Sixteen years after the Norwegian industrial investment company Orkla ASA, forayed into India, with a takeover of MTR Foods, it is writing a a new recipe for growth.
Last month, the conglomerate, which also owns Eastern Condiments, having acquired a 67 per cent stake in the Kerala-based spices major in 2021, announced the re-organisation of its Indian operations under one business entity, Orkla India. Now there will be three verticals — MTR, Eastern and International Business, where both the brands will be pushed hard in a new way.
At the recent World Food India, Orkla India had a buzzing stall, showcasing its new products — MTR has recently forayed into sweets — as well as its new business thrust to trade visitors. A gung-ho Orkla India Chief, Sanjay Sharma, along with MTR Foods CEO, Sunay Bhasin, and the newly-formed International Business head, Ashvin Subramanyam, spent time with businessline, describing the rationale behind the re-organisation.
Sharma describes how in its 16-year-long journey in India, Orkla has grown MTR into a ₹1,200 crore business. Together with Eastern, Orkla India’s total business is ₹2,000 crore. “Now we are restructuring the business to leverage the combined strength of MTR and Eastern in our international business,” says Sharma. “We are changing our mindset from just exporting what we produce in India, to the diaspora, to developing products for the mainstream population abroad. And hence we have set up a dedicated organisation with a dedicated CEO and marketing for this,” he explains.
Ashvin Subramanyam, the new CEO, who comes from a hardcore FMCG background of Kraft, Britannia, Mondelez, Danone, pipes up, saying, “We have a phrase — together we go farther.” He says the idea is to work on the synergies of MTR and Eastern in global markets, to scale faster.
“We have a beautiful story — 90 per cent of Eastern’s international revenues come from the Middle East, while 90 per cent of MTR’s revenues come largely from North America and Australasia, though MTR has a presence in 42 countries,” says Sharma.
The first task for Subramanyam, he says, is to form a single culture in the international business unit as the cultures of Eastern and MTR are very different, and then build on it. Next comes the product development. Already, there are examples — Eastern, for instance, in 2021 launched Shawarma and other Arabic spices for the mainstream Arab population. “There are quite a few Arabic masalas that we have launched in Middle East that are doing very well, and we are beginning to appeal to the mainstream population. That’s a classic case of how we are going to do it,” says Subramanyam.
The reorganisation is also streamlining operations in India through four functions — finance, people (Orkla has 3,000 people in the country), and operations (11 factories, 21 contract manufacturing units and a large procurement division). “Our procurement has doubled so we need to reap the synergies of scale in buying. It’s not so easy, because the specifications of spices that we buy in MTR are quite different from the specifications of spices we buy for Eastern.”
And then the fourth department is a new one - digital transformation and sustainability. MTR, Eastern and international business have got different levels of maturity as far as digital is concerned, explains Sharma. For instance, SAP has been just implemented in Eastern, whereas MTR has always been running on SAP. e-commerce is also a big thrust with seven per cent of MTR’s sales comes from digital channels. Only four per cent of Eastern’s sales are from e-commerce while it is 1.5 per cent for the international business.
Going forward, Sharma says, the objective is to scale up fast. “We have demonstrated over the last 16 years how strong value creation we can do in India. We are now the sixth largest portfolio company for Orkla.” Orkla globally had restructured last year and has 12 independent portfolio companies of which Orkla India is one.
“Orkla India is a very good platform and Orkla is very excited about it. So having formed these three BUs (business units), we can not only have a sharper focus on protecting our brands, but can also look at structured initiatives,” says Sharma. By these, he means acquisitions. “We are looking at our core category which is the traditional Indian food business and we will continue to look at spices and masalas as a big area for us to invest,” says Sharma.
Meanwhile, organic growth is happening through new products, especially at MTR. A new initiative is ready-to-eat sweets. Four sweets — mysore pak, besan laddoo, coconut barfi and Bombay halwa have been launched in Bengaluru, says Bhasin. Along with the fresh batter, now akki roti and Malabar paratha have also been introduced.
Sharma says the company is relatively well capitalised (MTR has zero debt, he asserts) and hence in a good place to grow. Will the new mix and recipe work?