Stocks

Dodla Dairy public issue opens on June 16

Our Bureau Hyderabad | Updated on June 11, 2021

Price band fixed as ₹421-428 a share

The Hyderabad-based Dodla Dairy’s initial public offering (IPO) will open on June 16, with a price band of ₹421-428 a share. The issue closes on June 18.

Bids can be made for a minimum of 35 equity shares.

Announcing the details of the IPO, Dodla Dairy Managing Director Sunil Reddy has said that a part of the proceeds would be used to pay debts to the tune of ₹32 crore. About ₹7 crore would be used for capital expenditure.

Fresh issue of ₹50 crore

The IPO comprises a fresh issue aggregating up to ₹50 crore and an offer for sale of up to 1.09 crore equity shares, including 92 lakh shares held by TPG Dodla Dairy Holdings Pte. Ltd., 4.16 lakh shares by Dodla Sunil Reddy and 10.41 lakh shares by Dodla Family Trust.

Sunil Reddy said the Covid pandemic had hit the dairy industry, slowing down the growth rate of the industry.

Covid impact

In its filing to the SEBI, the company said the initial months of lockdown, the dairy industry faced challenges in last-mile customer reach, availability of labour at plants, logistical issues such as availability of vehicles for transportation, and adhering to Covid-19 safety protocols for all employees.

“The nationwide lockdown leading to a shutdown of hotels, restaurants and cafes dried up demand from industrial users in the first half of the financial year 2020-21,” it said.

“Consumption from office canteens dried up. While hotels reopened in the second half, the number of people physically visiting hotels has come down significantly compared to pre-Covid levels, which will impact revenues from this segment in the current fiscal,” it said.

However, there was a positive side of the pandemic. While much of industrial demand in milk, butter, ghee and paneer shifted home with people preferring in-home consumption and favouring established brands on account of rising health concerns, thereby aiding revenue growth in these segments.

Outlook

Sunil Reddy, however, expected that the dairy industry will witness a turnaround in the current financial year. After hitting a low growth rate of 0.3 per cent last year, the industry was expected to grow at a compound annual growth rate of 10-11 per cent during 2021-25, the same growth rate that it witnessed during 2015-20.

In 2018-19, the industry size stood at ₹6 lakh crore. This remained stagnant at ₹6.8 lakh crore in 2019-20 and 2020-21. This, however, is expected to reach ₹9.9 lakh crore in 2024-25, growing at a CAGR of 10-11 per cent, he said.

India is the global leader in milk production, contributing about 30 per cent of milk production in 2020.

Published on June 11, 2021

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