Out of the total fresh issue of Rs. 300 crore to be raised through the IPO, the Company is planning to utilise Rs. 147.7 crore for expansion and modernisation plan.
Parag Milk Foods Limited (the “Company”) proposes to set up a research and development centre at Manchar facility (near Pune) to develop new products and processes and a technology centre at subsidiary for training and development activities and focus on animal husbandry. Out of the total fresh issue of Rs. 300 crore to be raised through the IPO, the Company is planning to utilise Rs. 147.7 crore for expansion and modernisation plan.
The Company recently launched flavoured milk with higher protein content under its ‘Topp Up’ brand and buttermilk under ‘Go’ brand with a few variants each. It has also introduced milk variants on the basis of specific end-use and introduced T-Star milk to be used to make tea and coffee and introduced Go Kidz milk with high protein content for growing children. It now intends to increase dairy based beverages portfolio under ‘Go’ brand and introduce milk based high protein drinks.
Mr. Devendra Shah, Chairman, Parag Milk Foods Ltd. said, “We constantly focus on research and development to distinguish ourselves from our competitors to enable us to introduce new products based on consumer preferences and demand. We intend to increase the share of our value-added product portfolio by focusing on health and nutrition to cater to evolving consumer trends. We believe that we can increase our margins by focussing on increasing sales of our value-added products and that such initiatives will assist us in further diversifying our business.”
Parag Milk Foods Ltd. is the second largest cheese player in India with 32% market share. It also has the largest cheese plant in India where the addressable market is Rs. 1,200 crore. It is a pioneer and the biggest player in Cow ghee segment where the addressable market size is Rs. 61,800 crore. It is the largest private player in UHT milk market where the addressable market is Rs. 2,600 crore. In fresh milk, it is the largest private brand in Mumbai, 2nd Largest in Pune and 3rd largest in Nagpur; amongst top 5 in Bangalore & Chennai. It is a pioneer in frozen & flavored yoghurt segment and an important player in curd market in West & South India.
The Company proposes to open on Wednesday, May 4, 2016, a Public Issue of its equity shares of face value of Rs. 10 each (the “Equity Shares”) for cash at a Price Band from Rs. 220 to Rs. 227 per Equity Share. The Company in consultation with the Investor Selling Shareholders and the BRLMs will offer a discount of up to Rs. 12 per Equity Share on the Issue Price to Eligible Employees and a discount of up to Rs. 12 per Equity Share on the Issue Price to the Retail Individual Bidders. The Bid/Issue Period will close on Friday, May 6, 2016.
While the current product portfolio includes plain curd, it proposes to introduce a new variant of curd with a higher protein and lower fat content and cream cheese with a lower fat content for health conscious consumers. It also intends to introduce colostrum products, which can be consumed as a daily supplement to improve community and general health, introduce several cheese products with low fat, high protein and mineral content. It seeks to add value to and convert milk powder into food supplements and nutritional products for different age groups. Further, it intends to sell premium quality butter and ghee through the farm-to-home concept under ‘Pride of Cows’ brand.The Company’s current range of whey products include whey protein concentrates, whey permeate and demineralised whey powders. It sells whey proteins to institutional customers including Nestle India Limited and UTH Beverage Factory Private Limited and whey powders to bakeries and confectionaries. As of December 31, 2015, it had incurred Rs. 31.85 crore in setting up whey products processing infrastructure and is in the process of commissioning additional technological infrastructure to increase the concentration and grading of whey proteins that it manufactures, and sell them directly to retail consumers in the form of branded health supplement foods and beverages.
The BRLMs to the Issue are Kotak Mahindra Capital Company Limited, JM Financial Institutional Securities Limited, IDFC Securities Limited and Motilal Oswal Investment Advisors Private Limited.
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