Orkla India IPO opens for subscription on Wednesday — Here are some key risk factors for investors

The ₹1,667.5 crore Initial Public Offering (IPO) of Orkla India Ltd., parent company of MTR, will be opening for subscription on Wednesday, October 29.

Price band for the issue has been fixed between ₹695 - ₹730 per share, with 35% of the IPO reserved for retail investors. One lot will involve 20 shares and will entail a minimum investment of ₹14,600 per lot.

The issue will close for subscription on Friday, October 31.

Here are some key risk factors for investors to know before the issue opens for subscription, as highlighted by the company in its Red Herring Prospectus (RHP):

Raw Material Price Volatility and Packaging Costs

Orkla India has highlighted in its RHP that its operations are exposed to significant fluctuations in the prices of raw materials such as chili, turmeric, pepper, cumin and coriander, and packaging materials as well.

Unpredictable weather patterns, including irregular rainfall, droughts, floods and heatwaves may result in crop shortages, quality variations, and price volatility.

"Any inability to procure these materials at competitive prices or prolonged disruptions in supply could negatively impact production schedules, increase costs, and result in reduced margins or loss of market share," the company stated in its RHP.

Geographic Revenue Concentration

As much as 70% of Orkla India's revenue from the sale of products for the quarter that ended in June 2025 came from the southern parts of India.

This heavy reliance on a single region exposes the company to risks associated with economic fluctuations, competitive pressures or demographic changes, which could significantly impact revenue and financial performance, the RHP stated.

Brand Reputation, Product Safety

Product Safety issues, spoilage, contamination, or improper processing or storage of products or raw materials could adversely impact the company's business performance, according to the RHP.

Additionally, a third-party restaurant chain is permitted to use the MTR trade name. Any negative publicity, food safety issues, or quality concerns linked to this separate restaurant business, which is not owned by Orkla, could still harm the reputation of the packaged foods brand, Orkla India said.

International Business and Export Risks

As much as 20% of Orkla India's topline in financial year 2025 came from the sale of products outside of India.

Operations in international markets exposes the company to currency fluctuations, trade restrictions, freight price volatility and compliance with international regulatory standards, which differ from market to market, the RHP stated.

Supplier Dependence and Distribution Network Risks

Orkla India relies on a set of key suppliers with the top 10 accounting for nearly 34% of the total raw material purchases in financial year 2025. The loss of any such supplier could negatively impact the business performance.

"The inability to manage this network, the loss of partners to competitors, or a rapid shift in consumer preferences toward modern trade and online channels could negatively impact product reach and sales," the company said in its RHP.

Legal and Contingent Liabilities

Orkla India's promoters, the company, and key management personnel are involved in various ongoing legal proceedings, including criminal and tax-related cases.

As of June 30, 2025, the company's contingent liabilities stood at ₹127.8 crore. "If any of these contingent liabilities materialize, they could adversely affect the company's financial condition," the RHP stated.