Madhusudan Masala IPO Review: Madhusudan masala is coming up with its Initial Public Offering. This is an SME (small and medium size enterprise) which is going to be listed on NSE SME.

The Madhusudan Masala IPO Review will open for subscription 18th September  2023, and closes on 21st September 2023. This review will delve into the IPO’s strengths and weaknesses. Keep reading for more details!

Madhusudan Masala IPO Review – About The Company

 Madhusudan Masala, a company engaged  in the production and processing of over 32 types of spices, operates under the brand names “Double Hathi” and “Maharaja”. Their product line includes whole spices, tea, and other groceries, all sold under the “Double Hathi” brand. The company’s manufacturing facility is based in Jamnagar, Gujarat.

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The spice business, divided into ground spices and blend spices segments, contributes to 75% of the company’s revenue. Ground spices include chilli powder, turmeric powder, coriander powder, and coriander cumin powder. Blend spices range from garam masala and tea masala to various other masalas and powders. The company also trades in whole spices in both retail and bulk quantities.

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The remaining 25% of revenue comes from other products such as food grains, tea, and groceries. This includes items like rajgira flour, papad, soya products, asafoetida (hing), achar masala (ready to make pickle powder), sanchar (black salt powder), sindhalu (rock salt powder), katlu powder (food supplement), kasuri methi (dry fenugreek), among others.

In addition to its branded sales, Madhusudan Masala also generates revenue from unbranded sales of whole spices and food grains.

Madhusudan Masala IPO Review – Industry Overview

 India holds the title as the world’s largest producer, exporter, and consumer of spices, exporting to over 180 countries. The country produces approximately 10.88 million tonnes of spices annually, with exports in 2021-22 reaching 1.5 million tonnes, valued at Rs. 30,576 crore. This export accounts for around 14% of total production. From 2017-18 to 2021-22, the total exported quantity from India grew at a CAGR of 10.47%.

The Indian government has established the Spices Board of India to promote the development and global promotion of Indian spices. The board also launched eight crop-specific Spices Parks in key market centres to help farmers improve price realization and reach for their produce.

In the tea industry, India is the second-largest global producer, with the northern region contributing about 83% of the country’s annual tea production. The southern region contributes about 17%, with Tamil Nadu, Kerala, and Karnataka being the major producing states. From January to September 2022, India’s tea production stood at 984.67 million kg.

India’s food and grocery market is the sixth-largest in the world, with the food processing industry contributing 32% to this market. The industry contributes 13% to total export and six% of industrial investment.

The Indian food processing industry is expected to reach US$ 535 billion by 2025-26 and employs about 1.77 million people. According to the National Accounts Division, Ministry of Statistics and Programme Implementation, food processing units in India are growing at an annual rate of 7.68%.

Madhusudan Masala IPO Review – Financial Highlights

The company’s assets have seen a significant rise, going from 25.9Cr in March 2021 to 57.3Cr in March 2023. 

There was also a substantial increase in revenue, which jumped from 68.7Cr in March 2021 to 127.5Cr in March 2023.

However, the net worth of the company remained relatively stable, moving from 10.94Cr in 2021 to just slightly higher at 10.99Cr in 2023.

The PAT saw a jump from 44.9 Lakhs in march 2021 to 5.75Cr in march 2023.

In terms of return ratios, the company has an  ROE of 101.9% and a ROCE of 20.8%. The debt-to-equity ratio stands at 3.84, indicating a high level of debt compared to equity.


(Source: RHP of the company)

Competitors of the Madhusudan masala

The  main competitors include companies like Gandhi Spices (Hathi Masala), Adani Food Products, Ramdev Food, MDH Masala, Baadshah Masala, Everest Masala, and NHC Food Limited. 

Strengths of the company:

  •  The company boasts a comprehensive and diversified portfolio of over 32 types of spices and other grocery products like tea, flour, papad, and soya products. This wide range caters to various consumer tastes and market trends, ensuring superior quality.
  •  The company maintains high-quality standards across all stages of production, from sourcing to distribution. All products are free from preservatives and artificial flavour enhancers. The manufacturing facility is ISO 9001:2015 and ISO 22000:2018 certified.
  •  The company has built strong relationships with customers, understanding the Indian taste palate and meeting specific taste requirements. This reputation for quality and price competitiveness has led to a network of over 2100 wholesalers and 3700 retailers as of March 31, 2023.
  •  The company is equipped with in-house manufacturing capabilities that allow for hygienic processing, grading, and packaging of spices. The facilities are accredited with HACCP for Hazard Analysis Critical Control Points and hold an FSSAI license under the Food Safety and Standards Act 2006.

Weaknesses of the Company:

  •  The company relies on third-party suppliers for certain products like tea, papad, soya products, etc. Any issues with quality, delivery delays, or cost increases from these suppliers could negatively impact operations.
  •  A significant 85% of the company’s revenue comes from specific regions in Gujarat. Failure to expand into new markets could limit growth and negatively affect the business.
  •  The company relies on third-party vendors for raw materials without long-term contracts. This exposes the company to risks such as supply shortages, cost increases, and quality control issues.
  •  The market in which  the company operates is characterized by rapidly changing consumer tastes and preferences. Any industry disruptions or reduced demand for products could lead to a decline in sales and operating margins.
  • The company is heavily reliant on the agricultural industry for raw materials. Factors such as weather conditions and monsoons can affect crop production and increase raw material prices, potentially impacting the company’s operations.

Madhusudan Masala IPO Review – GMP

The SME IPO for Madhusudan masala is set at a price band of ₹66-70. The latest grey market price stands at ₹42 as on September 15ths, 2023. This gives it a premium of Rs 112 per share.

Madhusudan Masala IPO Review – Key IPO Information

IPO Size23.80Cr
Fresh Issue23.80Cr
Opening date18th September 2023
Closing date21st sep 2023
Face Value₹10 per share
Price Band₹66-₹70 per share
Lot Size2000 shares
Minimum Lots1 (2000 shares)
Maximum Lots1 (2000 shares)
Investment Amount₹1,40,000
Listing Date3rd oct 2023

Promoters: Mr. Dayalji Vanravan Kotecha, Mr. Vijaykumar Vanravan Kotecha, Mr. Rishit Dayalaji Kotecha, and Mr. Hiren Vijaykumar Kotecha are promoters of the company.

Book Running Lead Manager: Hem securities limited 

Registrar to the Offer: Kfin technologies limited

The Objective of the Issue: The company intends to utilize the net proceeds from the issue towards the funding of the following objects:

  • Funding to meet working capital requirements, and
  • General Corporate Purpose.

In Closing

Madhusudan Masala, a brand known for its quality in the spice market, faces stiff competition. Their success in Gujarat has been notable, and they have plans to expand across India.

This expansion strategy includes modernizing their manufacturing facilities and widening their distribution network. However, the market is sensitive to brands, and consumers tend to stick with those they trust. Therefore, Madhusudan’s expansion into new territories could be challenging.

However it’s important to note that the minimum investment for this SME IPO is 1,40,000  which is higher than the main line IPO.

Written by Niharika Jadhav

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