Bhujia to billions: Ganga Bhisan's Haldirams has now become $3 bn biz empire

The world’s second-largest snack food company is eyeing a stake in a business that started as a humble shop in Bikaner in 1937. Trying to diversify its portfolio beyond breakfast products, Kellogg wants to buy a stake in Haldiram's which it has valued at $3 billion (excluding a Kolkata branch). The iconic bhujia maker, which now sells a range of desi snacks, has grown from a small shop into a vast empire while surviving disputes and break-ups in the original family business,

The humble origins
Haldiram's, which has become an iconic brand all over India and among the NRIs, started small with a shop in Bikaner in 1937. Ganga Bhishen Agarwal, fondly called Haldiram by her mother, got to know the recipe from his aunt who used to make a thick and soft prototype of the current snack known as Bikaneri bhujia. When Ganga Bhishen joined his family snack stall at Bhujia Bazar in Bikaner, he used the his aunt's trick. Pavitra Kumar mentions in her book 'Bhujia Barons' that Agarwal reinvented bhujia by adding moth (a type of lentil) flour to the snack which used to be made of besan (chikpea flour). He also made it thinner using a finer mesh. He knew how to brand his new product smartly. He named it 'Dungar sev' after Dungar Singh, the popular Maharaja of Bikaner. With his new brand, he parted ways with his grandfather's business. His product hit a chord with the buyers. After nearly a decade, he was selling as much as 200 kilo of bhujia every week and the price had gone up from 2 paise a kilo to 25 paise, writes Kumar in her book. Haldiram was a tall, agile and fit man even in his seventies, writes Kumar. He inspired fear and awe in his sons and grandsons due to his sobre disposition and serious mannerism. Even when he was 72, he moved in town riding his bicycle.

The beginning of the empire
The Haldiram's empire too had a humble beginning. Haldiram went to Kolkata to attend a wedding which gave him the idea of opening a shop there. That was the first branching out of the Bikaner bhujia business. The second generation did not expand the business further. However, grandsons Manoharlal and Shiv Kishan took the business to Nagpur and Delhi. The Chandni Chowk shop in Delhi proved to be a huge hit with the masses. Then came manufacturing plants in Delhi as well as Nagpur, followed by restaurants in major cities in India as well as foreign countries. The company came to be divided between three distinct areas of operations with Delhi-based Haldiram Snacks and Ethnic Foods in the northern region, Nagpur-based Haldiram Foods International in western and southern regions and a much smaller Kolkata-based Haldiram Bhujiawala in the eastern region. The Delhi business has emerged to be the largest.

Dispute over trademark 
Breakups and disputes have marked the business empire as Ganga Bhisan's descendants have fought over territorial and trademark rights, a typical challenge for heritage family-run businesses. There is an ongoing dispute over the brand ownership and trademark. The estranged Kolkata faction, which operates primarily in West Bengal, has dragged the other two sides to court. The decade-long legal battle is currently in the Supreme Court. The group’s complex corporate structure with several subsidiaries and group entities and the ongoing disputes will pose a big challenge for a buyer.

Making billions from bhujia
The ongoing talks with Kellogg's involve two of the three branches of the company — Delhi-based Haldiram Ethnic Foods and its affiliates, and Nagpur based Haldiram’s Food International and affiliates. The two businesses are believed to be valued at around $3 billion (Rs 20,000 crore), excluding the restaurants business. The two divisions together, are expected to end FY19 with sales of Rs 4,500-5,000 crore and profit of Rs 450-550 crore.

When Haldiram’s revenues crossed Rs 4,000 crore in FY16, it had gained twice the size of Hindustan Unilever's packaged food division or Nestle Maggi and grew larger than the India turnover of the two American fast food rivals Domino’s and McDonald’s put together. In year ended September 2017, Haldiram's regained the top spot as the country’s largest snack company after more than two decades, surpassing PepsiCo in sales. Haldiram's posted sales of Rs 4,224.8 crore in the year ended September, compared with PepsiCo’s Rs 3,990.7 crore from brands such as Lay’s, Kurkure and Uncle Chipps.

From Bikaner shop to French bakery
In 1937 when Ganga Bhisan set up his bhujia shop in Bikaner, he would have rarely imagined that Haldiram's would be selling Veg Shami Kebab, Soya Shami Kebab, Dahi Kebab and Hara Bhara Kebab. Haldiram's has definitely come a long way from Ganga Bhisan's thin, moth-dal bhujia to a range of kebabs it offers in the Middle East as part of its frozen foods business. In between, it diversified its namkeen snacks range by including sweets such as canned rasgullas and soan papdi, pani puri and now desi wraps. Recently, Haldiram’s signed its first partnership outside the family and entered into an exclusive master franchisee partnership with French bakery cafe Brioche Dorée, the world’s second-largest bakery chain. For the first time, the Brioche Dorée cafes will serve only vegetarian food

What pulled Kellogg's to Haldiram's
The story of Haldiram's shows that foreign food businesses, however big they are, have to go desi to succeed in the Indian market. When the first McDonald's restaurant in India opened at Basant Lok in Delhi in 1996, it made a unique cultural concession — it became the first McDonald's in the world to not serve beef or pork products. Years later, it made another concession by introducing McAloo Tikki burger. Later, the Big Mac had to reincarnate as Mac Maharaja. No foreign pizza chain can hope to make its mark in India without offering vegetarian products. In 2013, in a first, American restaurant franchise Subway opened a Jain counter at its first all-veg outlet in Ahmedabad. Haldiram's is an attractive option for foreign buyers because it is difficult for a foreign food giant to build a desi food brand from scratch when desi brands can trace their heritage back to 1937!

A telling coincidence is the possessive in both the brand names, Kellogg's and Haldiram's. Like Ganga Bhisan of Bikaner, Will Keith Kellogg of Michigan in the US too invented a food item — corn flakes — more than a century ago. Kellogg's eponymous company rode on the popularity of corn flakes to become a global behemoth. Eying a stake in Haldiram's, Kellogg's may be thinking it would make a really hot mixture if corn flakes meet bhujia.