At Marcellus we have written books on and built a business around the consolidation of various sectors of the Indian economy around 1 or 2 well-managed highly efficient companies who steadily crush their competitors and make a lot of money for their shareholders. For several years now, we have been looking at the spices industry and searching for a consolidator to emerge. For those of us who grew up in the previous century in north India, the radio jingle which will forever ring in our ears is “MDH masala’s “Asli masale sach sach, MDH, MDH” is one of those ad jingles that still play in most people’s heads.” Shubhangi Misra’s article in The Print suggests that MDH might be a company to look out for in this extremely interesting sector where a lot of money will be made in the next decade or so:
“MDH, pioneers of readymade masala in the Indian market and founded in 1919 by Mahashay Chunnilal Gulati in Sialkot (now in Pakistan), is a ‘start-up’ success story in an era when the word hadn’t even been coined in its current form.
MDH’s journey from Sialkot to a small shop in Delhi opened by a Partition immigrant to a conglomerate that manufactures more than 62 kinds of spices available in 150 packages has been nothing short of extraordinary. And almost everyone knows the face of the patriarch of the company – Dharampal Gulati, son of Chunnilal.
Reports of a takeover by FMCG maker HUL were rubbished by MDH executives. “No one thinks of selling their own child. The news is fake, baseless and frivolous,” Rajendra Kumar, executive vice-president of MDH, told ThePrint. On Twitter, the company told people “not to believe such rumours.” MDH is estimated to be valued between Rs 10,000 crore and Rs 15,000 crore.
Mahashay Dharampal was the second of three sons of Chunnilal who owned a shop that ground spices in Sialkot. Post-partition, the family came to a refugee-camp in Amritsar, but on 27 September 1947, Dharampal decided to head for Delhi. There, he bought a horse carriage and ferried tourists to the capital. When that didn’t work, Dharampal started selling jaggery on Ajmal Khan road in Delhi, according to a booklet written on the life of MDH’s proprietor.
Although dates haven’t been specified, by early 1948, Dharampal had purchased a plot on Khajoor road, Krishna gali, to start an outlet for Indian spices, a business he understood well. In the meantime, he had already built a customer base at Ajmal Khan Road, selling Indian spices, pulse, oil, soap, and sugar among other things.
Dharampal, along with his father, Chunnilal, started buying natural spices to ground from Gadodiya Market, Katra Ishwar Bhawan, Katra Hussain Baksh and Tilak Nagar Market in Delhi. And thus started the empire….
In 1967, Dharampal purchased a plot in Delhi’s Kirti Nagar and established a small factory, scaling up his business. Today, MDH has large, fully automatic manufacturing plants in Delhi, Gurgaon, Nagaur and Sojat in Rajasthan. Branches have been set up at Ghaziabad in Uttar Pradesh and Amritsar and Ludhiana in Punjab.
Pioneering packaging of ground spices, scaling the business and establishing a trustworthy supply chain worked to Dharampal’s advantage and ensured his place as the king of the Indian masala market. Today, MDH is India’s second-biggest spice producer and seller after Everest Spices.”
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Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
