INVESTMENT OPPORTUNITY SUMMARY
Tier-2 Dairy Manufacturing | ₹5 Cr Structured Capital Raise |
THE OPPORTUNITY
A profitable, FSSAI-compliant dairy manufacturing unit operating at 40% capacity utilisation is raising ₹5 Cr in structured capital to fund a 2.5x revenue scale-up over 24 months. The business has grown from ₹23 lakh seed capital (2022) to ₹12 Cr revenue (FY25) on a B2B distributor-led model — having deliberately exited the brand-led D2C race that consumes ₹100+ Cr of marketing capital from competitors. With 60% of installed plant capacity already paid for, every incremental litre converts at 35–45% contribution margin versus the 5–8% blended P&L margin. This is the core thesis: the investor is buying embedded operating leverage on an asset already in place, not funding net new capex from scratch.
THE BUSINESS (FY25)
- Revenue: ₹12.0 Cr | EBITDA: ₹65–70 L (~5.5%) | PAT: ₹40–45 L
- Installed plant capacity: 25,000 LPD | Current utilisation: 40% | Idle headroom: 60%
- Channel: B2B distributor supply, multi-city tier-2/tier-3 cluster within 150 km radius
- Procurement: Mix of direct farmer + aggregator; opportunity to migrate to ~70% direct
- Compliance: FSSAI-certified, GST-compliant, audited financials FY23–FY25
- Promoter capital deployed: ₹23 L initial + retained earnings; zero external equity to date
STRATEGY
The 60% idle capacity is the core asset. Four parallel revenue tracks fill it without new plant — capital deployed is largely into procurement, cold chain, and working capital, not greenfield.
- Private-label contract manufacturing for D2C dairy brands (Country Delight, Akshayakalpa, regional players) that are capital-constrained on plant. Target: 8,000–10,000 LPD anchor contract within 6 months.
- Value-added products on the existing line — paneer (25–30% GM), ghee (30–40% GM + export), curd, lassi, flavoured milk. Incremental capex ~₹85 L.
- Institutional channels — Mid-Day Meal, ICDS, Railways, defence canteens, modern-trade private label. Thin margin, zero marketing cost, anchors volume and bankability.
- Backward procurement integration — 10 village-level Bulk Milk Coolers. Eliminates dalal layer, saves 8–12% on milk cost, unlocks quality-sensitive premium SKUs.
USE OF FUNDS — ₹5 CR
| Use of Funds | Amount | % of Raise |
| Value-added products line (homogeniser, paneer vat, ghee kettle, pouch-fill, lab) | ₹0.85 Cr | 17% |
| 10 Bulk Milk Coolers + village-level collection infrastructure | ₹1.60 Cr | 32% |
| Cold chain — 3 reefer vehicles, distributor-end deep freezers | ₹0.70 Cr | 14% |
| Working capital for 2.5x volume scale-up (receivables + inventory) | ₹1.50 Cr | 30% |
| Systems & people — ERP, CFO hire, BIS/FSSAI/export licensing | ₹0.35 Cr | 7% |
| Total Capital Raise | ₹5.00 Cr | 100% |
FINANCIAL TRAJECTORY
| Metric | FY25 (Actual) | FY26 (Plan) | FY27 (Plan) |
| Revenue | ₹12.0 Cr | ₹19–21 Cr | ₹30–32 Cr |
| Gross margin | 8% | 11–12% | 15–16% |
| EBITDA | ₹0.65 Cr (5.5%) | ₹1.7–2.0 Cr (9%) | ₹3.8–4.2 Cr (13%) |
| Capacity utilisation | 40% | 65% | 85% |
| Direct procurement share | ~30% | ~50% | ~70% |
| Value-added product share of revenue | 0% | 20% | 35–40% |
EBITDA expansion bridge: VAP mix shift (+400 bps), direct procurement (+250 bps), operating leverage on fixed cost base (+200 bps).
THE ASK — ₹5 CR BLENDED STRUCTURED INSTRUMENT
The capital is structured as a blended instrument from a single HNI investor. The split provides the investor with secured downside on the larger tranche and equity upside on the smaller tranche — and avoids over-diluting the promoter while still delivering a target IRR of 19–22%.
Tranche A — Compulsorily Convertible Debentures: ₹2.00 Cr
- Coupon: 11% p.a., paid quarterly
- Conversion at the lower of (a) ₹12 Cr pre-money, or (b) 20% discount to next institutional round
- Conversion window: 36 months; equity post-conversion ~15–17% on fully diluted basis
- Reserved matters, board observer seat, broad-based weighted average anti-dilution, tag-along
Tranche B — Secured Non-Convertible Debentures: ₹3.00 Cr
- Coupon: 13% p.a., paid quarterly
- Security: first charge on plant & machinery; second charge on current assets
- Tenure: 48 months; principal repayment in equal instalments from Year 3
- Personal guarantee from promoter
Blended investor economics: ~12.2% cash yield during hold period + equity upside on Tranche A conversion. Target cash-on-cash 2.5–3.0x over 4–5 years; IRR 19–22%.
EXIT PATH
Year 4–5: strategic acquisition by a regional dairy major or an institutional Series A from a consumer/food PE fund. Comparable tier-2 dairy transactions in the last 36 months — ₹40–60 Cr revenue, 12%+ EBITDA, with direct procurement networks — have closed at 6–8x EBITDA. At projected FY28 EBITDA of ₹5–6 Cr, this implies an enterprise value of ₹30–48 Cr, providing a clear liquidity path for both tranches.
FOUNDER & DATA ROOM
Promoter: Ujwal — Founder & MD. Prior career in corporate management; founded the unit in 2022 with ₹23 lakh of personal capital. Built to ₹12 Cr revenue and operational profitability without any external equity. CIBIL, ITR, and personal asset declaration available on request.
Data Room — ready for investor review:
- Audited financial statements: FY23, FY24, FY25
- GST returns (GSTR-1 and GSTR-3B) reconciled to P&L — 36 months
- Current account bank statements — 24 months
- Distributor contracts, channel-level P&Ls, top-customer concentration analysis
- FSSAI licence, BIS certifications, pollution and effluent clearances
- Plant valuation report, asset register, insurance schedule
- Procurement contracts, BMC site map, farmer relationship register
- 24-month operating plan with monthly cash flow model and sensitivity scenarios
- Promoter ITR, CIBIL report, personal asset & liability statement
- Draft term sheet, shareholders’ agreement, and debenture trust deed
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