Bhubaneswar: U.S. International Development Finance Corporation (DFC) has committed a US$10 million loan to Milk Mantra, a new age dairy foods startup in India which was set up to solve the large problem of trust deficit between consumers and food in the large $50 billion dairy industry in India. DFC has also approved $371,000 (INR2.8cr) in technical assistance to increase the impact of its loan to Milk Mantra. The 80 cr investment by the US DFC is the first direct and substantial investment into Odisha. US DFC as an esteemed organisation finances actionable solutions to developmental challenges across the globe. This investment potentially opens up the opportunity to attract more investment from US DFC into not only Odisha but also other neighbouring states in the east.
Milk Mantra is a socially responsible company that not only impacts thousands of farmers in its ethical sourcing model but has also become one of the fastest-growing premium dairy food brands in India, focused on the eastern region, especially Odisha.
With this investment, Milk Mantra has raised nearly 300crs which has been invested and will continue to be largely invested into Odisha with a strong focus on empowering the local dairy farming community and creating indirect jobs. The company has been instrumental in building and motivating a start-up ecosystem in Odisha and this new investment from the US will further support their efforts. In the past 8 years, Milk Mantra has directly put more than 500crs in the hands of farmers in Odisha via its ethical milk sourcing program.
Milk Mantra’s ongoing efforts to support smallholder farmers and produce and sell dairy products of superior quality with an end to end technology stack will receive a boost and further solidify the company’s leadership position while supporting food security in the country.
DFC has also approved technical assistance amounting to $371,000 to support the company’s agriculture extension services and ethical milk sourcing program. The main focus of this would be to build out Milk Mantra’s digital financial services platform for its network of farmers. This platform will drive financial inclusion for farmers, especially women farmers. It may be noted that there are nearly 100 million dairy farmers in India with a significant proportion being women.
Talking about the funding, Srikumar Misra, Founder- Milk Mantra said- “I am excited to bring on board a financial partner like DFC. At Milk Mantra, we align with DFC’s focus on development impact. We have developed an ethical sourcing model that looks to revitalize rural economies, increase farmers yields, and provide farmers, their families, and their communities with growth opportunities while we scale up a mass-premium food brand that’s nourishing the lives of consumer families.”
“Startups that are able to reach a stage of sustainable cash flow and EBITDA will have the ability to access not just equity funding, but also different layers of debt funding. In these challenging times, when debt liquidity in India is almost at a freeze, for a premium foods consumer startup like Milk Mantra to raise a substantial debt in the form of external commercial borrowing is note worthy. This leverage will in fact conversely enable the company to raise large amounts of equity capital to fund its inorganic growth plans further down the line. Milk Mantra has already raised four rounds of capital and has Eight Roads, Aavishkaar and Neev Fund on its cap table. It may be noted that Milk Mantra went on to become India’s first agri-foods startup to be VC funded when it raised its Series A back in 2011. “ added Srikumar Misra.
Ajay Rao, Director of DFC’s Social Enterprise Finance Team, who led this transaction, said, “We have been very impressed by the Milk Mantra team and its efforts to build a socially responsible business that empowers smallholder farmers while strengthening food security. We are excited about our collaboration with Milk Mantra, which will help the company scale up its operations by supporting expanded processing and sourcing capacity.”
Setuka Partners LLP based out of Washington DC, led by Aman Khanna, was the exclusive advisor to this transaction.
As India’s organized milk market is slated to reach $10 billion by 2025, private dairies are expected to play a central role. Over the last 8 years, Milk Mantra has sustainably impacted over 60,000 farmer families, helping them increase productivity by 31%, and incomes by 70%. Founded in 2009, Milk Mantra addresses the problem of trust deficit between consumers and food, arising out of opaque supply chains and adulterated food. Milk Mantra solves this problem in two ways – first by building a premium and innovative food brand and scalable business, and the second by creating an ethical sourcing network at scale. The company’s implementation success can be seen on two parameters: ‘commercially’ how the revenues have scaled from $2 million in 2013 to $32 million in 2020, reaching more than 300,000 households every day, and ‘consciously’ how its farmers have grown to more than 60,000. Milk Mantra also has other marquee equity investors like Eight Roads (Fidelity), Aavishkaar, and Neev Fund.
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