Parag Milk Foods launches growth funding plan

By Jim Cornall contact

- Last updated on GMT

The company said the proceeds of preferential shares and warrants would be utilized to reduce short-term debt limits and enhance working capital for future growth.  Pic: Getty Images/kanzilyou
The company said the proceeds of preferential shares and warrants would be utilized to reduce short-term debt limits and enhance working capital for future growth. Pic: Getty Images/kanzilyou

Related tags: Dairy, Milk, India

Parag Milk Foods Limited, a dairy-FMCG company in India, has announced plans to raise Rs. 316 crores ($431m) by way of preferential issue of equity shares, foreign currency convertible bonds (FCCB) and the issue of convertible warrants.

The plan is subject to shareholders’ approval at an extraordinary general meeting on April 26, 2021, as well as regulatory approvals.

The International Finance Corporation (IFC) is proposing an investment of up to Rs. 155 crores ($21m) by way of subscription to preferential issue of equity shares and subscription of FCCBs.

The proposed investment includes a preferential allotment of 6,756,757 equity shares with a value of Rs. 10 ($0.14) each at a price of Rs. 111/$1.51 (including a premium of Rs. 101/$1.38 per equity share) for a total consideration of Rs. 75 crores ($10.2m). Additionally, as part of the proposed investment, IFC would be offered to subscribe to FCCBs aggregating up to $11m by private placement to be converted at, subject to applicable laws, a conversion price of Rs. 145 ($1.98) per equity share with a five-year maturity to redemption.

Sixth Sense Venture Advisors LLP, India’s first domestic, consumer-centric venture fund, also proposed an investment of Rs. 50 crores ($6.8m) by way of preferential allotment of 4,504,505 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 crores, ($15m), which includes preferential allotment of 5,000,000 convertible share warrants in the name of Devendra Prakash Shah along with 5,000,000 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%.

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 & Sixth Sense Ventures who strongly believe in the growth potential of the company. At Parag Milk Foods, we have leapfrogged during these times by focusing on key consumer categories and have focused 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 utilized for meeting our capex requirements over the next two years and would free up our cash flows during that period. Additionally, the proceeds of preferential shares and warrants would be utilized 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.”

comments

Post your comment

We will not publish your email address on the website

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Follow us

Products

View more

Webinars