India’s Epigamia, the dairy and dairy-free brand trading name of Drums Food International, has turned a profit for the first time.

Epigamia’s CEO and co-founder Rohan Mirchandani told Just Food the company switched focus last year from top-line growth to profitability. Not wanting to disclose the actual EBITDA figures, he said the target was to become profitable by September but that materialised at the start of the new fiscal year in April after breaking even in March.

“That turned the tide for us,” he said. “And now we see an amazing line of sight for this fiscal year.”

In the financial year to 31 March, Epigamia booked revenue equivalent to $24m and is seeking to increase that by around 50% in the current year. Speaking to Just Food in 2020, Mirchandani put the figure at $15m.

“It is something we should have done before,” he said in terms of the change in strategy. “We got caught up in this start-up environment from a few years ago, raising funding from private equity and venture capital. We took a conscious call late last year that we’re going to focus on building a fundamentally sound business. Now it’s kicking ass.”

Faced with inflationary cost pressures last year – when Mirchandani said India’s food inflation reached more than 20% – management decided Epigamia “has to be sustainable”, rather than “just pressing the bullet on marketing” and churning out top-line growth.

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Brussels-based private-equity firm Verlinvest is Epigamia’s largest shareholder, while French dairy giant Danone holds a “minority” stake in the business through its venture fund – Danone Manifesto Ventures. Other venture and private-equity funds also hold minority shares, while Mirchandani and his co-founder remain “significant shareholders”.

Set up in 2015, the Mumbai-based business has expanded from Greek yogurts and smoothies into plant-based yogurts, and last year entered the milkshake category. Vegan dairy beverages are also on the cards.

Epigamia’s preservative-free shakes now contribute around 15-20% of revenue, Mirchandani said.

The company sells into India’s so-called mom-and-pop shops, or kirana stores, found on most streets and offering all kinds of wares from food to household items. But digital and e-commerce are a large part of its business.

Direct-to-consumer online is one, along with e-commerce platforms and what Mirchandani describes as “quick commerce”, which he suggests is unique to Asian countries – an app service that delivers product within eight minutes, he said.

He added that quick commerce is the “fastest-growing” segment of Epigamia’s digital business. Of the 33% in revenue generated through digital technologies, the app accounts for 20%.

Sale speculation swirls around Epigamia

Mirchandani kicked back at a report by Reuters. The news service suggested Epigamia had ‘shelved’ a plan to sell the business.

He confirmed that was not the case, explaining he was approached by a couple of investment bankers in January pitching for deals.

“They were pushing us to say, ‘we can get you a great valuation, you can sell a majority deal,’” Mirchandani said. “We had extremely high-level conversations with them [but] we didn’t really engage any further. Not once did we engage with any potential buyer.”

Mirchandani described last year as “terrible” as costs in India went up by 50%, including raw materials and packaging, with milk increasing by some “crazy” means in 2021 and 2022 in the region of 40-50%.

Prices started to “stabilise” through March and April, however.

“Our growth plans have stalled a little bit, we’re looking at 40-50% growth year on year, which is still pretty healthy. Profitable growth is the need of the hour and that’s been a big learning for us in the last eight to 12 months.

“Inflation put that pressure on us to say, ‘you can’t just be going this route and continue to raise money and dilute.’ Focus on the business, make it a real sound business.”