Milk Mantra raises Series D round from Neev Fund, existing investors

Odisha-based dairy startup Milk Mantra Dairy has raised its Series D round of funding led by Neev Fund, which is backed by the country's largest lender State Bank of India, it said in a statement.

The firm’s existing investors Eight Roads Ventures and Aavishkaar also participated in the round, said Srikumar Misra, CEO of Milk Mantra.

Misra said the capital infusion will help Milk Mantra expand operations both organically and inorganically. “With this Series-D round, the company is well poised to expand further in its core markets. We are looking to acquire select high-quality dairy businesses in east India in the near future,” he said.

Last year, VCCircle reported that Milk Mantra was in talks to acquire a small-sized dairy farm to meet the growing demand of branded milk and value-added products in the eastern region. It had earlier bought Sambalpur-based Westernland Dairy Pvt. Ltd.

However, the company did not provide transaction details. Earlier on Tuesday, The Economic Times reported that the dairy firm has raised nearly $10 million (around Rs 66.5 crore) in this round.

As part of the deal, Ambalika Banerjee from Neev Fund and Dhyanesh Shah from Eight Roads will join the board of Milk Mantra, in addition to existing directors Noshir Colah from Aavishkaar and Kabir Narang from Eight Roads.

The company markets its dairy products including packaged milk, probiotic dahi, long-life paneer, mishti dahi, lassi, curcumin-based milkshakes under Milky Moo brand. The firm procures milk from a network of more than 43,000 farmers covering around 800 villages.

Apart from sourcing milk, the company claims to be helping farming community through various initiatives such as facilitating cattle loans, supplying feed supplements, organising veterinary camps, artificial insemination programme, etc.

The firm has also taken the contract manufacturing route to expand its operations beyond Odisha. It has entered into partnerships with two contract manufacturers in Kolkata and Mumbai to produce its probiotic curd and milkshakes. Misra previously said more such partnerships are in the pipeline to reduce transportation cost and tackle lack of robust supply line.

The company had so far restricted its presence to markets in Odisha, Kolkata (West Bengal) and Ranchi and Jamshedpur (Jharkhand). It has also made its presence felt in south India through its milkshakes which are being sold under the brand MooShake.

The company had raised Rs 80 crore ($13.08 million) in its Series C led by Eight Roads Ventures, an investment arm of Fidelity International Ltd, with participation of existing social venture investor Aavishkaar.

Dairy market, other deals

India is the world’s largest producer of milk but the country’s dairy market is highly fragmented and is dominated by local milkmen, regional brands and milk cooperative Amul. The sector has attracted several investors in recent years, and has also seen consolidation moves.

In July last year, India's largest private dairy firm by revenues Kwality Ltd raised Rs 520 crore ($77.4 million) from alternative investment giant Kohlberg Kravis Roberts & Co Ltd (KKR) in a structured finance transaction to boost its consumer facing business.

Prior to that, Karnataka-based Srikrishna Milks Pvt. Ltd raised its first external round of funding from CAC Invest Ltd, an affiliate of the Zurich-based investment firm Capvent.

Besides, several startups have attracted external funding. In November, HR Food Processing Pvt. Ltd, which makes dairy products under the brand name Osam, raised Rs 45 crore (around $6.7 million) in its Series B round of funding.

The dairy sector has also seen a couple of major merger and acquisition deals this year. French giant Groupe Lactalis SA bought the milk products business of Mumbai-listed Anik Industries Ltd for Rs 470 crore in its second acquisition in India in as many years. The deal helped Lactalis go neck and neck with India's top private dairy firm, Hatsun Agro Product Ltd, in terms of revenue.

Lactalis had acquired India's second-largest private dairy firm, Tirumala Milk Products Pvt. Ltd, two years ago from private equity firm Carlyle and its promoters.

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