Table of content
Dindigul Farm Products Introduction
Dindigul Farm Products, also known as EnNutrica, is a company planning an initial public offering (IPO) to raise capital
Brief about Dindigul Farm Products
Summary of the business of Dindigul Farm Products
Established in 2010, are primarily engaged in processing of whole milk and skimmed milk to make dairy ingredients including, milk protein concentrates, skimmed milk powder, dairy whitener, whey protein concentrate, milk whey powder, casein, unbranded cream and butter and fat filled powders for infant milk formula. Our processing facility is situated at Dindigul and is spread over 15 acres.
History of Dindigul Farm Products
Company was incorporated as ‘Dindigul Farm Product Private Limited’, Tamil Nadu, Coimbatore on September 29, 2010. The name of our Company was subsequently changed to ‘Dindigul Farm Product Limited’, Pursuant to the share purchase on June 30, 2022, by Indrayani Biotech Limited from some of then existing shareholders, IBL acquired 7,33,482 Equity Shares constituting 51.00% of the then existing paid-up equity share capital. As on date, IBL holds 42.59% of the paid-up equity share capital
Promoters & Board of Directors of Dindigul Farm Products
Promoters are R Raja sekaran, Raja dharshini Rajasekaran and Indrayani Biotech Limited
| Name | Designation |
| R Rajasekaran | Chairman & Managing Director |
| Raja dharshini Rajasekaran | Non-Executive Director |
| Nangavaram Mahadevan Ranganathan | Independent Director |
| Bokara Nagarajan Padmaja Priyadarshini | Independent Director |
| Rajappan Ravi | Non-Executive and Non-Independent Director |
Share Holding pattern of Dindigul Farm Products
| Sr. No. | Names | Percentage of pre- Issue Equity Share capital (%) |
| Promoters (A) | ||
| 1. | R Rajasekaran | 10.80% |
| 2. | Rajadharshini Rajasekaran | 8.02% |
| 3. | Indrayani Biotech Limited | 42.59% |
| Sub-total (A) | 61.41% | |
| Promoter Group (B) | ||
| 4. | Rajasekaran Suriyaprabha | 6.54% |
| 5. | Sarayu | 4.12% |
| 6. | S R Srinivasan | 1.27% |
| 7. | Ravi Chandran Ranganathan | 7.33% |
| Sub-total (B) | 19.25% | |
| 8 | Public | 19.34% |
Qualitative Factors of Dindigul Farm Products
- Diverse product basket.
- Milk procurement process.
- State of the art infrastructure
- Experienced Promoters and Management Team
Strategy of Dindigul Farm Products
- Continue to invest in our manufacturing capabilities thereby expanding our offerings
- Expand presence across geographies and diversify our customer base
- Enhance brand visibility
- Focus on increasing operational efficiencies to improve returns
Industry Outlook
The Dairy sector in India has grown substantially over the years. As a result of prudent policy interventions, India ranks first among the world’s milk producing nations, achieving an annual production of 221.06 million tonnes during the year 2021-22 as compared to 209.96 million tonnes during 2020-21 recording a growth rate of 5.29%. FAO Food Outlook (November 2022) reported 1.34% increase in world milk production from 912.6 million tonnes in 2020 to 924.8 million tonnes in 2021 (estimates). This represents a sustained growth in the availability of milk and milk products for the growing population.
Dairying has become an important secondary source of income for millions of rural families and has assumed the most important role in providing employment and income generating opportunities particularly for women and marginal farmers. The per capita availability of milk has reached a level of 444 grams per day during the year 2021-22 which is more than the world average of around 320 grams per day in 2021 (estimates) (Food Outlook Nov’22). Most of the milk in the country is produced by small, marginal farmers and landless labourers.
India, about 46% of the milk produced is either consumed at the producer level or sold to nonproducers in the rural area, he balance 54% of the milk is available for sale to organised and unorganised players. Organised sector comprise of Government, Producers’ Owned Institutions (Milk Cooperatives & Producer Companies) and Private players which provides fair and transparent system of milk collection round the year at the village level. Unorganized/informal sector involves local milkman, dudhias, contractors etc. and they are mostly found to be opportunistic, as there is no uniformity of milk price paid to producers and it varies depending upon the situation. Possibility of adulteration of milk is higher among these unorganized groups. In the areas where competition is high and presence of formal sector is strong, they generally give higher prices and at the same time, they don’t offer remunerative prices to the producers where organized sector is not present.
The Dairy sector in India has grown substantially over the years. As a result of prudent policy interventions, India ranks first among the world’s milk producing nations, achieving an annual production of 221.06 million tonnes during the year 2021-22 as compared to 209.96 million tonnes during 2020-21 recording a growth rate of 5.29%. FAO Food Outlook (November 2022) reported 1.34% increase in world milk production from 912.6 million tonnes in 2020 to 924.8 million tonnes in 2021 (estimates). This represents a sustained growth in the availability of milk and milk products for the growing population.
SHARE OF MILK PRODUCTION AND SUPPLY
India, about 46% of the milk produced is either consumed at the producer level or sold to nonproducers in the rural area, he balance 54% of the milk is available for sale to organised and unorganised players. Organised sector comprise of Government, Producers’ Owned Institutions (Milk Cooperatives & Producer Companies) and Private players which provides fair and transparent system of milk collection round the year at the village level. Unorganized/informal sector involves local milkman, dudhias, contractors etc. and they are mostly found to be opportunistic, as there is no uniformity of milk price paid to producers and it varies depending upon the situation. Possibility of adulteration of milk is higher among these unorganized groups. In the areas where competition is high and presence of formal sector is strong, they generally give higher prices and at the same time, they don’t offer remunerative prices to the producers where organized sector is not present.
DEMAND
The drivers of demand for milk in India are – population growth, urbanisation and increasing per capita income. The consumption of milk has been rising, commensurate with the increase in purchasing power of people, changing food habits & lifestyles and demographic growth. Milk with its varied benefits is the only source of animal protein for the largely vegetarian population of the country. Further, factors such as increased consumer interest in high protein diets and increasing awareness & availability of dairy products through channels such as organised retail chain are also driving this growth.
ROLE OF DAIRY DIVISION
- Increase in livestock production and productivity and increasing share of organised sector through improvement in procurement, processing and marketing of milk and milk products.
- Trade policy relating to milk & milk products.
- Monitoring of milk situation and Policy decisions to maintain supply of milk & milk products to the consumers and reasonable prices for milk to the milk producers.
- Approval of schemes/projects, review of progress, re-appropriation of physical & financial targets, audit and inspection, scheme/project governance, signing of loan agreements with external/ domestic agencies, hedging liability, repayment of external loans etc.
- Quality improvement of milk and milk products in compliance to FSSAI Act.
- Formulation of national action plan and policy for implementation.
- Collection and updation of requisite data for suitable policy interventions
Business Data of Dindigul Farm Products
Verticals of Dindigul Farm Products
- Products for New Age Nutrition, Protein Fortification, Functional, Taste and Texture Enhancing Applications
- Products for FAT and SNF standardisation
- Products for Baking and SMP Replacement Applications
- Products for Legacy Nutrition application containing only Casein
- Products for Infant Nutrition resembling the human milk using medium chain tri glyceride fat technologies
- Butter
Revenue contribution from Geography presence of Dindigul Farm Products
| Geograp hy | For the period ended December 23, 2023 | Fiscal Year Ended March 31, | ||||||
| 2023 | 2022 | 2021 | ||||||
| Amount (₹ in lakhs) | (% of Revenue from Operati ons) | Amount (₹ in lakhs) | (% of Revenue from Operati ons) | Amount (₹ in lakhs) | (% of Revenue from Operati ons) | Amount (₹ in lakhs) | (% of Revenue from Operati ons) | |
| Domestic | 6,772.72 | 98.52% | 7,496.53 | 91.89% | 2,533.55 | 89.47% | 1,569.48 | 89.02% |
| International | 97.97 | 1.43% | 579.08 | 7.10% | 161.59 | 5.71% | 5.55 | 0.31% |
| Miscellaneous sales | 4.06 | 0.06% | 16.05 | 0.20% | 3.55 | 0.13% | 0.52 | 0.03% |
| Processin g Charges | – | – | 66.09 | 0.81% | 133.18 | 4.70% | 187.57 | 10.64% |
| Total revenue from operation s | 6,874.75 | 100.00% | 8,157.74 | 100.00% | 2,831.88 | 100.00% | 1,763.13 | 100.00% |
Customer dependency of Dindigul Farm Products
| Particulars | Top Customers as a percentage (%) of revenues | |||
| 23-Dec-23 | 31-Mar-23 | 31-Mar-22 | 31-Mar-21 | |
| Top 1 | 26.55% | 16.22% | 15.56% | 14.24% |
| Top 3 | 42.38% | 43.10% | 36.49% | 42.52% |
| Top 5 | 53.13% | 56.44% | 50.07% | 59.47% |
| Top 10 | 70.56% | 79.36% | 73.11% | 74.87% |
Supplier dependency of Dindigul Farm Products
| Particulars | Top Suppliers as a percentage (%) of Purchase | |||
| 23-Dec-23 | 31-Mar-23 | 31-Mar-22 | 31-Mar-21 | |
| Top 1 | 54.66% | 67.15% | 58.47% | 92.51% |
| Top 3 | 97.32% | 89.83% | 70.02% | 94.36% |
| Top 5 | 98.53% | 97.22% | 76.90% | 95.63% |
| Top 10 | 99.53% | 98.90% | 88.50% | 97.22% |
Machinery/Plants/Factory of Dindigul Farm Products
Manufacturing infrastructure is a key driver of our business. Our current facility is situated at Dindigul and spread over more than 15 acres. processing facility is equipped with machinery and equipment like Micro Filtration, Ultra Filtration, Nano Filtration, reverse Osmosis, Evaporation, Crystallization and Drying processes and Pasteurization Techniques as followed by the International standards for Dairy processing. We have sourced some of our key machineries from international reputed dairy technology brands. We further intends to start with production line of Butter with our planned capital investment. Company have a capacity of 3 lakh litres per day Effluent Treatment system and 3 Lakh litres per day water treatment facility to enable us to recycle 50 % of the water content from milk.
Utilization
The following tables sets forth information relating to the annual utilisable capacity, actual production and capacity utilization of our major products at our processing facility as of, and for the period ended December 23, 2023 and as of, and for the fiscal year ended March 31, 2023, March 31, 2022 and March 31, 2021. These details are certified by B. Devaraj, Chartered Engineer vide his certificate dated December 28, 2023
(in metric tonnes)
| Particulars | As of, and for the period ended December 23, 2023 | As of, and for year ended March 31, | ||||||||||
| 2023 | 2022 | 2021 | ||||||||||
| Utilisa ble capaci ty for 266days | Actual Produc tion | Capaci ty Utilisat ion % | Utilisa ble capaci ty | Actual Produc tion | Capaci ty Utilisat ion % | Utilisa ble capaci ty | Actual Produc tion | Capaci ty Utilisat ion % | Utilisa ble capaci ty | Actual Produc tion | Capaci ty Utilisat ion % | |
| Skimme d Milk Powder | 714 | 684.40 | 95.83% | 784 | 539.17 | 68.77% | 784 | 306.00 | 39.03% | 784 | 748 | 95.41% |
| Casein | 619 | 169.03 | 27.29% | 680 | 465.00 | 68.38% | 680 | 151.00 | 22.21% | 680 | 37.63 | 5.53% |
| WHEYPowder A | 842 | 264.12 | 31.38% | 924 | 735.54 | 79.60% | 924 | 206.00 | 22.29% | 924 | 73.43 | 7.95% |
| Milk Protein Concent rate | 131 | 71.32% | 54.37% | 144 | 87.43 | 60.72% | 144 | 93.00 | 64.58% | 144 | 116.00 | 80.56% |
| WHEYPowder S | 144 | 101.07 | 70.04% | 158 | 126.00 | 79.55% | 158 | 108.00 | 68.18% | 158 | 154.40 | 97.47% |
| Dairy Whitene r | 152 | 77.49 | 51.00% | 167 | 53.98 | 32.36% | 167 | 47.00 | 28.18% | 167 | 42.30 | 25.36% |
| Sodium Casenat e | 14 | 13.05 | 94.25% | 15 | 8.58 | 56.45% | 15 | 6.17 | 40.59% | 15 | 0.50 | 3.29% |
| Fat Filled Powder s | 60 | 48.71 | 81.02% | 66 | 39.95 | 60.53% | 66 | 34.46 | 52.21% | 66 | 32.85 | 49.77% |
| Total | 2,677 | 1,429.19 | 53.39% | 2,938 | 2,055.65 | 69.96% | 2,938 | 951.63 | 32.39% | 2,938 | 1205.11 | 41.01% |
Customers
Company provide products mainly to nutrition based companies, dairy industry, ice cream industry and baking industry
Key clients
- Healt HK ART
- SYMEGA
- Himalaya
- Zeon
- Raaj Milk
- Elite
- Zenova
- Synthite
- Suguna
- SameSky
- McRennett
- Epigamia
- Clarion casein
- SARADA KESARI
- Avani Food Products
- Pro Athlete
- Schreiber
- Dynamix
Peer company comparison
| Name of the company | Standalone / Consolidated | Face Value (₹) | Current Market Price (₹) | EPS (₹)Diluted | P/E Ratio | RoNW (%) | NAV per Equity Share (₹) | Revenue from operations(₹ in Lakhs) |
| Dindigul Farm Products Limited | Standalone | 10.00 | 54 | 3.59 | 15 | NA | -11.39 | 8,157.74 |
| Peer Group | ||||||||
| Dodla Dairy Limited | Standalone | 10.00 | 465.00 | 15.84 | 29.36 | 10.76% | 148.44 | 258,412.40 |
| Parag Milk Foods Limited | Standalone | 10.00 | 73.20 | 6.34 | 11.55 | 8.37% | 69.81 | 285,320.00 |
| Modern Dairies Limited | Standalone | 10.00 | 18.81 | 5.21 | 3.61 | -12.64% | -41.06 | 21,608.13 |
Holding company
Indrayani Biotech Limited is our Holding Company by virtue of their ability to control the composition of our board of directors
Associate company
Company have an associate entity G K Wind Farm wherein our Company has acquired 26% in the partnership firm.
Group companies
- A R Dairy Food Private Limited
- Nellai Farm Product Private Limited
Business risk factors
- Company have incurred net losses during Fiscal 2022 and Fiscal 2021 and our inability to achieve profitability in future may have an adverse effect on our operations.
- Real or perceived product contamination could result in reduced sales, product liability and damage to our reputation, and subject us to regulatory action.
- Company do not receive firm and long-term volume purchase commitments from our customers. If our customers choose not to renew their supply contracts with us or continue to place orders with us, our business and results of operations will be adversely affected.
- Company derive a significant portion of our revenue from certain customers, and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for our products could adversely affect our business, results of operations, financial condition and cash flows.
- Company generate our major portion of sales from our operations in certain geographical regions especially Tamil Nadu, Gujarat and Himachal Pradesh. Any adverse developments affecting our operations in these regions could have an adverse impact on our revenue and results of operations.
- For the period ended December 23, 2023, and for the year ended March 31, 2023, March 31, 2022 and March 31, 2021, revenue from our customers situated in Tamil Nadu, Gujarat and Himachal Pradesh contributed 69.05%, 70.00%, 36.45% and 24.76% of total revenue from operations as per Restated Financial Statements
- Improper storage, processing or handling of whole milk, skimmed milk and our dairy products may result in spoilage of, and damage to, such whole milk, skimmed milk and dairy products which may adversely affect our business prospects, results of operations and financial condition.
- Company business is subject to seasonal volatility which may contribute to fluctuations in our results of operations and financial condition.
- Group Companies are authorised to engaged in activities which is similar to our business. This may be a potential source of conflict of interest for us and which may have an adverse effect on our business, financial condition and results of operations
- We have experienced negative cash flows in the period ended December 23, 2023, and in Fiscal 2023, Fiscal 2022 and Fiscal 2021.
(₹ in lakhs)
| Particulars | For the period ended December 23 | For the fiscal year ended March 31, | ||
| 2023 | 2023 | 2022 | 2021 | |
| Net cash generated from/(used in)operating activities | 112.06 | 630.30 | 97.63 | 306.21 |
| Net cash (used in) investing activities | (68.37) | (262.82) | 229.44 | (72.96) |
| Net cash generated from/(used in) financing activities | 1,092.29 | (365.97) | (383.21) | (234.45) |
Competition
We compete with organized and as well as unorganized players in the industry with better financial position, market share, product ranges, human and other resources. There are no entry barriers in our industry which puts us to the threat of competition from new entrants as there are numerous players operating in the industry. The dairy industry in India is highly fragmented and the main challenges lies in quality, reliability, pricing and goodwill.
Many of our competitors have substantially large capital base and resources than we do and offer broader range of products and services. We believe that our ability to compete effectively is primarily dependent on ensuring consistent product quality at competitive prices, thereby strengthening our brand over the years. We believe that our cost effective and our product offerings puts us ahead in dealing with all challenges and expectations by our customers. We are located in proximity to seaport to link to ASEAN markets. Also, our geographical raw material procurement strategy gives us an edge when raw material quality is considered giving us a better vantage point in domestic markets.
Financials
Key Financial Ratios
| Particulars | 23-12-2023 | 31-03-2023 | 31-03-2022 | 31-03-2021 | Variance 1 | Variance 2 |
| Current Ratio | 1.33 | 0.60 | 0.45 | 0.57 | 33% | -20% |
| Debt-Equity Ratio | 4.63 | -1.21 | -0.91 | -1.23 | 33% | -26% |
| Debt Service Coverage Ratio | 5.81 | 2.18 | -0.07 | -0.21 | -3253% | -67% |
| Return on Equity Ratio | Negative | Negative | Negative | Negative | – | – |
| Inventory Turnover Ratio | 6.60 | 11.83 | 4.61 | 2.44 | 157% | 89% |
| Trade Receivable Turnover Ratio | 32.22 | 31.05 | 8.69 | 5.34 | 257% | 63% |
| Trade Payable Turnover Ratio | 2.28 | 3.26 | 1.02 | 0.71 | 219% | 43% |
| Net Capital Turnover Ratio | 7.23 | -8.08 | -1.93 | -1.64 | 318% | 18% |
| Net Profit Ratio | 0.09 | 0.06 | -0.15 | -0.25 | -143% | -42% |
| Return on Capital Employed | 0.62 | Negative | Negative | Negative | – | – |
| Return on Investment | NA | NA | NA | NA | NA | NA |
Profit & Loss
(₹ in Lakhs)
| Particulars | For the Period / Year ended on | |||
| 23-Dec-23 | 31-Mar-23 | 31-Mar-22 | 31-Mar-21 | |
| Revenue from Operations | 6,874.75 | 8,157.74 | 2,831.88 | 1,763.13 |
| Growth in Revenue from Operations(%) | – | 188.07% | 60.62% | – |
| Gross Profit | 2,369.60 | 2,155.88 | 574.01 | 408.67 |
| Gross Profit Margin (%) | 34.47% | 26.43% | 20.27% | 23.18% |
| EBITDA | 934.76 | 927.28 | -153.34 | -83.93 |
| EBITDA Margin (%) | 13.60% | 11.37% | -5.41% | -4.76% |
| Profit After Tax | 588.89 | 516.67 | -416.58 | -462.02 |
| PAT Margin (%) | 8.57% | 6.33% | -14.71% | -26.20% |
| Net Fixed Asset Turnover (In Times) | 5.62 | 6.57 | 2.17 | 1.19 |
| Operating Cash Flows | 112.06 | 630.30 | 97.63 | 306.21 |
Cash Flow
| Particulars | For the period ended December 23 | For the fiscal year ended March 31, | ||
| 2023 | 2023 | 2022 | 2021 | |
| Net cash generated from/(used in)operating activities | 112.06 | 630.30 | 97.63 | 306.21 |
| Net cash (used in) investing activities | (68.37) | (262.82) | 229.44 | (72.96) |
| Net cash generated from/(used in)financing activities | 1,092.29 | (365.97) | (383.21) | (234.45) |
Capital structure
(Rs. In Lakhs)
| S No | Particulars | For the period ended 23rd December, 2023 | For the year ended 31st March, 2023 |
| A | Debt | ||
| a) Short – term debt | 465 | 437 | |
| b) Long – term debt | 1,799 | 1,961 | |
| Total Debt | 2,264 | 2,398 | |
| B | Net Worth | ||
| a) Equity share capital | 1,753 | 1,438 | |
| b) Reserves & Surplus | (1,359) | (3,077) | |
| Total Equity (Net Worth) | 394 | (1,638) | |
| C | Long term Debt/Equity | 5.75 | –1.46 |
SWOT
- Strengths:
- Profitability Surge: Despite challenges, Dindigul Farm Products has seen a surge in profitability.
- Specialization in Dairy Processing: The company specializes in dairy products, which can be a competitive advantage.
- Weaknesses:
- 9-Month Revenue Figures Fell Short: While overall revenue grew, the 9-month figures didn’t meet expectations.
- Increased Liabilities and Debt-Equity Ratio: The company’s reliance on debt has increased.
- Opportunities:
- Potential Business Growth: Despite past losses, there’s an opportunity for future profits.
- Market Expansion: Exploring new markets or product lines could be beneficial.
- Threats:
- Market Challenges and COVID-19 Impact: Past losses were influenced by market challenges and the pandemic.
- Rising Expenses: Uncertain future profits due to increasing expenses.
- Raw Material Sourcing and Product Liability Risks: Reliance on unsourced raw materials poses risks
IPO Details
Dindigul Farm Products (EnNutrica) IPO Details
| Field | Details |
|---|---|
| Issue Type | BSE SME IPO |
| Issue Size | ₹34.83 Crore |
| Price Band | ₹51 – ₹54 per Share |
| Market Lot | 2,000 Shares |
| Minimum Investment | ₹1,08,000 (at Upper Price Band) |
| Open Date | June 20, 2024 |
| Close Date | June 24, 2024 |
Why need of funds
| Particulars | Estimated amount (₹ in lakhs) |
| Funding Capital Expenditure | 1,222.58 |
| Working Capital Requirements | 1,384.00 |
| General corporate purposes |
Litigation involved
Please refer DRHP page no.s 189-192
Gray Market Premium
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I’m always learning something new from your blog.
Thanks for the comprehensive guide.