Orkla's Indian Expansion: IPO & Beyond

Orkla ASA, the Norwegian industrial investment company, is considering a significant move in its Indian operations. The company is exploring a potential initial public offering (IPO) of its Indian business, which is valued at around $400 million. This strategic decision comes amidst Orkla's robust expansion plans and product diversification in the Indian market.

Orkla's Indian arm, which includes popular spice and condiments brands MTR and Eastern, has seen remarkable growth in recent years. MTR contributes 48% and Eastern accounts for 34% of Orkla's Indian revenue, with the international market making up the remaining share. The company achieved around 12-13% growth in recent years, indicating a strong performance in the market.

The proposed IPO would allow Orkla to tap into public markets, raising funds to support its ambitious expansion plans. By 2025, Orkla India aims to strengthen its presence in the food category, introducing products like wet batters for idlis and dosas, along with pre-packaged regional specialties. The company is also focusing on international expansion, particularly in the Gulf Cooperation Council (GCC) countries, where its products are available in about 42 markets.



The IPO proceeds could be allocated across various business segments, such as MTR, Eastern, and international markets. A significant portion may be invested in enhancing infrastructure and supply chain capabilities, particularly in cold chain-based food products, which have shown strong month-on-month growth. Additionally, Orkla may diversify its product offerings by expanding into ready-to-eat sweets and other regional delicacies. The company might also use a portion of the IPO proceeds to solidify its international presence, targeting specific diaspora communities.

Raising funds through an IPO would enable Orkla to capitalize on growth opportunities in the Indian market and beyond. Currently, Orkla's Indian arm generates around 52% of its revenue ($1,200 million annually) from its MTR and Eastern brands, with international sales contributing 18% ($414 million). An IPO would provide much-needed capital to invest in growth areas and further increase international sales.



The IPO could also impact Orkla's ability to attract and retain talent, as well as its competitive position in the market. With increased liquidity, Orkla can offer competitive compensation packages, attracting top talent and retaining key personnel. Moreover, an IPO could enhance Orkla's reputation as a transparent and financially stable company, further boosting its appeal to potential employees. Additionally, the proceeds could be invested in expanding Orkla's product offerings, entering new markets, and enhancing its distribution network, maintaining its market leadership and strengthening its position against competitors.

In conclusion, Orkla's potential $400 million IPO of its Indian business is a strategic move that aligns with its long-term expansion plans. The IPO would provide much-needed capital to invest in growth areas, diversify its product offerings, and strengthen its international presence. This move could have a significant impact on Orkla's talent acquisition, retention, and competitive position in the market. As the company continues to grow and diversify, investors should keep a close eye on Orkla's progress and potential opportunities.