Eastern Condiments, among the leaders in the Indian spices industry, is up for sale as the promoters, the Meeran family, are planning to sell a controlling stake in the company, said people aware of the development.
The Meerans hold about 74% while global spices leader McCormick & Co owns 26%. McCormick also plans to sell its nine-year-old investment in Eastern along with the promoters, valuing the company at 1,800-2,000 crore ($250-280 million), said one of the persons cited above.
Avendus Capital is advising the promoters on finding a buyer and feelers have been sent to private equity buyout funds, he added. An official sale process will be launched in a week. It couldn’t be ascertained whether the promoters will sell the entire stake in Eastern or remain as minority shareholders.
Set up by ME Meeran in 1989, Eastern Condiments manufactures spices, masalas, blended spice powders, pickles and rice-based products under the Eastern brand.
The company has a 70% market share of the organised spice segment in Kerala and has diversified into pickles and ready-to-eat and ready-to-cook items. Eastern competes with local brands such as Nirapara and Kitchen Treasures in Kerala and Everest Spices and MDH Masala across India.
The group, which is also engaged in the construction, mattress and readymade garment businesses, is currently run by the founder’s sons-Navas and Firoz Meeran.
One of the country’s top brands, Eastern has a footprint across India with a presence in Uttar Pradesh, Madhya Pradesh, Karnataka, Maharashtra, Rajasthan, Tamil Nadu and Andhra Pradesh. Exports contribute around 25% to revenue, with a strong presence in the Middle East, especially Dubai, Doha and Jeddah. These markets also provide higher realisations and profitability than domestic markets, said a recent Crisil report. Kerala contributed around 50% to the revenue of Rs 810 crore in FY18.
US-based McCormick picked up its 26% stake for $35 million in 2010.
The $5.3-billion McCormick manufactures, markets and distributes spices, seasoning mixes and condiments to the global food industry-retail outlets, food manufacturers and foodservice businesses. McCormick has been active in the Indian food and spices market. In 2011, it acquired 85% in Kohinoor Speciality Foods for about $115 million.
India’s spices industry has been an investment destination for private equity funds as well as global strategic players.
In April, Swiss fragrance company Firmenich acquired a majority stake in the Kerala-based manufacturer of seasonings and flavours, VKL Seasoning, from homegrown PE fund True North. Founded in 1996, Vallabhdas Kanji Ltd (VKL) Seasoning makes food ingredients and flavouring solutions in India and the Middle East with a strong focus on the quick service restaurant (QSR) and processed food industries. True North owned 55% of VKL.
Chennai-based spices maker Aachi Group had been in the market to raise external funding from private equity firms as well as seeking to raise debt to fund expansion, which has not fructified.
