Perishability Assessment: Critical Factors in Food Industry M&A in India
India’s ₹19.8 trillion food industry is ripe for M&A, but perishability poses complex risks. This article explores how LawCrust’s hybrid consulting approach enables accurate perishability assessment mitigating inventory risks, ensuring compliance, and preserving value in food M&A deals across India.
Industry Overview & Context
India’s food industry encompasses diverse segments, including agricultural processing (grains, pulses), packaged foods (snacks, ready-to-eat meals), and quick-service restaurants (QSRs). Moreover, it spans highly perishable categories such as dairy, meats, and fresh produce, which require stringent handling and storage protocols. The cold chain encompassing refrigerated storage, transportation, and logistics is vital for preserving product quality and extending shelf life. Efficient storage and accurate shelf-life management prevent spoilage, reduce waste, and protect profitability. Lapses in these areas lead to inventory risks, impacting brand reputation and financial performance. Therefore, a thorough perishability assessment during Food M&A is essential, as it enables acquirers to clearly understand a target’s ability to preserve value across the supply chain.
1. Recent Developments (as of June 2025)
India’s food industry is undergoing transformative changes that reshape perishability assessment. In recent years, innovations in cold chain logistics such as automated cold storage facilities and robotics have significantly enhanced operational efficiency.
Real-time inventory tracking, powered by IoT-enabled devices, provides granular insights into product conditions, reducing spoilage. For instance, advanced sensors monitor temperature and humidity, ensuring compliance with quality standards.
The Food Safety and Standards Authority of India (FSSAI) has tightened regulations, with updated guidelines effective July 1, 2025, mandating clearer shelf-life disclosure and stricter packaging standards. As a result, these rules demand rigorous compliance checks during due diligence to prevent post-acquisition liabilities.
M&A activity in perishable verticals remains robust. For instance, recent deals include private equity investments in dairy firms like Amul’s expansion. Additionally, the frozen snacks sector has seen acquisitions, such as Vadilal’s strategic partnerships.
These trends highlight the need for meticulous perishability assessment to evaluate inventory risks in high-stakes categories like fresh produce, dairy, and meats.
2. Key Challenges in Perishability Assessment
Effective perishability assessment faces several challenges in India’s food industry:
- Short Shelf Lives and High Spoilage Risks: Dairy, processed meats, and fresh produce have limited shelf lives, amplifying spoilage risks. Without precise management, these categories incur significant financial losses.
- Inadequate Cold Storage Infrastructure: Nevertheless, despite recent improvements, India’s cold chain infrastructure remains highly fragmented, posing challenges for perishability management. Unreliable third-party logistics (3PLs) or outdated facilities can cause temperature excursions, compromising product quality.
- Data Gaps in Inventory Management: Many target companies, particularly smaller players, lack robust data on inventory turnover, shrinkage (losses from damage or expiry), or shelf-life forecasting. These gaps hinder accurate perishability assessment, increasing inventory risks.
- Strategic Due Diligence Lens
A comprehensive perishability assessment requires a multi-faceted due diligence approach, integrating legal, financial, operational, and technological perspectives:
- Legal: To ensure regulatory alignment, it is crucial to verify compliance with FSSAI labeling norms, including expiry dates and nutritional information.
Review recall history and traceability systems to assess legal and reputational risks. LawCrust’s legal experts ensure thorough scrutiny of compliance frameworks. - Financial: Analyse shrinkage-related losses, inventory write-offs, and insurance claims tied to spoilage. These metrics reveal the target’s perishability assessment effectiveness and impact on profitability.
- Operational: Evaluate cold chain capacity, including owned and leased storage facilities. Assess warehouse practices like FIFO (First-In, First-Out) protocols and temperature monitoring to ensure product freshness.
- Technological: Examine the target’s tech stack for freshness tracking. IoT sensors for real-time monitoring, RFID for batch tracking, and AI-driven inventory prediction tools indicate a proactive approach to managing inventory risks.
Illustrative Examples
For example, consider a chilled dessert brand evaluated during Food M&A. LawCrust’s hybrid team blending operational and supply chain expertise conducted a detailed perishability assessment and, as a result, identified high spoilage rates in last-mile delivery. Furthermore, audits revealed that third-party logistics providers lacked refrigerated vans and proper temperature controls. Consequently, this insight prompted the acquirer to proactively budget for cold chain upgrades, thereby preventing post-deal value erosion.
In contrast, a frozen food company specialising in ready-to-eat meals stood out as a high-value acquisition. Their perishability assessment highlighted a 40% reduction in wastage, driven by IoT-based inventory tracking and AI-powered predictive analytics. Real-time data on batch conditions and optimised distribution enhanced their appeal, showcasing the value of advanced technology in managing inventory risks.
Conclusion
For senior leaders pursuing Food M&A in India, a rigorous perishability assessment is a strategic imperative. By evaluating a target’s cold chain capabilities, compliance with FSSAI regulations, and technological infrastructure, acquirers can mitigate inventory risks and prevent value erosion. LawCrust’s expertise in legal, financial, operational, and technological due diligence empowers decision-makers to make informed choices, ensuring post-deal synergies and sustainable growth in India’s dynamic food industry.
About LawCrust
LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & Acquisitions, Private Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.
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