The initial public offer of Pune-based dairy product company Parag Milk Foods Ltd will hit the primary market from May 4-6, at a price band of Rs 220-227 per equity share of face value of Rs 10 each. There will be a discount of Rs 12 on the final issue price of retail bidders and eligible employees. The total offer size is Rs 750-764 crore at the respective ends of the price band.
However, the retail portion of the issue is restricted at 10 per cent of the offer since the company does not meet capital market regulator SEBI’s requirement of a three-year profitability track record.
Parag Milk is also looking to raise Rs 300 crore by the issue of fresh shares. The company will spend Rs 150 crore on expansion and modernisation and Rs 100 crore to repay a part of the working-capital loan.
With Rs 100 crore from the issue proceeds towards debt repayment, the net debt will come down to Rs 300 crore post issue. In the long run, the company will have to gear up for the competition coming from new players like ITC and M&M.
Parag is an integrated dairy company with presence in over twenty product categories. While the company’s products are sold nationally, over half of its revenues are earned from western India.
It commenced business in 1992 with collection and distribution of milk and has now developed into a dairy-based branded consumer products company with an integrated business model.