CCI approves demerger of Haldiram Group’s FMCG business

The Competition Commission of India (CCI) on Monday gave its nod to the demerger plan of Haldiram Group, one of the country's most popular snacks and sweet makers. The statutory body, under the Ministry of Corporate Affairs, approved the proposed combination involving demerger of the FMCG business of Haldiram Snacks and Haldiram Foods into Haldiram Snacks Food. The CCI also gave green signal for acquisition of 56% and 44% shareholding in Haldiram Snacks Food by existing shareholders of Haldiram Snacks and Haldiram Foods.

Haldiram is a billion-dollar company that was founded by the iconic bhujia-maker, Haldiram Agarwal, as a retail sweets and namkeen shop in Bikaner, Rajasthan, in 1937. He split the business between his four sons – While the eldest took charge of the business in Nagpur (western India), the third and the fourth sons took charge of the Delhi business (north India), while Agarwal handled the business in Bikaner (Rajasthan). 

The Nagpur-based Haldiram Foods International Private Limited (HFIPL or Haldiram Foods) is run by the oldest brother, Shiv Kisan Agrawal. It is engaged in the manufacturing and distribution of packaged foods products such as snacks, namkeen, sweets, ready to eat/pre-mix food, biscuits, cookies, non-carbonated ready to drink beverages, pasta etc.

The Delhi-based entity Haldiram Snacks Private Limited (HSPL or Haldiram Snacks) is run by the youngest brothers Manohar and Madhusudan Agarwal. It is engaged in the manufacture and distribution of packaged food products in India such as snacks, namkeen, sweets, ready to eat / pre-mix food, frozen food, biscuits, non-carbonated ready to drink beverages, pasta etc.

Haldiram Snacks Food Private Limited (HSFPL or Haldiram Snacks Food) is a newly incorporated entity that currently does not undertake any business operations. Post the proposed transaction, HSFPL will undertake the FMCG business that is currently undertaken by HFIPL and HSPL, respectively. The FMCG business (i.e., the packaged foods business) would comprise collectively of the FMCG business currently undertaken by HSPL and HFIPL and their respective subsidiaries or affiliates.

The demerger and acquisition are being seen as part of the FMCG major’s plan to expand its footprint in India by taking the initial public offering (IPO) route. The demerger of Haldiram Snacks and Haldiram Foods will have a significant impact on the FMCG market in India, as they aim to create an Indian ethnic snacks behemoth. The namkeen and ethnic snacks market is valued at ₹11,400 crore and is expected to witness a growth of 16% over the next four-five years.

In November last year, ethnic snack brand Bikaji made its debut on the domestic stock market, which is promoted by Shiv Ratan Agarwal, grandson of Haldiram's founder Ganga Bishan Agarwal, fondly known as Haldiram Ji. Bikaji Foods, one of the country’s largest ethnic snacks companies, raised ₹881 crore through initial public offering (IPO), which was subscribed 26.67 times. Bikaji Foods is a ₹1,650 crore business with a 5% (34% share in Rajasthan and over 80% share in the North-East and Bihar) share in the ₹72,800 crore Indian savoury and snacks market.