Dabur India Enters Spice Market Via Badshah Masala Acquisition

On Wednesday, Dabur India Limited announced its signing of definitive transaction agreements for the acquisition of 51 per cent stakes of Badshah Masala Private Limited

Badshah Masala is a firm engaged in the manufacturing, marketing and export of ground spices, blended spices and seasonings. This acquisition is in line with Dabur’s strategy to expand its Food business to Rs 500 Crore in 3 years. It also marks the firm’s entry into the branded spices and seasoning market in India, which is over Rs 25,000 crore.

Announcing the acquisition, Dabur India Ltd Chairman Mohit Burman stated, “The Indian spices and seasoning category is a large and attractive market. Badshah Masala is one of the key players in this space. Our investment in Badshah Masala will help expand this business and continue to provide unmatched quality products. This acquisition will accelerate our growth strategy as we continue to build our Foods business. We intend to leverage our international market presence to grow this business globally.”

“The transaction is expected to be Cash EPS neutral in the first year and accretive thereafter. The acquisition is expected to be completed within this fiscal. As per our agreement, we will acquire the balance 49 per cent shareholding after 5 years,” Dabur India Ltd Group Director P. D. Narang stated.

Dabur India Ltd Chief Executive Officer Mohit Malhotra stated,  “Branded Spices market in India is growing at healthy double digits, led by increasing consumption, upgradation from unbranded to branded and growing preference for regional flavours across states. The market is dominated by regional players and holds significant potential for growth in the future.Dabur has an existing Foods portfolio and views ground and blended spices as a good addition to this portfolio. Badshah portfolio will gain from Dabur’s extensive distribution reach. We look forward to unlocking further synergies and market opportunities to capture the full potential of Badshah Masala.”

This acquisition is less proportionate debt as on the closing date, with the Badshah enterprise being valued at Rs 1,152 crore. It translates to a Revenue multiple of around 4.5x and EBIDTA multiple of around 19.6x of FY2022-23 estimated financials.