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Indian dairy brand owner turns to Belgian investor for round-B funding

By RJ Whitehead

- Last updated on GMT

Indian dairy brand owner turns to Belgian investor for round-B funding
The parent of Epigamia Greek yoghurt has raised INR900m (US$14m) in funding from a Belgian private equity group.

Drums Food International, which also manufactures the Hokey Pokey ice cream brand and chain, will spend the cash injection on innovation, launching new flavours and increasing production capacity, it said in a statement.

The B-round financing was led by consumer-focused investor Verlinvest and venture capital firm DSG Consumer Partners, with participation from InnoVen Capital.

The stakeholders had previously invested in a series-A round worth INR445m last year, since when the company has expanded its distribution more than five-fold.

"They have been true value-added partners and helped us grow the business with full support and assistance​," Drums chief executive Rohan Mirchandani.

"Partnering again in this round was a no-brainer and with their support we plan to continue expanding our product lines, categories, and geographies.​”

Drums was co-founded by Mirchandani, chef Ganesh Krishnamoorthy, Milap Shah and Uday Thakker in 2008. It developed the concept of mixing ice-creams on a cold stone slab, giving customers the choice to create their own flavours. It also launched Epigamnia yoghurt in 2015 as part of a diversification plan.

Verlinvest executive director Nicholas Cator said he believed that Epigamia addressed the “great growth potential​” for premium dairy products in India “with a compelling proposition​”.

A Brussels-based family office related to Belgian brewer AB InBev has been scouting for investment opportunities in India over the last 10 years, and recently funded education technology start-up Byju’s with US$30m.

It has also co-invested with Indian capital management major Everstone in Sula Vineyards, one of the country’s biggest names in wine production, and pan-Asian food and beverage brand owner F&B Asia Ventures.

Cator recently told Deal Street Asia that he had half an eye on buying out Drums in the long-term, depending on its performance.

We like the dairy space in India… but for these companies, we can ultimately also look at acquisitions, because for us, it makes sense to back a team over the long run and look at potential acquisitions with that team​,” he said.

More from Asia…

Venky’s gains from beef ban despite recent suspension 

India’s ban on the sale of cattle has boosted the corporate fortunes of poultry producer Venky’s, whose stock has rallied by 360% so far this year.


Though the Supreme Court recently suspended a government order that outlawed trade in beef, buffalo and other meats for slaughter, its enactment in May led to soaring factory-gate chicken prices to the tune of 25%

The move, which has also featured a crackdown on illegal meat shops, led to the Hindu-nationalist government being accused of being motivated by religion in a secular country, though the ban’s subsequent suspension has given relief to the multi-billion dollar beef and leather industries.

Despite lacklustre revenue growth over the last five years, Venky’s—which also owns the once-great English football team Blackburn Rovers—has cashed in on the elevated poultry prices, and is shares are expected to sustain their rally regardless of the long-term position of the Supreme Court.

Until the cattle restrictions were suspended, average broiler chicken prices in Mumbai jumped by around 50% to INR100 (US$1.55) per kilo—the first time they have sustained this level over a period of time.

Near-term earnings visibility is high, especially following a sharp rise in poultry prices in the first quarter of FY18. On a two-year investment horizon, assuming trailing multiples are sustained, Venky’s stock can potentially double with a high likelihood of strong gross margins running through till FY19​,” analyst Kotak Securities said in a recent note. 

A year-on-year drop of around 30% in soya prices, and a 10% fall in the cost of corn—both important poultry inputs—have also sharpened the Maharashtra-based business’s bottom line.

Soymeal and corn prices usually rise during the summer months as supplies dwindle, but bumper harvests and sluggish exports this year have kept prices in check. Feed typically makes up two-thirds of poultry production costs.

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