Prataap Snacks earmarks Rs 421-422 crore for Indore plant

Prataap Snacks Limited plans a Rs 421-422 crore integrated manufacturing facility near Indore that management expects to improve operating profit by 1.5-2 percentage points and create capacity headroom to double output. The project follows Q2 FY2027 revenue of Rs 541 crore, which was 26% higher year on year.

Why is Prataap Snacks building an integrated Indore plant?

Prataap Snacks is building the new plant to replace inefficiencies created by seven smaller units operating at its existing Indore complex. Management said the units were added over time to meet immediate demand, resulting in separate production operations, manpower requirements and overhead costs within one campus. A more integrated and automated facility is intended to improve production planning and reduce conversion costs.

Indore is Prataap Snacks’ largest manufacturing location, contributing about 40-45% of total revenue, but the current complex occupies only about 14 acres and has no space for another production line. The proposed site covers approximately 50 acres, allowing the company to replicate its existing lines initially while retaining land for later expansion. Prataap Snacks acquired RLOP Foods during Q2 FY2027 to secure the leasehold rights to this project land.

The relocation plan is separate from the commodity inflation that affected Q2 FY2027 profitability. Gross margin fell to 25.5% from 29.8% a year earlier as palm oil, potatoes, packaging material, fuel and logistics costs increased. Earnings before interest, tax, depreciation and amortisation, or EBITDA, declined to Rs 12.9 crore from Rs 22.9 crore, with EBITDA margin at 2.4%.

Management said the integrated plant’s estimated 1.5-2 percentage-point operating-profit benefit would not directly restore gross margin because it addresses overhead and manufacturing efficiency. It identified a broader 5-6% margin-expansion opportunity from manufacturing, channel-margin and supply-chain measures over two to three years. These are management targets, rather than reported financial outcomes.

What capacity will Prataap Snacks add at Indore?

Prataap Snacks expects the new Indore facility to have capacity of roughly 65,000-70,000 metric tons once it is operational. The first phase will replicate the existing Indore plant’s manufacturing lines, and management said the machinery can produce different pack sizes and maximum retail price, or MRP, points according to demand. The facility is therefore not restricted to a single category or price pack.

The principal capacity benefit is future expansion room. Management said Prataap Snacks could double capacity at the 50-acre site without significant further investment in core infrastructure such as land and buildings. That contrasts with the present 14-acre Indore operation, where management said there is no physical room to add even one line.

Namkeen is relevant to the capacity plan because its share of Prataap Snacks revenue has risen from about 15-16% two years ago to 20% last year and roughly 25% currently. Management said Namkeen accounts for about 45-50% of the Indian snack market, while Prataap Snacks remains under-represented in the category. The new Indore plant will not be Namkeen-only, but Namkeen production is presently concentrated in Indore and Rajkot.

Prataap Snacks also plans to expand Namkeen manufacturing at other existing plants in the near term, which management said should lower freight costs from transporting products nationally from two locations. In a potential second phase, machinery from the old Indore site may move to northern and eastern facilities as other operations are consolidated. That footprint optimisation is distinct from the first-phase Indore relocation.

How will Prataap Snacks finance the Indore project?

Prataap Snacks plans to finance the Rs 421-422 crore project through internal accruals and a term loan of about Rs 250 crore. Management said major loan drawdown is expected in the following year as civil work and equipment orders advance, rather than at the project’s start. It had begun procurement planning for plant and machinery with longer delivery times as of the November 3, 2026 earnings call.

Prataap Snacks plans to monetise its existing Indore land after the replacement facility is ready and apply the proceeds to prepay the planned term loan. Management estimated the old site’s commercial value at about Rs 250-300 crore, broadly matching the proposed debt quantum. The stated land value is an estimate, and no completed sale or sale price was disclosed on the call.

Management said there had been no significant borrowing for the new project by November 3, 2026. Existing borrowings included about Rs 25 crore of overdraft and a Rs 4 crore current instalment on the Jammu plant loan. The company said the expected interest rate on the new borrowing was below 8%, although the eventual rate and drawdown schedule were not disclosed.

When will Prataap Snacks start production at the new Indore plant?

Prataap Snacks is internally targeting commercial production around January 1, 2028. Management also described about 15 months as a realistic execution period and gave a broader 15-18 month planning range on the November 3, 2026 call. The date is a management target, not an achieved construction milestone.

The company said it obtained possession of the 50-acre industrial land in the month before the call and had started work on the site. The land is held on a long-term lease from the state government. Prataap Snacks also plans to merge RLOP Foods into the company, a step management said would simplify the corporate structure after the acquisition.

Prataap Snacks is sequencing machinery procurement with civil construction so that equipment delivery can coincide with building progress. This matters because the project is a relocation and consolidation of existing Indore operations, rather than only an additional factory. Management said machinery from the current complex is planned to be shifted to other locations after the replacement facility is ready.

The project is being executed while Prataap Snacks uses shorter-term measures to address input inflation. In Q2 FY2027, management said transaction growth, measured by packets sold, was about 17%, while pricing growth was about 8-9%. The company has used price increases, grammage rationalisation in selected stock-keeping units and reviews of trade schemes to seek to maintain gross margin near its Q2 level.

Conclusion

The Indore project combines a Rs 421-422 crore capacity investment with Prataap Snacks’ effort to lower structural manufacturing costs. It addresses the space limit and seven-unit configuration at a site that generates 40-45% of revenue, while the planned 50-acre facility is expected to provide 65,000-70,000 metric tons of initial capacity and room for a later doubling.

The next disclosed milestones are civil-construction progress, equipment procurement, term-loan drawdown and monetisation of the current Indore land. Management is targeting commercial production around January 1, 2028 and expects the full benefit from the plant and other identified margin measures to emerge over two to three years.