Shivashrit Foods

• Shivashrit Foods is coming out with an initial public offering (IPO) of 49,32,000 equity shares in a price band Rs 135-142 per equity share.
• The issue will open on August 22, 2025 and will close on August 26, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 13.50 times of its face value on the lower side and 14.20 times on the higher side.
• Book running lead manager to the issue is Mark Corporate Advisors.
• Compliance Officer for the issue is Bharti.

Profile of the company

Shivashrit Foods is manufacturer, supplier and exporter of potato flakes. The company has a dedicated potato processing and manufacturing facility at Aligarh in Western Uttar Pradesh, India for production of potato flakes. It specializes in manufacturing of premium-grade potato flakes, used in ready-to-eat meals, snack foods, and processed food products. The company’s product portfolio is designed to cater to the specific requirements of both global and domestic food manufacturers, offering consistency in quality and a long shelf life.

The major raw material used in manufacturing of potato flakes are Potatoes. It procures potatoes directly from farmers, third party suppliers and traders. The peak season for procurement of potatoes is December to March, which is harvesting season. The company procures around 80% - 90% of annual requirement of potatoes during peak season. It has direct access to the farmers in the radius of 200 kilometers from its manufacturing unit. 

This extensive network of farmers enables it to ensure a steady supply of high-quality potatoes. It works closely with the farmers to uphold strict quality standards at every stage of production, from planting to harvesting, by maintaining end - to end oversight of the procurement process. Thus, it ensures that the freshest and highest quality of the potatoes are delivered to its processing facilities. It offers competitive pricing and timely payments, ensuring that farmers are rewarded for their hard-work.

Proceed is being used for:

• Part finance the capital expenditure to be incurred towards Construction of the Building, Plant & Machinery (Potato Flakes Line Machine), Utilities (Boiler, ETP Plant, Power Generator, Solar Panel), other miscellaneous assets, etc. (Expansion Project)
• Part finance the working capital requirement for Expansion Project
• General corporate purposes

Industry Overview

The food processing sector has become a key contributor to India's economy over the past few years, thanks to progressive policy measures by the Ministry of Food Processing Industries (MoFPI). The sector has performed exceptionally well with an impressive average annual growth rate of 7.3% from 2015 to 2022. It has significantly contributed to Gross Domestic Product (GDP), employment, and investment, accounting for 10.54% of Gross Value Added (GVA) in Manufacturing and 11.57% in Agriculture sector in 2020-21. GVA in Food Processing sector has increased from Rs. 1.61 lakh crore ($24.60 billion) in 2015-16 to Rs. 1.92 lakh crore ($ 24.43 billion) in 2022-23 (as per First Revised Estimates of Ministry of Statistics and Programme Implementation). India's diverse agro-climatic conditions allow for abundant production of cereals, pulses, fruits, and vegetables, making it a leading producer of various foods.

Meanwhile, production of potatoes is projected at 59.57 million tonnes in 2024-25 which is almost 4.4 per cent more than the same period last year. In what could be of some comfort to the government in its fight against inflation, production of three major vegetables namely tomato, onions and potatoes that comprise the trinity of TOP is expected to be higher in 2024-25 season as compared to the previous year. The estimates showed that tomato production in 2024-25 season is estimated at 21.54 million tonnes which is 1 per cent more than the previous year, while production of onion is projected at 28.87 million tonnes in 2024-25 which is almost 19 per cent more than 2023-24. Production of potatoes is projected at 59.57 million tonnes in 2024-25 which is almost 4.4 per cent more than the same period last year.

India's onion production is expected to rise by 19 per cent to 288.77 lakh tonne in the ongoing crop year ending June 2025, according to the agriculture ministry's latest estimate. Production of onion stood at 242.67 lakh tonne in the previous year. The crop year runs from July to June. Releasing the first advance production estimate of horticultural crops for 2024-25, the ministry said tomato production is expected to be around 215.49 lakh tonnes as compared to about 213.23 lakh tonnes last year, which is higher by 1.06 per cent. Potato production is expected to reach 595.72 lakh tonnes, which is 25.19 lakh tonnes more than last year. Total vegetable output is seen to increase to 2145.63 lakh tonnes in 2024-25 from 2072.08 lakh tonnes in the previous year.

Pros and strengths

Efficient supply-chain: The company’s supply chain begins with the procurement of raw materials, which are then transported via freight inward to the manufacturing unit. Excess raw material is stored in the cold storage, this ensures the raw material stays fresh and preserved. After production, the finished products undergo testing and are packaged. The packaged goods are shipped outward through freight to the customer. Ultimately, the products are delivered directly to retail customers or consumed for further production of goods. The company’s supply chain system enables it to fulfil orders promptly and consistently, meeting the needs of its customers with precision and reliability.

Advanced manufacturing facility: The company’s current facility is situated in Aligarh, Uttar Pradesh and spread over more than half an acre. The company’s manufacturing facility is equipped with plant and machinery with modern technology, placing it at the forefront of efficiency and quality in the potato flakes industry. Its manufacturing facility is equipped with machinery and process like Evaporation, Drying, and Packing as followed by the international standards for flakes. It has sourced some of its key machineries from international reputed technology brands. By leveraging modern technology, the facility not only enhances operational efficiency but also ensures consistent, high-quality output that meets stringent industry standards.

Strategic location for potato procurement process and storage: The company’s production facility is located in Aligarh, which is in close proximity to a network of local potato farmers, offering both logistical and cost benefits. Aligarh is a significant contributor to the potato production in Uttar Pradesh. The district has produced over tons of potatoes, making it a key area for both local consumption and supply to other States. Its strategic location, near major urban centers such as Delhi and Agra, further strengthens its position in the potato supply chain. This location advantage ensures a reliable, year-round supply of high-quality raw potatoes. By sourcing raw materials locally, the company not only reduces transportation costs but also shortens its supply chain, which enhances overall operational efficiency. This proximity also enables closer collaboration with farmers, fostering sustainable relationships and greater control over raw material quality.

Risks and concerns

Maximum revenue comes from limited customers: The company is dependent on a few customers for a portion of its revenues. The company has garnered 79.10%, 58.93% and 76.32% of its total revenue from top 5 customers in FY25, FY24 and FY23 respectively. The company may continue to derive a significant portion of its revenues from key customers. Although the composition and mix up of its top customers varies from year to year, if any decision by one or all its customers to cease or significantly reduce their business with the company, its revenue could decline, which may have a material adverse effect on its business, results of operations, cash flows and financial condition.

High working capital requirement: The company’s business requires a significant amount of working capital which is based on certain assumptions, and accordingly, any change in such assumptions will result in changes to its working capital requirements. Working capital is required for mobilization of resources like labour and raw materials. If it experiences insufficient cash flows or are unable to access suitable financing to meet working capital requirements and loan repayment obligations, its business, financial condition and results of operations could be adversely affected.

Geographical constrain: The company’s business operations are geographically concentrated in Aligarh, Uttar Pradesh. This limited geographic presence makes it highly susceptible to local economic conditions, regulatory changes, infrastructure issues, labor market dynamics, and sociopolitical developments specific to this region. Any adverse developments in or affecting Aligarh, such as natural disasters, political unrest, changes in local government policies, or economic downturns, could materially and adversely impact its operations and financial performance.

Outlook

Shivashrit Foods manufactures, supplies, and exports potato flakes. The Company has a potato processing facility in Aligarh, Uttar Pradesh, for producing potato flakes. The company has strategic location for potato procurement and storage, gaining benefits from government policies, incentives, and subsidies for a food processing unit in Aligarh. On the concern side, the company is dependent on a few customers for a portion of its revenues and any failure to continue its existing arrangements could adversely affect its business and results of operations. Moreover, the company’s business is working capital intensive. If it experiences insufficient cash flows or are unable to access suitable financing to meet working capital requirements and loan repayment obligations, its business, financial condition and results of operations could be adversely affected.

The company is coming out with a maiden IPO of 49,32,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 135-142 per equity share. The aggregate size of the offer is around Rs 66.58 crore to Rs 70.03 crore based on lower and upper price band respectively. On performance front, the revenue from operation for the financial year ended March 31, 2025, stood at Rs 10,469.34 lakh whereas for the financial year March 31, 2024, it stood at Rs 7,622.05 lakh representing an increase of 37.36%. Moreover, the restated profit after tax for the financial year March 31, 2025 stood at Rs 1,205.50 lakh whereas for the financial year March 31, 2024, it stood at Rs 1,161.39 lakh representing a slight increase of 3.80%.

The company aims to gradually reduce its dependence on open market purchases by establishing long-term relationships with farmers, third party suppliers and traders. While the flexibility of open market purchases will play a crucial role in procurement, forming long term relationships with suppliers is intended to secure a more stable and predictable supply of high-quality potatoes. By engaging directly with farmers, the company ensures greater control over raw material quality and can negotiate more consistent pricing, reducing exposure to seasonal price spikes and fluctuations. Establishing long term partnerships with reliable traders also helps the company to streamline procurement operations, ensuring a resilient supply chain that can better withstand market conditions. This strategic shift is central to the company’s vision of cost-effective, reliable sourcing that aligns with its growth and quality objectives.