Project Spark
Distribution & applications-support platform for enzymes and process chemicals serving the paper, sugar and distillery industries
Executive summary
Project Spark is a South India-based supplier of enzymes, process chemicals and applications-support services to the paper, sugar and distillery industries. Incorporated within the last five years, the company operates as an authorised distributor for a small number of principal manufacturers, pairing product supply with on-site technical service to process-industry customers.
Revenue grew from ₹2.64 Cr in FY23 to ₹3.79 Cr in FY25. Profitability has been volatile across the same period and is materially influenced by commission paid to the promoter group, a point noted in the financial snapshot and management sections. The company presents as an asset-light, working-capital-driven business rather than a manufacturing or technology asset.
At a glance
Basis of preparation. All figures are drawn from the company's audited standalone financial statements for FY23, FY24 and FY25, and from its FY25 income-tax return and tax audit report (Form 3CD). No consolidated, group or unaudited management figures have been used anywhere in this document.
Figures are stated in ₹ Lakh (L) or ₹ Crore (Cr), rounded to the nearest ₹0.01 L/Cr. A full year (FY26) has closed since the latest audited financials and is not yet reflected — see section 08.
Investment highlights
Diversified end-markets
Demand spans three distinct process industries — paper, sugar and distillery — reducing reliance on a single sector's capex or crush-season cycle.
3 industries servedRevenue growth
Revenue rose from ₹2.64 Cr (FY23) to ₹3.79 Cr (FY25), a two-year CAGR of roughly 20%, ahead of the underlying margin trend.
~20% CAGR, FY23–FY25Asset-light model
Net tangible fixed assets were just ₹0.65 L at FY25 close — the business scales without a manufacturing or capex base to carry.
₹0.65 L net block, FY25Improving receivables discipline
Debtor days fell from roughly 111 (FY24) to 43 (FY25), a meaningful tightening of the collection cycle even as revenue grew.
−68 debtor days, FY24→FY25Negative FY25 cash-conversion cycle
In FY25 the combined debtor-plus-inventory cycle ran shorter than the payables cycle, implying supplier credit financed a larger share of working capital than customer credit absorbed — an efficient position for a distribution business, though it has swung between years and should not be assumed stable (see section 05).
−18 days cash cycle, FY25Business overview
The company supplies enzyme-based and specialty-chemical products, sourced from principal manufacturers, into three process industries. Products are typically sold alongside on-site technical/applications support rather than as a stand-alone commodity.
Paper industry
Enzymatic stickies control, odour-control programmes, an enzymatic masterbatch programme, barrier/OGR coatings and non-sodium pH boosters positioned as caustic-soda alternatives.
Sugar industry
Non-QAC/DTC mill sanitation products, phosphoric-acid replacement, dextran and starch control, imported lime, and syrup-preservation formulations.
Distillery industry
Broad-spectrum contamination-control enzymes, high-alcohol-tolerance yeast, antimicrobial formulations, fermentation enzymes and a COD-reduction programme.
Note on technology ownership. Company materials describe several of the above as patented or first-in-India programmes. Where sighted, these credentials attach to third-party principal manufacturers whose products the company distributes, not to intellectual property registered in the company's own name; the financial statements record no capitalised intangible assets.
Business model & economics
Revenue is earned through product distribution to process-industry customers, with technical/applications support bundled into the relationship rather than billed separately.
Cost of materials consumed as a share of revenue — a trading margin structure rather than a manufacturing one.
Technical/on-site service is not separately billed or disclosed in the financials; it is a service overlay on product sales, per company materials.
Sales commission paid to promoter-directors and a promoter-linked entity — effectively the company's sales function (see section 09).
Revenue is billed on delivery to process-industry customers on open credit terms (debtor days ranged 43–111 across FY24–FY25), against trade credit taken from suppliers (creditor days 93–126 across FY23–FY25). The relationship between these two cycles has not been stable year to year — see section 05.
| Particulars | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue from operations | 263.60 | 351.54 | 379.27 |
| Cost of materials consumed | 200.81 | 237.49 | 266.65 |
| Gross profit | 62.79 | 114.05 | 112.62 |
| Gross margin | 23.8% | 32.4% | 29.7% |
| Employee cost | 9.26 | 16.99 | 26.08 |
| Other operating expenses | 8.71 | 8.59 | 6.85 |
| Other expenses (incl. commission) | 56.79 | 70.25 | 68.72 |
| Reported EBITDA (PBT + finance costs + depreciation) | (11.97) | 18.22 | 10.97 |
| Reported EBITDA margin | (4.5%) | 5.2% | 2.9% |
| Add: promoter remuneration | — | — | 42.00 |
| Adjusted EBITDA | — | — | 52.97 |
| Adjusted EBITDA margin | — | — | 14.0% |
| Finance costs | 0.44 | 4.91 | 7.98 |
| Depreciation | 0.01 | 0.09 | 0.24 |
| Profit / (loss) before tax | (12.41) | 13.23 | 2.77 |
| Profit / (loss) after tax | (12.41) | 13.03 | 2.02 |
Working capital & inventory cycle
As a distribution business, the company's economics turn on how quickly it collects from customers relative to how quickly it pays suppliers, and how much stock it needs to hold in between.
| Particulars | FY23 | FY24 | FY25 |
|---|---|---|---|
| Debtor days | 103.5 | 110.6 | 42.9 |
| Inventory days | 10.6 | 2.0 | 31.4 |
| Creditor days | 125.6 | 101.1 | 92.6 |
| Cash-conversion cycle | (11.5) | 11.4 | (18.3) |
Inventory rose sharply in FY25 (to ₹22.94 L from ₹1.27 L) alongside the shorter debtor cycle, consistent with the company holding stock against orders rather than a change in product mix; the tax-audit quantitative schedule shows closing stock of roughly 15,500 kg across twelve product lines, none individually dominant.
Supplier agreements & territory rights
Company materials reference distribution or technical-collaboration relationships with several principal manufacturers, both domestic and overseas, across the three industries served.
Evidenced supplier concentration. Tax-collected-at-source records in the FY25 tax audit imply that purchases from a single domestic principal accounted for roughly 57% of FY25 cost of materials consumed (Supplier Group A). This is the most concrete supplier fact available and should anchor diligence on supply continuity, pricing and exclusivity.
Unevidenced claims. Company materials also describe relationships with overseas principals across the Middle East and Europe. No import transaction, foreign-currency payment or overseas remittance appears anywhere in the FY23–FY25 audited accounts or the FY25 tax audit report. These relationships, if they exist, are not reflected in the company's own books as reviewed and should be verified directly with the relevant principal before being relied upon.
Supply base, as evidenced
What diligence should obtain
Written distribution/territory agreements for every principal referenced in company materials, including exclusivity, minimum purchase commitments, termination and change-of-control clauses — none were made available for this document.
Customer mix & concentration
Customers are process-industry mills and distilleries that place recurring orders against enzyme and chemical consumption norms rather than one-off purchases. A repeat order is typically triggered by production throughput, not by a discrete project.
| Customer | Segment | FY25 revenue (₹ L) | % of FY25 revenue |
|---|---|---|---|
| Customer A | Paper | 69.82 | 18.4% |
| Customer B | Sugar | 57.80 | 15.2% |
| Customer C | Paper | 8.06 | 2.1% |
| Customer D | Paper (kraft) | 0.73 | 0.2% |
| Total, named accounts | — | 136.40 | 36.0% |
| All other customers | Various, unidentified below TDS threshold | 242.87 | 64.0% |
| Revenue, FY25 | — | 379.27 | 100.0% |
The base, in numbers
Concentration in the identifiable base is moderate (top two accounts under 34%), but nearly two-thirds of revenue has no account-level visibility in the documents reviewed. A buyer should treat customer concentration as genuinely unknown, not as confirmed-low, until a full account-level ledger is produced in the data room.
Financial snapshot
Balance sheet, ₹ Lakh
Company-computed ratios (FY24 vs FY25)
Columns above read FY23 / FY24 / FY25 unless stated otherwise. The apparent improvement in debt-equity and return-on-equity between FY24 and FY25 is driven substantially by the very small equity base (₹3.62–5.64 L) rather than by a change in absolute debt or absolute profit — see the figures above.
Weakest metric. Net worth is ₹5.64 L at FY25 close, against a balance sheet of ₹131.31 L — the business is thinly capitalised and working-capital funding (short-term bank and NBFC borrowing, and historically promoter loans) does the work that equity would otherwise do.
Management & organisation
The company has been run by a small promoter-director group since incorporation, with sales substantially channelled through the same group under a commission arrangement.
| Role | Function | FY25 shareholding |
|---|---|---|
| Promoter-Director (1) | Overall leadership; largest individual commission recipient | 50% |
| Promoter-Director (2) | Operations; second commission recipient | 50% |
| Promoter-Director (3), exited during FY25 | Held equal one-third stake to Dec-2024, then divested in full | 0% by FY25 close |
Key-man and governance note. The company is closely held and the promoter group is also its de facto sales channel, paid by commission rather than fixed salary. A buyer should expect to negotiate a post-completion arrangement — employment, consultancy or transition services — with the continuing promoters, and should obtain a current, independently verified shareholding and board register before signing, given the changes that occurred both during and after FY25.
M&A proposition
The promoters are exploring a full strategic sale of the company's equity.
Two-year revenue CAGR to FY25, achieved without material capex, on an asset-light base.
Process industries served, reducing exposure to any single sector's investment cycle.
Existing principal and technical-service relationships offer a base for expansion into adjacent industrial-chemical categories under a better-capitalised owner.
Buyer profile
A trade buyer already serving paper, sugar or distillery process chemicals, looking to add a distribution and applications-support front end in South India; or a financial buyer building a platform for consolidation among regional specialty-chemical distributors.
Transaction parameters
Value-creation levers
Formalise principal distribution and territory agreements in writing; broaden the customer base beyond the four accounts currently identifiable; convert promoter commission into a market-rate, capped cost structure; and replace promoter working-capital support with a proper trade-finance facility.
Use of proceeds. Management has indicated this is intended as a full exit; no post-completion reinvestment or rollover commitment has been confirmed and should be tested directly at the management meeting.
Process & next steps
Interested parties should follow the steps below. The coded customer key in section 07 and detailed management accounts are released only after NDA execution.
For introductions, contact the deal team at CA Dhiraj Ostwal & Co., Transaction Advisory, currently handling this mandate.