DSM Fresh Foods coming with IPO to raise Rs 59.65 crore

DSM Fresh Foods

• DSM Fresh Foods is coming out with an initial public offering (IPO) of 59,06,400 equity shares in a price band of Rs 96-101 per equity share.
• The issue will open on September 26, 2025 and will close on September 30, 2025.
• The shares will be listed on SME Platform of BSE.
• The face value of the share is Rs 10 and is priced 9.60 times of its face value on the lower side and 10.10 times on the higher side.
• Book running lead manager to the issue is Narnolia Financial Services. 
• Compliance Officer for the issue is Prabhleen Kaur Gujral. 

Profile of the company

The company is a fresh meat and ready-to-cook/eat non-veg products retailer. It is an online meat delivery company committed to revolutionise the way customers experience and enjoy quality non-veg food. Established in 2015, the company has swiftly risen to prominence by blending convenience, unpreserved products, with a commitment to customer satisfaction. With a user-friendly website and mobile application that offers a diverse selection of fresh and hygienically sourced meats, ranging from succulent cuts of mutton, poultry and seafood to exotic options. Its aim is to ensure that all the produce reaching the end consumer is fresh. 

The platform allows customers to tailor their orders according to their preferences. Emphasizing transparency and encourages customer reviews and provides detailed product descriptions. Timely and efficient deliveries, bolstered by tracking systems, to further enhance the customer experience. With a focus on quality, convenience and innovation, the company is on the path of its growth trajectory, shaping the future of online meat delivery.

Zappfresh, a meat brand of DSM Fresh Foods, it was started in June 2015 by Deepanshu Manchanda who distinguished an enormous business opportunity in offering prime quality meat products that were initially overpowered by the unhygienic and problematic local wet market which has been later taken over by frozen meat choices which is not preferred workaround for Indian consumers. Zappfresh is a full stack business where its meat delivery process starts from procuring the fresh produce to processing, storage and delivery. Zappfresh provides quality fresh meat through its own website and mobile application which is available on android as well as iOS with over lakh downloads at Play Store.

Proceed is being used for:

• Meeting out the capital expenditure requirements 
• Meeting out the marketing expenditure 
• Meeting out the working capital requirements 
• Meeting out the expenses of unidentified acquisition and general corporate purposes

Industry Overview

India’s meat market is set to expand at a robust 8.5% CAGR-from $55.3?billion in 2024 to $114.4?billion by 2033. Currently, 90% of the meat market is dominated by the unorganized sector. Packaged meat demand is surging, up around 25% year-over-year. The poultry industry in India is experiencing significant transformation driven by changing consumer preferences and retail modernization. The sector has witnessed substantial digital integration, with internet penetration reaching 759 million users in 2022 and 70% urban penetration, facilitating the growth of online meat delivery platforms. Traditional brick-and-mortar establishments are increasingly complemented by digital channels, as evidenced by major retailers expanding their omnichannel presence. The evolving retail landscape has prompted traditional players to adopt modern technologies and hygiene practices, particularly in meat processing and storage facilities.

The Indian poultry market prices grew by 0.96% in 2022 compared to the previous year. During the first half of 2022, chicken prices decreased as heatwave conditions across the country had a severe impact on the poultry industry, with chicken prices plunging by 50% as farmers sold off their chickens in the market due to worries that high temperatures could kill them. The Indian poultry industry has come a long way in the last few years in terms of brand-building and adding value to chicken meat. However, in general, around 91% of the Indian chicken meat market is still sold through the wet market and the open wholesale market in a perfectly competitive environment.

The processed chicken India segment is experiencing remarkable growth in the Indian market, projected to expand at around 389% CAGR during 2024-2029. This exceptional growth is driven by developments in procurement, machine slaughter, and processing technologies that have enhanced safety and efficiency standards. The segment's expansion is supported by various meat tenderization methods, including mechanical tenderization, enzymatic tenderization, and marination techniques, which improve product quality and texture.

Pros and strengths

Well organized organization structure: It also has a well-organized management structure and an experienced management team operating within a culture of strong corporate governance and commitment to social responsibility. To better manage the rapid growth and diversification of its various segments, its organizational structure has been arranged with corporate division namely SCM & Logistic, Sale & Marketing, Admin & Human Resources and IT.

Efficient business model (Farm to Fork Model): Farm to Fork is a model where the food is directly procured from farm where it's grown or raised and sent directly to its ultimate consumers. It comprises various stages including sourcing, processing, packaging, transportation, distribution, and retailing to minimize the distance and processes that food undergoes between its origin in the fields to the final consumer. The concept emphasizes sustainability, traceability, and transparency in the food supply chain. It also highlights the value of fresh, unprocessed, and nutrient-rich foods, contributing to healthier eating habits.

Cold chain supply: It has ensured a preservative-free freshness lock from the farm to the kitchen table. Meat products are air-chilled with zero water absorption right after slaughter to avoid bacterial growth. The meat that makes it to you free of preservatives, chemicals and hormones.

Risks and concerns

Do not have long-term contracts with suppliers: Since it does not have long-term agreements with its suppliers, it is possible that supplies will not be available in the future, which could have a negative impact on how its business operates. Any delays in the acquisition of supplies could make it more difficult for it to fulfill obligations and damage its reputation for prompt delivery. Furthermore, it usually does business with its suppliers on short term basis, and it is unable to ensure the continuity of its supplier ties. The cost of using raw materials might rise and negatively impact the company, prospects, operational performance, and financial situation if it is unable to get sufficient supply of commodities in a timely way or on terms that are economically acceptable.

Dependent on third party processing units: The company's operations and growth are significantly dependent on third-party processing units for its production needs. As it does not own these processing units, any disruptions, delays, or operational changes in these third-party facilities could adversely affect its business. Such disruptions may arise from a variety of factors including, but not limited to, equipment failure, labor disputes, regulatory compliance issues, or changes in the financial stability of the processing unit operators. Furthermore, any significant changes in the business relationships with these third-party operators, including contract terminations or unfavorable renegotiations, could pose a risk to its business continuity and growth prospects.

Rely on third party software for supply of products: It has outsourced its software that maintains the order details, and information of the customers. Building a strong online presence and actively managing \ brand's image can also help you stand out in a crowded digital marketplace. However, relying on third-party platforms or software providers makes it vulnerable to their performance and any outages they experience. If this software suffers from performance, reliability, or security issues, it can negatively impact business's reputation, especially if these issues affect customers. Any disruption, security breach or technology glitch in the operations of these third party softwares could adversely affect its business and profitability. To mitigate the risks, it's essential to invest in robust cybersecurity measures, stay up to date with technology and software and have a contingency plan for technical disruptions.

Outlook

The company is a fresh meat and ready-to-cook/eat non-veg products retailer. It is an online meat delivery company committed to revolutionize the way customers experience and enjoy high-quality non-veg food. Established in 2015, the company has swiftly risen to prominence by blending convenience, unpreserved products, with a commitment to customer satisfaction. On the concern side, it derives a substantial portion of its revenue from its chicken business as compared to mutton and sea food. Its dependency on chicken can have a material adverse effect on its business, financial condition, results of operations and cash flows. Further, it sources several key raw materials and components from a single or limited group of third-party suppliers, which leads to supplier concentration risks. Any supply restrictions or quality defects could delay implementation, affecting its ability to offer services at profitable prices. 

The company is coming out with a maiden IPO of 59,06,400 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 96-101 per equity share. The aggregate size of the offer is around Rs 56.70 crore to Rs 59.65 crore based on lower and upper price band respectively. On performance front, the company’s total Income for the period ended FY 2024-25, stood at Rs 13,147.48 lakh whereas for FY 2023-24 it stood at Rs 9,067.57 lakh representing an increase of 44.99%. The restated profit after tax for FY 24-25, stood at Rs 905.18 lakh whereas in FY 23-24 it stood at Rs 466.65 lakh representing an increase of 93.98%

In its strategic planning, it is actively exploring the possibility of expanding into offline segments to provide direct access to its meat products for end consumers. This is an initiative wherein traditional meat shops would be converted into exclusive ‘Zappfresh Stores.’ This comprehensive strategy is to tap into the currently unorganized meat market. The objective is to introduce its meat that comes with a clear and traceable source, assuring consumers of the highest quality and ethical sourcing practices. This aligns with its commitment to enhancing customer trust, establishing a broader market presence, and elevating the overall meat purchasing experience.