DSM Fresh Foods IPO

DSM Fresh Foods claims to operate on a farm-to-fork model, which involves sourcing meat directly from farms and delivering it to consumers with minimal processing and transit.

The company claims that its partner farms are equipped with innovative technologies designed to ensure the healthy growth of animals. According to the company, animals are fed vegetarian diets, provided clean water, and not treated with antibiotics.

DSM Fresh Foods claims to have a cold chain infrastructure where meat is air-chilled with zero water absorption to limit bacterial growth and to deliver fresher products.

The company operates under FSSAI guidelines and holds ISO 9001:2015 certification for its quality management systems, ISO 22000:2018 for its food safety management systems, and halal certification.

The company has reported a consistent increase in profit after tax (PAT). It increased from Rs 2.74 crore in FY23 to Rs 4.67 crore in FY24 and Rs 9.05 crore in FY25.

DSM Fresh Foods operates under the consumer-facing brand ‘Zappfresh,’ selling fresh meat products. It also deals in ready-to-eat and ready-to-cook segments. This mismatch between brand perception and actual business offerings may hinder its ability to reposition or diversify into new food categories, limiting long-term growth.

The company recorded negative cash flow from operating activities amounting to Rs 16.67 crore in FY25, Rs 13.04 crore in FY24, and Rs 2.42 crore in FY23. Additionally, negative cash flow from investing activities amounted to Rs 9.59 crore in FY25, Rs 4.91 crore in FY24, and Rs 1.01 crore in FY23. This is primarily driven by investments in inventories, advances to suppliers, and trade receivables to support business growth, particularly during its transition from a business-to-consumer (B2C) to a business-to-business (B2B) model. In addition, the company has made substantial investments in plant and machinery, office equipment, and furniture to strengthen its operations and capacity for future growth. But if cash outflows continue to exceed inflows, the company may face liquidity challenges in the future.

With limited product differentiation beyond quality standards, DSM faces a significant risk from fake, counterfeit, cloned, and pass-off products in the market. These imitations can damage brand reputation, mislead consumers, and lead to legal disputes, which can be particularly serious in a food safety-sensitive industry.

The company has a high dependence on chicken-based products. This segment accounted for Rs 71.70 crore (54.85 percent) of the company’s revenue in FY25. Rs 51.08 crore (56.48 percent) in FY24 and Rs 31.58 crore (56.12 percent) in FY23. This over-reliance exposes the company to severe disruption if poultry demand declines due to health scares, supply issues, or shifting consumer preferences.

A significant portion of the company’s purchases of raw materials comes from its top five suppliers. They accounted for Rs 38.89 crore (44.48 percent) of the company’s total cost of materials consumed in FY25, Rs 27.78 crore (43.53 percent) in FY24, and Rs 17.63 crore (42.82 percent) in FY23. Any disruption in supplies from one or more of these suppliers could adversely affect the company’s business and finances. Further, the company lacks long-term agreements with its suppliers, increasing the risk of raw material shortages or sudden cost escalations. This instability could affect product availability, delivery timelines, and overall profitability.

As of FY25, the company had contingent liabilities of Rs 8.68 crore, a slight uptick from Rs 8.01 crore in FY24 and a little more from Rs 6.37 crore in FY23. If any of these contingent liabilities materialise, it could affect the company’s financial condition.

As of FY25, the company had trade receivables of Rs 16.87 crore, a significant increase from Rs 5.15 crore in FY24 and Rs 4.51 crore in FY23. Any failure to collect these receivables on time or at all can negatively impact the business and its financial condition.

DSM Fresh Foods does not own the processing units used in its supply chain and is heavily dependent on external partners. Any disruption at these third-party facilities could disrupt production and delay the fulfilment of customer orders.

The company and its promoters are involved in certain ongoing legal proceedings. Any adverse judgments in any of these cases could be detrimental to the company’s business prospects.

During culturally sensitive periods like Saavan and Navratri, meat consumption declines sharply. These religious observances temporarily reduce sales, create overstocking risks for perishable items, and force aggressive price cuts, impacting overall revenue.

As of FY25, DSM Fresh Foods had an outstanding financial indebtedness of Rs 31.70 crore. Any failure to service or repay these loans can hurt the company’s operations and financial position.