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Hatsun Agro acquires Eight Road Ventures-backed Milk Mantra

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Hatsun Agro acquires Eight Road Ventures-backed Milk Mantra Milk Mantra has raised nearly $35 million from the likes of Aavishkaar Venture Capital, Fidelity Growth Partners, Neev Fund, Eight Roads Ventures and US-based DFC. Hatsun Agro Product Limited (HAP), a dairy product manufacturer, has announced the acquisition of 100% of the share capital of Milk Mantra for Rs 233 crore ($27.5 million). This acquisition aims to strengthen HAP’s presence in the Eastern India dairy market, particularly in Odisha, where Milk Mantra’s brand, ‘Milky Moo’, has established a strong foothold, the company said in a stock exchange filing. The acquisition will be completed through a series of Share Purchase Agreements (SPAs) and other transaction documents with Milk Mantra’s existing promoters and shareholders. Post acquisition, Milk Mantra will become a wholly-owned subsidiary of HAP. Milk Mantra has raised nearly $35 million from the likes of Aavishkaar Venture Capital, Fidelity Growth Partners, Neev Fund, Eight Roads Ventures and US-based DFC. Established in 2009, Milk Mantra provides a range of products including milk, curd, cottage cheese, buttermilk, and cattle feed, among others. This acquisition seems to be a slump sale, given that Milk Mantra reported an operating revenue of Rs 276.42 crore in FY24, while the acquisition cost is Rs 233 crore. The Bhubaneshwar-based company also recorded a profit of Rs 9.78 crore in the last fiscal year. However, its revenue has remained nearly stagnant over the past three fiscal years. Milky Mist, a well-established company, reported revenue of Rs 1,907.21 crore in FY24, positioning itself as one of the leading players in the D2C dairy brand sector. According to media reports, Milky Mist is also planning an initial public offering (IPO) this year, aiming to raise approximately Rs 2,000 crores through the listing. Milk Mantra also faces competition from new age companies like Country Delight, Akshayakalpa, and Sid’s Farm. ‘Grow or die’ seems to be the mantra that sank Milk Mantra, as its inability to break out of the rut saw it sold for a valuation that is less than 1x sales, despite profitability to boot. It also indicates a high share of liquid milk in the portfolio, where margins again are severely limited till the time you try a stunt like A2 milk or other options and get away with it long enough. For the publicly listed, Chennai-based Hatsun, the acquisition would seem to be a decently valued fit for its portfolio, improving its footprint significantly at an acceptable cost. Which explains the little movement in the stock price post announcement as well.