Singapore based Olam in talks to buy Vallabhdas Kanji (VKL), a Kochi based spices firm

MUMBAI: The $13 billion agriculture commodities giant Olam is in talks to snap up Vallabhdas Kanji (VKL), a Kochibased spices business firm of the JV Mariwala Group. This could mark Olam’s entry into the heavily fragmented Indian spices market as the international commodities group continues with its acquisition strategy.

Olam was in advanced discussions to clinch a deal after the Mariwala family mandated an investment bank for a stake sale, said sources directly familiar with the matter. The 76 year-old VKL is among Asia’s leading processor of spices and spice ingredients . It often sets the benchmark for black pepper in the global commodity markets.

US private equity group Argonaut and Ascent Capital are minority investors in VKL, which has processing plants in south east Asia and exports to over 30 countries. When contacted, Ajay Mariwala , MD of VKL, said, “We have been running a process to bring in a strategic investor. We will announce any such development when we are ready.”

The $150 million JV Mariwala’s business interests also include Autohanger India, which is a dealership of Mercedes Benz cars in Mumbai. Singapore-based Olam, in which private equity fund Temasek Holdings has a stake, last week snapped up Hemarus Industries, a Kolhapur, Maharashtra-based company that owns a sugar mill and power plant for $73.8 million.

The proposed spices acquisition is in line with the company’s aspirations to build value added ingredients business in India, which is the world’s largest spices producer and the world's largest spices consumer.
Sunny Verghese-led Olam has been consolidating its position in the spices business globally and had acquired California-based Key Food Ingredients in the recent past.

The JV Mariwala family in recent times have been ramping up presence in the automobile dealerships space. Mohan Mariwala, cousin of Harsh Mariwala , owner of oil major Marico Industries, recently took up the dealership for iconic sports car brand Lamborghini.

The Rs 1,200 crore-branded Indian food ingredients business is seeing biggies like Olam, ADM and McCormick upping their play here. US' McCormick, for instance, acquired a 26% stake in Keralabased Eastern Condiments for Rs 126 crore in 2010. It also has a 50% stake in AVT McCormick ingredients.