Pune, India-based Parag Milk has been granted regulatory approval to pursue an initial public offering after filing a prospectus with the Securities and Exchange Board of India (SEBI) this past autumn.

 

Last October VC Circle reported that the company was seeking to raise Rs 325 cr (US$49.5 million) through a possible float, however, the final approval from SEBI was for the raising of Rs 1,200 cr (US$180 million). The company is planning to use Rs 150 cr (US$22.5 million) of the fresh issue to fund the modernization and expansion of its plants at Manchar and Palamaner, and will also use Rs 100 cr (US$15 million) to pay down a working capital loan, and to finance general corporate costs of operations.

 

The offer of up to 19,850,000 equity shares, which are set to be listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) of India, is being managed by Kitak Mahindra Capital, JM Financial Institutional Securities, IDFC Securities and Motilal Oswal Investment Advisors, reports NDTV Profit.

 

Parag Milk is the second Indian dairy company to file for an IPO following Ahmednagar-based Prabhat Dairy Pvt Ltd., which suffered a poor showing due to a correction in the secondary market. However, its private equity backers decided to cut the issue by half its size, saving the float, according to VC Circle.

 

Founded originally as a milk distributor in 1992, Parag Milk has grown into a branded, dairy consumer products company, whose portfolio includes cheese, ghee, fresh milk, whey protein, curd, paneer, yogurt, milk powder, and dairy beverages. The company produces its own milk at its fully automated Bhagyalaxmi Dairy Farm in Manchar where it milks 2,000 Holstein cows, but also purchases milk from farmers across 29 districts at more than 3,400 village-centered milk collection centers. The company has a milk processing capacity of 2 million liters per day, and its cheese factory is the largest in India with raw cheese output of 40 tons per day.

 

Between fiscal year 2011 and fiscal year 2015, Parag’s operating revenue more than doubled, and in the year ending March 31, 2015, the company saw a 32% year on year increase in revenue to Rs 1,440.8 cr (US$216 million), while the company’s net profits more than doubled last year.