Milk Mantra scoops up $10 million in debt financing from US-backed DFCDairy foods startup Milk Mantra has raised $10 million (about Rs 76 crore) in structured debt financing from US International Development Finance Corporation (DFC), the Bhubaneswar-headquartered company announced on Friday.

Milk Mantra, which is one of the relatively few prominent startups to have emerged from the eastern state of Odisha, already counts the likes of Eight Roads, the investment arm of Fidelity, impact investment firm Aavishkaar and Neev Fund, among its largest institutional investors, having raised an estimated $35 million in equity financing till date.

“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,” Ajay Rao, director of DFC’s social enterprise finance team, said in a prepared statement.

Additionally, DFC has also approved $371,000 in technical assistance to increase the impact of its loan to Milk Mantra, according to the statement.

Founded in 2009 by husband-wife duo and Xavier Institute of Management alums Srikumar and Rashima Misra, Milk Mantra operates two flagship mass premium brands – Milky Moo and MooShake – under which it produces a range of fresh dairy products, such as pure milk, probiotic dahi, paneer, lassis, buttermilk, sweet curd, desserts and milkshakes.

The company competes with a host of domestic and international dairy giants, such as Amul and Lactalis, among others.

Proceeds from the debt financing round will be used by Milk Mantra towards expanding capacity, across product lines, in its two existing plants. The company is also in the process of acquiring a new plant asset in Kolkata, as part of its broader inorganic growth plans.

The company closed its first acquisition, after it bought Sambalpur-based Westernland Dairy for about Rs 10 crore, in 2014.

“In the last two years, we have been a bit muted, as we have been focusing on our core operations…We will also be investing in expanding our entire sourcing network, which consists of about 63,000 farmers, in terms of infrastructure, technology and geographically as well,” Srikumar Misra, chief executive of Milk Mantra, told ET.

The company plans to ramp up the number of daily pouring farmers, which currently stands at about 15,000, to 25,000 over the next 2-3 years, while also increasing the overall network of farmers to over 100,000, he said.

According to Misra, who, prior to co-founding Milk Mantra, was the London-based director of mergers and acquisitions for Tata Tea and Tetley Group, the company will expand the capacity of its main plant in coastal Odisha, which currently has a capacity of about 3 lakh litres across product lines, and create a separate new yoghurt plant, to expand it from 20,000 kgs, to 50,000 kgs a day.

The company’s second plant in western Odisha, which has capacity of about 70,000-100,000 litres per day, will be expanded to about 2 lakh litres per day, the CEO said, adding that the company expects to be at its pre-Covid-19 sales by the end of the second-quarter of the current financial year.

“We expect our Q4 numbers to be robust. We are getting used to the ongoing situation, created by the Covid-19 pandemic. It’s not going to go away any time soon, and we have been preparing for that,” Misra said.

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