Baba Food Processing India Limited IPO

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1. Manufacturing: The company operates a manufacturing unit in Ranchi, India, with two distinct divisions: the high-fiber whole wheat atta division and the refined flour division. In the former, they produce whole wheat atta using advanced Buhler’s Swiss Technology Pesa Mill. In the latter, they manufacture refined flour (maida), tandoori atta, and semolina flour (sooji) using an ultra-modern Buhler’s Swiss Technology Roller Flour Mill. Additionally, they commercialize by-products and waste materials like wheat bran as cattle feed and fish feed, emphasizing a zero-waste and zero-discharge manufacturing process.

2. Brands: The company markets and sells its products under the brand names ‘Panchakanya’ and ‘Bhajan.’ They also sell chickpea flour (besan) and roasted gram flour (sattu) sourced from third-party manufacturers. The company plans to expand its product portfolio by manufacturing chickpea flour (besan) and roasted gram flour (sattu) in their existing manufacturing unit.

3. Leadership: The company is led by Yogesh Kumar Sahu, an experienced professional in the agro trading and milling business. He previously worked with a partnership firm named ‘M/s. Baba Flour Mill’ and played a key role in establishing the company.

4. Geographic Expansion: While currently operating in Jharkhand, Odisha, and West Bengal, the company intends to expand its business operations across India. This includes setting up an ultra-modern roller flour mill and chakki whole wheat atta mill in Patna and broadening its market and customer base to Bihar, West Bengal, Andhra Pradesh, the North East Region, Odisha, and Jharkhand. They’ve even incorporated a wholly-owned subsidiary, Panchakanya Foods Private Limited, for this purpose, with plans to invest in its expansion.

5. Marketing Network: The company has a diverse customer base categorized into five groups:

a) Institutional Manufacturers: They supply products to renowned FMCG companies and food processing companies, including franchises offered by established FMCG companies, to be used as raw materials for finished products.

b) Modern Traders: The company sells its products through modern supermarkets like ‘Reliance SMART’ and ‘JIO Mart,’ which offer convenience and quality to customers.

c) Dealers: A network of dealers is used to penetrate local markets, particularly in Jharkhand and Odisha, and establish a brand presence.

d) Wholesalers: The company directly sells products to wholesalers and large-scale retailers in Jharkhand, Odisha, and West Bengal.

e) Retailers: Products are supplied directly to local retailers in Jharkhand, without intermediaries, ensuring higher profit margins and customer feedback.

6. Future Investments: The company intends to use a portion of the proceeds from a new issue to invest in its subsidiary for expanding the manufacturing unit and market base.

Objects of the Baba Food Processing India Limited IPO:

The Company proposes to utilize the Net Proceeds from the Issue towards the following objects: 1. Investment in our wholly owned Subsidiary, Panchakanya Foods Private Limited ("PFPL") for setting up a manufacturing unit in Patna, Bihar, comprising an ultra-modern highly automated roller flour mill and chakki whole wheat atta mill (hereinafter referred as the "Project"); 2. Funding purchase of machinery for manufacturing Chickpea Flour (Besan) and Roasted Gram Flour (Sattu) in our existing manufacturing unit in Ranchi; 3. Funding working capital requirements of the Company; 4. Prepayment or repayment of all or a portion of certain outstanding unsecured borrowings availed by the Company; and 5. General Corporate Purposes.
DRHP of Baba Food Processing India Limited IPO
RHP of Baba Food Processing India Limited IPO

Baba Food Processing India Limited IPO Details:

Open Date: Nov 03 2023
Close Date: Nov 07 2023
Total Shares: 4,342,105
Face Value: ₹ 10 Per Equity Share
Issue Type: Book Built Issue IPO
Issue Size: 33 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 72 - 76 Per Equity Share
Listing At: NSE Emerge
Listing Date: Nov 16 2023

Promoters And Management:

i. Yogesh Kumar Sahu, aged 50 years, is the Promoter and Managing Director of the Company. He holds a bachelor's degree in arts from Government College, Rourkela. He has an experience of over a decade in the agro trading and milling. Prior to incorporation of the Company, he was associated with a partnership firm under the name ‘M/s. Baba Flour Mills’, in the capacity of a partner, which was engaged in the business of trading of agro-commodities and milling of rice and grains. He has an experience of twenty years in the business of manufacturing, milling and trading of agro-commodities. Presently, he head the sales and marketing division of the Company and is responsible for overall management of the Company. ii. Rajesh Agrawal, aged 47 years, is the Whole-time Director and Chief Financial Officer of the Company. He has attended Tribhuvan University, Kathmandu to pursue bachelor’s degree in commerce from. He is a fellow member of the Institute of Chartered Accountants of India. He has an experience of twenty three years in the field of audit, due diligence, accounting, taxation, finance and management. Presently, he is responsible for the accounting, finance and taxation functions of the Company iii. Binita Sahu, aged 40 years, is the Promoter and Non-Executive Director of the Company. She holds attended Baldeo Sahu Mahavidyalaya to pursue bachelor’s degree in commerce. She has experience of six years in the field of management and administration. She is also actively involved in social welfare activities.

Financials of Baba Food Processing India Limited IPO:

Particulars ( In Lakhs )
2021
2022
2023
3M-FY24
Revenue from Operations 10,655 9,711 18,954 4,135
Other Income 114 45 10 4
Total Revenue 10,770 9,756 18,964 4,139
Cost of Material Consumed 8,767 8,060 15,665 3,387
Purchase 133 74 324 32
Change in Inventories -35 -200 103 -76
Employee benefits expenses 311 299 422 120
Other Expenses 1,021 990 1,343 295
EBITDA 572 533 1,108 381
Depreciation & Amortisation 139 116 163 44
Finance Cost 124 136 246 60
EBIT 434 417 944 337
OPM (%) 5.31% 5.47% 5.84% 9.20%
PBT 309 281 698 276
Tax 111 80 194 84
PAT 198.1 201 503 192
NPM (%) 1.84% 2.06% 2.65% 4.65%
No.of Shares 163.42 163.42 163.42 163.42
EPS 1.21 1.23 3.08 1.17

Comparison With Peers:

Name of the Company Revenue (In Crore) PAT (In Crore) EPS ( in Rs) P/E CMP Mcap (In Crore)
Baba Food Processing (India) Limited 190 5.03 3.08 24.7 76 124
Megastar Foods Ltd 268 10 9.62 38.5 293 293
* All the data is as per FY23.

Recommendation on Baba Food Processing India Limited IPO:

Review and Recommendation of Baba Food Procession SME IPO by IZ team is 4/10

A) Introduction

Baba Food Processing India Limited is a prominent player in the food processing sector, with a manufacturing unit in Ranchi, India. 
The company is planning to go public with its Initial Public Offering (IPO) slated to open on November 3, 2023, and close on November 7, 2023. 
Here’s a comprehensive analysis to offer insights into the company’s business model, leadership, financial health, and IPO details.

B) Business Model

1. Manufacturing:
The company operates two distinct divisions—high-fiber whole wheat atta and refined flour. 
Employing state-of-the-art Buhler’s Swiss Technology, they emphasize a zero-waste and zero-discharge manufacturing process by commercializing by-products like wheat bran as cattle and fish feed. 2. Brands: 
Baba Food markets its products under ‘Panchakanya’ and ‘Bhajan’ brands. They also retail chickpea flour (besan) and roasted gram flour (sattu) sourced from third-party manufacturers. 3. Geographic Expansion: 
Currently operational in Jharkhand, Odisha, and West Bengal, the company aims to broaden its reach to Bihar, Andhra Pradesh, the North East Region, and more.

C) Marketing Network

The company employs a diversified marketing strategy, targeting institutional manufacturers, modern traders, dealers, wholesalers, and retailers.

D) Leadership:

Led by Yogesh Kumar Sahu, the company benefits from his decades-long experience in agro trading and milling. The management also includes professionals like Rajesh Agrawal, the CFO, and Binita Sahu, a Non-Executive Director.

E) Financial Health

The company has shown a steady revenue growth, with a total revenue of 189 Cr in 2023. 
The Net Profit Margin (NPM) has improved to 2.65% in 2023 from 1.84% in 2021.

F) Use of Funds

1. Setting up a manufacturing unit in Patna. 2. Purchase of machinery for Chickpea Flour and Roasted Gram Flour production. 3. Funding working capital requirements. 4. Repayment of unsecured borrowings.

G) SWOT Analysis


a) Strengths
- Diversified product portfolio
- Strong leadership
- Advanced manufacturing technology
- Zero-waste policy b) Weaknesses
- Limited geographic presence
- Dependent on third-party manufacturers for some products.                    c) Opportunities
- Expansion to new markets
- Product diversification d) Threats
- Competitive industry
- Volatility in raw material prices

H) Conclusion:

The IPO of Baba Food Processing India Limited seems to be a good investment opportunity given its strong business model, experienced leadership, and planned use of funds for expansion and debt repayment. 
However, investors should also consider the competitive landscape, the company’s limited geographical reach and higher valuation.

Lead Manager of Baba Food Processing India Limited IPO:

  1. Horizon Financial Pvt Ltd

Registrar of Baba Food Processing India Limited IPO:

  1. MAS Services limted

Company Address:

Baba Food Processing India Limited 6th Floor, Home Decor Building, Opposite Durga Mandir, Ratu Road, Ranchi G.P.O., Ranchi – 834 001, Phone: +91 915 519 2834 Email: Website: https://www.babafood.in/

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