
• This represents a growth of nearly 12% over two years, reflecting consistent performance despite fluctuations in input costs and consumer demand.
• The moderate growth rate indicates that Orkla India operates in a stable FMCG segment, where expansion is usually steady rather than aggressive.
• The growth can also be attributed to its strong product portfolio and brand presence (especially under MTR Foods and Eastern Condiments).

Profit (PAT) Analysis

• PAT declined from ₹339 crore in FY 2023 to ₹226 crore in FY 2024, mainly due to higher operating expenses and margin pressure caused by inflation and raw material costs.
• However, in FY 2025, profit rebounded to ₹255 crore, showing a 13% improvement over the previous year.
• This recovery suggests that the company has taken cost-control measures and optimized its supply chain and pricing strategies.
• The PAT margin, while lower than FY 2023, reflects resilience and adaptability in a competitive FMCG environment.

Total Assets Analysis

• Total assets increased from ₹3,101 crore in FY 2023 to ₹3,375 crore in FY 2024, indicating expansion in operations or capital investments.
• A slight drop to ₹3,171 crore in FY 2025 could be due to asset revaluation or reduced working capital requirements after efficiency improvements.
• The overall asset base remains strong, suggesting the company is financially stable with a solid infrastructure base.