Social venture capital firm Aavishkaar Venture Management services Pvt Ltd has invested in Orissa-based dairy company Milk Mantra Dairy Pvt Ltd for a significant minority stake. Milk Mantra is setting up an integrated dairy chain in Orissa and will sell milk and other dairy products across Eastern India. Milk Mantra has raised a total of $5 million for its Series-A funding from, besides Aavishkaar, individual angels, and debt funding. Approximately a 50% of this funding is debt and the remaining equity.

Milk Mantra, co-founded by Srikumar Misra and Ashit Mahapatra, aims to be the leading milk brand in Eastern India. According to the company website, Milk Mantra is building a 50,000 LPD (Litres Per Day) dairy processing unit in Gop, just 8 km from Konark. The firm targets to have 10,000 farmers in its network in the medium term. 

Srikumar Misra, Founder & CEO, Milk Mantra told VCCircle that the firm expects a product launch in September 2011 and will be the first direct-to-home dairy firm. The first round will be used to set up the entire supply chain network including cold chain storage, among others.

The angel investors consortium consists of members of Mumbai Angels along with others from India and London, Misra added.

A few dairy firms have raised funding from private equity and venture capital firms. Two of the most recent deals is Carlyle’s $22-million investment in Tirumala Milk Products in June 2010 and Motilal Oswal Venture Capital Advisors's investment in Parag Milk Foods.

“The association with Aavishkaar is a major step forward in realizing our objectives, specifically, Orissa, an oft neglected and under marketed region, creating sustainable development and providing natural, healthier milk products to urban consumers,” said Misra.

“There is an ongoing shortage of milk in India and Milk Mantra is working to create an organised supply chain in a region with significant latent potential. The combination of operational and brand building experience among the promoters makes them a very attractive investment for us,” said Vineet Rai, Managing Director, Aavishkaar.

Aavishkaar has earlier invested in food and agri-related companies. Last month it invested an undisclosed amount in Mumbai-based horticulture company Insight & Intellect (InI) Farms. It has also backed Zameen Organic, a marketing company for fairtrade, organic and pesticide-free cotton and Shree Kamdhenu Electronics Pvt Ltd, a company developing technology for the dairy industry.

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