Exactly a month back on 3rd November 2022 Bhikaji Food International Ltd. barged in through the doors of Bombay Stock Exchange with an IPO offering its shares at a price range of Rs.285 to Rs.300 a share thereby mopping up a sum of Rs.880 Crores. The company had made a claim that it is one of India’s largest fast-moving consumer goods (FMCG). The company’s product range includes six principal categories: bhujia, namkeen, packaged sweets, papad, western snacks as well as other snacks which primarily included assortment of gift packs, frozen food, mathri range and cookies. In the six months that ended on June 30, 2022, the company had claimed to have sold more than 300 products under the Bhikaji brand. Not surprisingly the IPO was a resounding success when it debuted at BSE with a listing price of Rs.322.80, a listing gain of 8%. Today, as of writing this the share price of Bhikaji is hovering around Rs.412/- per share prompting people to comment that Bikaner to BSE cost only a Billion Dollars. The promoters could not have asked for more – even a savory tasting so sweet! Deepak Agarwal, the Managing Director of the company proved every naysayer wrong and forced them to eat humble pie. With that he has done his ancestors proud. Bhikaji has entered the world dominated by the likes of Balaji, Pratap and Haldiram nationally and the likes of Nestle, Britannia, Tata Consumer, Jubilant, EID, PepsiCo, Kellogg’s and ITC to name a few internationally. Bhikaji is in august company, indeed!
The Bhikaji family have had a checkered past. That is only to be expected. The family owns the legendary ethnic food enterprise known as “Haldiram”. Bhikaji, the first listed company of this kind is from the Haldiram stable thereby having an impeccable legacy. Started as a family business by Deepak Agarwal’s great grandfather, today there are multiple claimants for its glorious legacy. However, all the splinter groups and entities carrying the logo Haldiram make their own claims to patriarch’s legendary legacy. One of the significant measures taken by the group somewhere down the road was to call truce among themselves to demarcate territories like Rajasthan, Kolkata and Nagpur with clearly earmarked boundaries to various claimants. Unlike other joint family enterprises in India the group managed to avoid intractable legal recourse to eventual self-destruction. One must, however, remember that the original promoter Haldiram Gangabishan Agarwal started his enterprise after walking out of the joint family. In a manner of speaking, that proved to be a master stroke though it was not a premeditated or pre planned move on his part. Nothing succeeds like success. Today the combined turnover of the enterprise is upward of Rupees 5000 Crores.
It would amount to an understatement to describe that the ethnic food market is extremely fragmented. When it comes to food there is nothing called a unique Indian palate common across the country. It is in this sphere that the country is more divided than any other. In that sense, India is many countries in one country. It is neither a country nor is it a continent. Snacking industry is a classic example to this. As a result, there is mushrooming of units cooking something or other to satisfy all the palates. India is such a diverse nation with different cultures. So is its food habits. To attain economies of scale taking into account the total population would be a gross mistake to begin with. Cuisines differ across India’s diverse regions as a result of variation in local culture, geographical location (proximity to sea, desert, or mountains), and economics. It also varies seasonally, depending on which fruits and vegetables are ripe and available. Take the North India cuisines, for example. They are heavily influenced by Middle Eastern and Central Asian cultures because of years of Mughal rule. As per the blog of Spice Garden the cuisine of Rajasthan is primarily vegetarian and offers a fabulous variety of mouth-watering dishes. The spice content is quite high in comparison to other Indian cuisines, but the food is absolutely scrumptious. Rajasthanis use ghee for cooking most of the dishes. Rajasthani food is well known for its spicy curries and delicious sweets. These traits describe the culinary elements of snacks prepared by Bhikaji. Each corner of India has its own story to tell about the food items prepared there. This gives rise to an exotic variety of salty snacks and sugary sweets with their own stories to tell. Therein lies the challenge for the industry. Every block of contiguous area is an opportunity area for a ‘snacky’ entrepreneur. Large organisations, especially multinationals find this especially challenging. India for all its vastness and varieties cannot be treated as one single market for all types of snacks. Every State border becomes virtually a limiting factor for expansion of a snack business. Smaller quantities of snacks are not appetising for a business just because it inhibits the scale of promotion of these edible items which moves fast in familiar territories. Those who still make it bid in this business truly deserve praise. The company has over the years established market leadership in the core states of Rajasthan, Assam and Bihar with extensive reach to boot. Bhikaji operates six manufacturing facilities with some more on contract basis or through its own subsidiary spread over the country. The industry growth is estimated at 15% p.a. The industry is estimated to be worth Rs. 1.50 lakh crores in which the organised sector is present to the tune of about 55%.
The company has a brand recognised pan India and abroad with a diversified portfolio of products. The manufacturing facilities of the company are located strategically across the country with an extensive distribution network. The Rajasthani diaspora in different countries helps it to generate a big draw for its products. The company exports to 21 countries to cater to this diaspora. This said, there are tell-tale gaps in its business operations. Snack business is run on cash basis leading to issues that will need more than normal supervision and control. Even at the time of IPO the governance issues of having to deal with large amount of cash was flagged by various commentators as a serious governance issue. India is a country that is maturing in a sense when it comes to healthy edible items. In many a household sugar and salt are already taboo. Eating healthy food is consciously promoted and followed. There is already a feeling that Bhikaji’s salty products are too salty for a health-conscious society. In that sense the company is trading health for cash.
At present the company is on a sweet spot. There is one shift in the macro picture that can be clearly discerned in the environment which could help promoting the company’s fortunes. Any product with native ingredients and ethnic flavour would find favour these days with the ruling dispensation busy promoting actively ‘atmanirbhar’ Bharat. There is no other product in the country that can compete with Bhujia on this one score. An Indian savoury getting exported is in itself a great gratification. More so if you spice it up with atmanirbhar. At any rate, this Bhujia and the company that makes it, shows us the fine taste that a Marwari has for food and why a Marwari entrepreneur is so successful in selling that very food. If you have a doubt, ask Amitabh Bachchan, the company’s brand ambassador.
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