Dodla Dairy (DODLA) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of 100% stake in HR Food Processing (Osam) aligns with the inorganic growth plan and expands presence into Bihar and Jharkhand, marking entry into Eastern India markets.

• Eastern India dairy market is growing faster than the national average, with low per capita milk consumption and significant potential for organized sector growth.

• Osam's product portfolio and procurement network complement existing operations, supporting strategic diversification and deeper market penetration.

Financial terms and conditions

• Transaction value is INR 2,710 million for 100% equity, based on an enterprise value of INR 2,472 million and net cash of INR 238 million.

• Fully cash transaction, financed through internal accruals, with no debt to be assumed post-acquisition.

• Osam's FY25 unaudited sales are INR 2,826 million, with a gross margin of 25% and EBITDA margin of 5%.

Synergies and expected cost savings

• Significant operational synergies expected in procurement, logistics, and plant operations, leveraging expertise to improve profitability.

• Potential to optimize procurement and reduce reliance on milk powder, improving margins.

• Value-added products contribute 28% of revenue, up from 20% in FY22, supporting margin expansion.