Chennai-headquartered food processing company Capricorn Food Products India Ltd on Tuesday filed a draft red herring prospectus (DRHP) with the capital markets regulator to go public.
As per the DRHP, the company has proposed to sell fresh shares worth Rs 171 crore and an offer for sale (OFS) of up to 7.64 million shares by promoters Rahoul Jain and Shuchi Jain, investor India Build-Out Fund and other shareholders.
VCCircle had reported last September that Capricorn was considering an initial public offering (IPO) to allow its investor India Build-Out Fund to exit. At the time, the company was said to be considering an IPO size of Rs 400-600 crore.
In 2013, Capricorn had secured Rs 60 crore ($10 million) from the then Quadria Capital-managed India Build-Out Fund to drive its expansion plans.
At present, India Build-Out Fund is managed by IBOF Investment Management. Capricorn remains the last portfolio company for IBOF. An earlier effort by the company to get strategic players on board to facilitate the fund’s exit had not materialised.
It is not common for food processing companies to go public.
Below is a snapshot of the IPO:
Use of proceeds
The company will use the net proceeds aggregating up to Rs 100 crore towards full or partial repayment/prepayment of certain outstanding debts.
It also intends to use Rs 41 crore for investment in its subsidiary, Gonglu Agro Pvt. Ltd. Part of the amount will go towards general corporate purposes.
Merchant banks and lawyers
IIFL Holdings Ltd, ICICI Securities and IDFC Bank are the merchant banks handling the IPO, while Shardul Amarchand Mangaldas & Co has been handed the legal reins.
Company
Founded in 1998, Capricorn Food Products India supplies fruits and vegetables-based ingredients to more than 300 customers including branded fruit-based beverages companies, processed food producers, companies selling ice cream and bakery items, frozen foods and companies selling frozen fruits and vegetables.
Its major domestic customers include multinational companies such as Coca-Cola India Pvt. Ltd, and Varun Beverages Ltd. It also supplies to Manpasand Beverages Ltd, Cremica Food Industries Ltd, FieldFresh Foods Pvt Ltd, Hector Beverages Pvt Ltd and certain multinational companies in the domestic market.
Its overseas customers include Aujan Industries LLC, Crop’s Fruits NV, Ardo UK Ltd and Agrana Fruit Services GmbH.
The company has three multifunctional production facilities in Sathyavedu (Andhra Pradesh, Krishnagiri (Tamil Nadu), and Nashik (Maharashtra).
It also uses two production facilities located in Krishnagiri (Tamil Nadu) and Srikalahasti (Andhra Pradesh) to cater to increased demand during peak seasons, under arrangements with third party manufacturers.
Financials
Capricorn reported total revenues of Rs 460.78 crore and net profit of Rs 23 crore for the financial year 2016-17.
Its revenue grew at a compounded annual rate (CAGR) of 13.61% in the three years starting 2013-14. Capricorn's net profit has increased at a CAGR of 22.64% during the same three-year period.