Investment in IQF vegetable and fruit processing plant

[Codemonkey]

One of my family friend who returned to India from US is starting a IQF fruit and vegetable plant with an annual processing capacity of 30 to 40 Metric tons. He said total valuation of the company is 35Cr with a working capital of 9Cr. He is raising funds with Rs.25 a share and gave me a opportunity to invest.

1. How do one come up with a company valuation?

2. How do they fix the share price?

3. Is IQF a viable business to invest? (Their target is India, Middle East, Europe and U.S.)

My family friend is a 3rd gen entrepreneur and has massive family wealth and his US born children are also well settled. He already owns fruit processing unit (squash, Jams) in India with 32Metric ton capacity (annual turn over of ~50-60Cr) but never gave any money to his shareholders in last 15 yrs since he kept reinvesting and expanding.
 

He has time and wealth to take huge risk and gamble. I don’t think I am anywhere close to that, is this whole investment in IQF business even worth it with no sight of dividends or exit strategy etc?

pros:

Person and people who will be running the plant are 100% reliable.

cons:

1. I have no idea about the business and market potential.

2. He withdraws huge salary like 2Cr per yr and since his children are well settled he plans to operate remote with other ppl running the unit. He will be making key decisions.

3. I don’t know what’s the exit strategy even after 10-15 yrs.

 

Appreciate any suggestions or feedback.
 

 

[dasari4kntr]

IQF…ante instant quick freezing..?

meat business lo idi baaga work avutundhi…not sure about fruits and veggies…

india lo maatrame pandinchagala  veggie or fruit aithe business vuntundi…otherwise lot of countries will compete…

but anything related to food will have good future…(it’s my opinion..)

company valuation derives by income stmt, balance sheet, cash flows..share price varies a little based on financials and brand name…

[Codemonkey]

13 hours ago, dasari4kntr said:

IQF…ante instant quick freezing..?

meat business lo idi baaga work avutundhi…not sure about fruits and veggies…

india lo maatrame pandinchagala  veggie or fruit aithe business vuntundi…otherwise lot of countries will compete…

but anything related to food will have good future…(it’s my opinion..)

company valuation derives by income stmt, balance sheet, cash flows..share price varies a little based on financials and brand name…

Yes Individual quick freezing and No meat. Regarding fruit and vegetables it comes two ways.

1. They procure fruit and veggies on their own locally, process and sell the final product in bulk to big players who market and sell in small packages for super markets or other forms across the world.

2. There are few companies who wants to export to US or Europe. They send the fruit/vegetables directly to the plant along with the packaging/label material and these guys process it, treat it, package it and the final vendor simply sells it directly to stores in US/Europe. 
 

Currently in model#2 they do in other fruit squash unit for Rasna, dabur chyawanprash for entire south India. 

[dasari4kntr]

3 minutes ago, Codemonkey said:

No meat. Regarding fruit and vegetables it comes two ways.

1. They procure fruit and veggies on their, process it and sell the final product in bulk to big players who market and sell in small packages for super markets.

2. There are few companies who wants to export to US or Europe sends the fruit/vegetables directly to the plant along with the packaging/label material and these guys process it, treat it, package it and the final vendor simply sells it directly to stores in US/Europe. 
 

Currently in model#2 they do in other fruit squash unit for Rasna, dabur chyawanprash for entire south India. 

I have a silly question…

why would USA imports fruits and veggies from india bearing all the cost and time that too frozen…Us has tropical countries near by…

[Codemonkey]

3 hours ago, dasari4kntr said:

I have a silly question…

why would USA imports fruits and veggies from india bearing all the cost and time that too frozen…Us has tropical countries near by…

For example Deep brand Sapota, Sitaphal comes only in IQF. For ice creams, pastries, flavors they heavily prefer and use IQF. 

[telugu_fan]

42 minutes ago, Codemonkey said:

For example Deep brand Sapota, Sitaphal comes only in IQF. For ice creams, pastries, flavors they heavily prefer and use IQF. 

@Codemonkey, do you know which region he is putting the plant, It will depend on a lot of factors like dasari4kntr pointed out. Maybe its in Himachal or Haryana where there might be local govt subsidies for industries and expenses covered a bit and if processing apples might be a good place.

In the south in AP or Telangana, Tamil Nadu, Karnataka, it has its own set of challenges and govt approvals. So depends on the location, size and since exporting again location from the port of export and so on.

Good business going forward as India is trying to get more produce processed and less wasted due to logistics and delivery. So while it is a good thing might need to look around where and how the plant is setup and work going on with scale.

[Codemonkey]

9 hours ago, telugu_fan said:

@Codemonkey, do you know which region he is putting the plant, It will depend on a lot of factors like dasari4kntr pointed out. Maybe its in Himachal or Haryana where there might be local govt subsidies for industries and expenses covered a bit and if processing apples might be a good place.

In the south in AP or Telangana, Tamil Nadu, Karnataka, it has its own set of challenges and govt approvals. So depends on the location, size and since exporting again location from the port of export and so on.

Good business going forward as India is trying to get more produce processed and less wasted due to logistics and delivery. So while it is a good thing might need to look around where and how the plant is setup and work going on with scale.

Location is South Andhra. Govt approvals is not an issue since our folks heavily fund both TDP and YSRCP in almost every election since 1980 and help elect local MLAs. Like in earlier squash plant most of subsidies end up as bribes to get approvals done, so these folks aren't relying on any subsidy.

Their end market is not direct customer like a packet in super market, here the products will be used to make a beverages, smoothies, fruit bar, oat meals, salad, bakery, soups, pasta, sauces and dips, yogurt mix, bakeries etc.

Also as world moves towards healthier and natural snack instead of processed one, these products are supposed to have high demand.

[Picheshwar]

K

[Kakynada]

ok