Parag Milk IPO will open for subscription on 4 May and will close on 6 May. Price band for the public offer has been fixed at INR220-227 per share and retail investors and eligible employees will get a discount of INR12 per share. However, retail investors will be allotted only 10% of the shares offered to be sold while non-institutional investors and qualified institutional buyers will be allotted 15% and 75% respectively.
Investors can apply for 65 shares and in multiples thereafter. Shares of Parag Milk are proposed to be listed on BSE and NSE. Parag Milk IPO will be managed by Kotak Mahindra Capital Company Limited, JM Financial Institutional Securities Limited, IDFC Securities Limited and Motilal Oswal Investment Advisors Private Limited.
Read Also: Parag Milk Foods files DRHP with SEBI
Parag Milk IPO will involve issuance of new shares of INR300 crore (INR3 billion) while 20,572,573 shares will be sold by existing shareholders through an offer for sale (OFS). Including the OFS component, the IPO will raise INR767 crore at the upper price band. Proceeds from the fresh issue will be used towards expansion and modernisation of manufacturing plants, capital investment in subsidiary Bhagyalaxmi Dairy Farm and partial repayment of the working capital consortium loan.
IDFC to exit through Parag Milk IPO
Among the existing shareholders in the company are IDFC Private Equity and India Business Excellence Fund (IBEF). IDFC Private Equity holds about 20.1% in the company and plans to sell about 82.6 lakh (8.26 million) shares. Motilal Oswal Financial Services’ IBEF will sell 60.2 lakh shares.
Parag’s inconsistent financial performance
During the financial year ended March 2015, Parag Milk Foods posted a top line of INR1,440.5 crore, up 32.5% from previous year’s INR1,089.5 crore. Similarly, its profits zoomed 62.6% to INR25.9 crore in FY2015, according to the company’s red herring prospectus. However, a look at Parag’s finances in the last five years reveals the company is not consistent with its performance.
| Parag Milk’s consolidated financial performance (in INR crore) | |||||
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 | |
| Total revenue | 658.5 | 900.5 | 927.1 | 1,089.5 | 1,440.5 |
| Total expenses | 608.1 | 817.5 | 841.6 | 1,005.9 | 1,332.3 |
| Profit/(loss) after tax | -0.4 | 18.9 | 20.7 | 15.9 | 25.9 |
| Net margin (%) | -0.1 | 2.1 | 2.2 | 1.5 | 1.8 |
