The initial public offer of Pune-based dairy product company Parag Milk Foods Ltd will hit the primary market from May 4-6, at a price band of Rs 220-227 per equity share of face value of Rs 10 each. There will be a discount of Rs 12 on the final issue price of retail bidders and eligible employees. The total offer size is Rs 750-764 crore at the respective ends of the price band.

However, the retail portion of the issue is restricted at 10 per cent of the offer since the company does not meet capital market regulator SEBI’s requirement of a three-year profitability track record.

The offer has a fresh issue component of up to Rs 300 crore. The company, which sells products such as milk, curd, cheese, butter, paneer under the Gowardhan, GO and Pride of Cows brand names, will use the fresh funds its raises to meet the capital expenditure requirements in relation to expansion and modernisation of existing manufacturing facilities at Manchar and Palamaner, improving the marketing/distribution infrastructure, investment in subsidiary for financing the capital expenditure requirements in relation to the expansion and modernisation of the Bhagyalaxmi Dairy Farm, partial repayment of the working capital consortium loans and for general corporate purposes.

The remaining portion of the offer includes an offer for sale of over 2.05 crore equity shares, mostly a partial exit by private equity investments made by IDFC PE and Motilal Oswal PE (1.4 crore), 31 lakh shares on the block by the promoter group and another 32 lakh shares by other selling shareholders.

Bids can be made for a minimum of 65 equity shares and thereafter in multiples of 65. The shares are proposed to be listed on the BSE and NSE. The merchant bankers to the issues are Kotak Mahindra Capital, JM Financial Institutional Securities, IDFC Securities Limited and Motilal Oswal Investment Advisors.

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