Haldiram's in talks to buy majority stake in Prataap Snacks: Report

The company listed on stock exchanges is valued at $350 million, reported Reuters, adding that Haldiram’s is planning the stake purchase in the rival firm with the aim expand its presence in the potato chip market, Reuters reported citing two people with direct knowledge of the matter.

A valuation is yet to be discussed as the talks are at an early stage but it is likely to be at a premium to Prataap's stock price, said the report.

The sources told Reuters on the conditions of anonymity that Haldiram's is eyeing a majority stake of at least 51%, though a final figure has not been decided.

Prataap’s Yellow Diamond brand of chips is popular, giving competition to Pepsi’s opens new tab Lay's brand apart from other snack-makers.

India’s chips segment has large number of local players as well as unorganised food sellers, who are also widely preferred by people.

Peak XV Partners, previously known as Sequoia Capital India, holds nearly 47% ownership in Prataap Snacks and is looking for a complete divestment of its stake in the company, according to the report.

Prataap, which entered the stock market in 2017, recorded annual revenues of around $200 million last year. The company claims that it achieves daily sales of over 12 million packets of its affordable salty snacks, priced as low as 5 rupees each.

However, is a family-run business founded in 1937, is a bigger manufacturer of packaged snacks and earns a revenue of over $1 billion.

The unlisted company runs 150 restaurants throughout the country.

Last year, Reuters reported that the company was involved in discussions with conglomerate Tata Group and other strategic investors, aiming for a $10 billion valuation. However, the talks did not materialize due to concerns surrounding the valuation.

"A deal (with Prataap) will help Haldiram's tap the potato chips segment. Consumers often prefer western flavoured snacks over local ones," said one of the sources.

Prataap runs 14 manufacturing plants spread across nine Indian states. While smaller unorganized companies currently dominate the fried snacks market in India, there has been a notable surge in the popularity of branded products in recent years. This shift is attributed to an increasing awareness of health consciousness among consumers and their greater disposable incomes, allowing them to invest in packaged goods, said the report.

Local snack producers like Prataap have grappled with inflationary pressures and intensifying competition in India, a market known for its price-conscious consumers.

Despite these challenges, Prataap's stock price remains close to its 2017 listing level. According to a November earnings report, Prataap projected that India's snacks market is valued at $5.2 billion, experiencing an annual growth rate of 14%, said the Reuters report.