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Parag Milk Foods Limited to raise Rs 316 crore through equity shares
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Wednesday, 07 April, 2021, 08 : 00 AM [IST]
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Our Bureau, Mumbai
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Parag Milk Foods Limited, a leading dairy-FMCG Company in India unveils its plans to raise a total of Rs 316 crore by way of preferential issue of equity shares, Foreign Currency Convertible Bonds (FCCB) and the issue of convertible warrants. This is subject to shareholder’s approval in ensuing Extra-ordinary General Meeting (EGM) scheduled on April 26, 2021, as well as regulatory approvals.
Reinforcing its trust in the company, International Finance Corporation (IFC) is proposing an investment of up to Rs 155 crore by way of subscription to preferential issue of equity shares and subscription of FCCBs in addition to proposed subscription to NCDs of Rs 150 crore committed in December.
The proposed investment includes a preferential allotment of 67,56,757 equity shares of face value Rs 10 each at a price of Rs 111 (including a premium of Rs 101 per Equity Share) for a total consideration of Rs 75 crore. Additionally, as part of the proposed investment, IFC would be offered to subscribe Foreign Currency Convertible Bonds (FCCBs) aggregating up to US$ 11 million by private placement to be converted at, subject to applicable laws, a conversion price of Rs 145 per equity share with a 5 year maturity to redemption.
Sixth Sense Venture Advisors LLP, which is India’s first domestic, consumer-centric venture fund, also showed confidence in the company and has proposed an investment of Rs 50 crore by way of preferential allotment of 45,04,505 equity shares of face value Rs 10 each at a price of Rs 111 each (including a premium of Rs 101 per Equity Share).
The promoters will further invest Rs 111 crore that includes preferential allotment of 50,00,000 convertible share warrants in the name of Devendra Prakash Shah along with 50,00,000 to Netra Pritam Shah, convertible into equity shares with a face value of Rs 10 each fully paid up, on a preferential basis, at a price of Rs 111 (including premium of Rs 101) per share warrant. With this, the promoter holding in the company would be maintained at 46 per cent.
Devendra Shah, chairman, said, “We would like to thank our existing shareholders for their continued trust and support during the pandemic. We are pleased to welcome on board marquee investors like IFC and Sixth Sense Ventures who strongly believe in the growth potential of the company. At Parag Milk Foods, we have leapfrogged during these times by focussing on key consumer categories and have focussed to enhance the long-term performance of the company.”
“We are looking at replacing our short-term working capital limits by NCDs, where there is a two-year moratorium, as well as reduce the overall debt burden. The funds that will be raised through FCCB will be utilised for meeting our capex requirements over the next 2 years and would free-up our cash flows during that period. Additionally, the proceeds of preferential shares and warrants would be utilised to reduce short-term debt limits and enhance working capital for future growth. This would provide enough firepower to bolster the balance sheet and propel the company for future growth,” he added.
“These investments reaffirm the faith that the market has in our capability to deliver steady revenues, execute outlined strategy, and deliver profitable growth over the long term. We as promoters are fully committed to the long-term vision and goal to provide the highest level of customer satisfaction with our host of well-established brands and innovative range of products. We would like to assure all our shareholders of achieving robust operational and financial performance with the full-fledged revival in demand across product categories,” he added.
Nikhil Vora, founder and CEO of Sixth Sense Ventures, said, “Parag fits perfectly well into the Sixth Sense thesis of betting on first generation founders, pioneering products for the new age consumer within the $100bn plus diary segment. We believe the Indian branded dairy space will get deeper with consumers migrating from the unorganised 75 per cent currently to the organised space, across product segments. Parag with its strategically focused branded dairy products is best positioned to reap the benefits of the changing consumer preferences.”
“Parag has been the pioneer of various product formats with its core positioning around cow’s milk and has already established a strong dominance in cheese with a near 35 per cent market share and ghee. If a brand can crack shelf space against large coops at one end and multinationals on the other, it makes for an extremely interesting proposition. With a strong product portfolio catering to the consumer of tomorrow - whey protein, branded paneer, curd, and so on, a robust supply chain and now a well-capitalized balance sheet, we believe Parag is perfectly positioned to become to the preferred private dairy player in the country,” he concluded.
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