Dairy firm Parag Milk Foods Ltd has filed its draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India for its initial public offering to raise Rs 325 crore ($49.5 million).
VCCircle was the first to report that the Pune-based company might look to list its shares even as media reports suggested that it was in talks with various strategic players including Dutch dairy cooperative Friesland-Campina to sell a majority stake.
The company has also raised Rs 60 crore (about $9 million) afresh from existing investor IDFC Alternatives. The PE firm invested through a separate fund IDFC S.P.I.C.E by subscribing to convertible debentures.
Parag Milk is the second dairy firm to file for an IPO after Prabhat Dairy Pvt Ltd. Prabhat Dairy received a poor reception in line with a correction in the secondary market. The Ahmednagar-based firm scraped through after its private equity backers decided to cut the offer-for-sale portion of the issue by half.
Home-grown private equity firm TVS Capital picked a 7.57 per cent stake in Prabhat Dairy in its IPO. Prabhat made a flat stock market debut last month.
Here's a snapshot of the IPO
* Parag Milk is looking to raise up to Rs 325 crore through a fresh issue of shares. The IPO also includes an offer for sale of up to 19.85 million shares by promoters and existing investors IDFC Alternatives and Motilal Oswal Private Equity.
* Bankers: Kotak Investment Banking, JM Financial, IDFC Securities and Motilal Oswal.
Use of proceeds
* Of the proceeds of the fresh issue, the firm plans to use Rs 150 crore for expansion and modernisation of existing manufacturing facilities at Manchar, near Pune, and at Palamaner in Andhra Pradesh.
* It will also use the funds to repay a working capital loan (Rs 100 crore) and for general corporate purposes.
Company
* Founded in 1992 as a milk distributor, Parag Milk has developed into a dairy-based branded consumer products company.
* It makes a diverse range of products like cheese, ghee, fresh milk, whey protein, paneer, curd, yogurt, milk powder and dairy-based beverages.
* The company has an aggregate milk processing capacity of 2 million litres per day. Its cheese plant is the largest in India, with a raw cheese production capacity of 40 MT per day.
* Its manufacturing facilities are located at Manchar in Pune district of Maharashtra and Palamaner in Chittoor district of Andhra Pradesh. The Bhagyalaxmi Dairy Farm at Manchar is fully automated and houses over 2,000 holstein breed cows with higher yields of superior quality milk. It supplies farm-to-home premium fresh milk from this farm under the ‘Pride of Cows’ brand in Mumbai and Pune.
* The company also procures milk from 29 districts across Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu through more than 3,400 village-level milk collection centres.
* It sells its products under Gowardhan, Go, Pride of Cows and Topp Up brands.
* Fresh milk, ghee, cheese/paneer and skimmed milk powder contribute roughly four-fifths of the company's sales with almost equal split in segment revenues.
Financials
* The company's operational revenue more than doubled between FY11 to FY15. The firm posted a 32 per cent rise in revenue in the year ended March 31, 2015, over the previous year to Rs 1,440.8 crore.
* Its EBITDA has also risen by a similar proportion in the four-year period and grew over 33 per cent last year to Rs 109.7 crore. Its net profit grew at a much swifter pace, from Rs 62.7 lakh to Rs 29.47 crore in the four-year period. The company's net profit more than doubled last year itself.
Investors
* IDFC Alternatives and Motilal Oswal PE hold 19.21 per cent and 9.11 per cent stake in the company, respectively, besides convertible debentures that are to get converted into equity. Both are part-exiting.