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Maharashtra-based Prabhat Dairy, an integrated milk and dairy products company, is looking to raise up to Rs 300 crore via primary issue for initial public offer (IPO).
The company filed its draft red herring prospectus (DRHP) with securities market regulator Sebi in March this year and has received approval.
Prabhat Dairy plans to set up new production lines for value-added milk-based products like mozzarella cheese, cheddar cheese, processed cheese and paneer.
Commenting on IPO plans, Vivek Nirmal Nirmal, CEO and managing director, Prabhat Dairy said, " We are planning to raise Rs 300 crore via IPO. The process will be completed in the next three months. We will utilise the funds mainely for expansion of the business and reduction of debts."
Netherlands' Rabobank's India-focused private equity firm Rabo Equity Advisors had invested Rs 80 crore in the company. French development finance institution Proparco had also invested Rs 60 crore in 2012-13 through preferential allotment in the company.
Currently, Rabo Equity Advisors owns 22.73% while Proparco holds 14.19% stake.
Nirmal added, "As part of our growth strategy, we intend to continue to invest in increasing our manufacturing capacities for our existing dairy products and also develop manufacturing capabilities for new products, particularly high margin products. The cheese market grew by around 20% CAGR to reach Rs 5,500 crore. Growth was mainly driven by the urban population, which accounted for about 80 to 90% of the total cheese consumption in India."
Prabhat Dairy's institutional clients include Abbott Healthcare, Mondelez India Foods (maker of Cadbury), Britannia Industries, Mother Dairy and Heritage Foods.
The dairy has an aggregate milk processing capacity of 15 lakh litres per day from its two plants at Navi Mumbai and Shrirampur. The dairy has recorded a net profit of Rs 17 crore in FY14 with annual turnover of Rs 850 crore.
According to a CRISIL report, the milk prices are expected to rise by 7 to 8% CAGR over the next three years, primarily driven by an increase in fodder prices, which in turn, are expected to be driven by a similar rise in minimum support prices of key crops. Thus, overall, the segment will grow by 12 to 13% CAGR with a market size of 31,000 crore.
