Parag Milk Foods Limited Parag Milk Foods Limited to raise Rs. 316 crore

Parag Milk Foods Limited, a leading dairy-FMCG Company in India announced its plans to raise a total of Rs. 316 crores 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 26th April 2021 as well as regulatory approvals.

Reinforcing its trust in Parag Milk Foods, International Finance Corporation (IFC) is proposing an investment of up to Rs. 155 crores by way of subscription to preferential issue of equity shares and subscription of FCCBs in addition to proposed subscription to NCDs of Rs.150 crores 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 crores. 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 crores 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 crores that includes preferential allotment of 50,00,000 convertible share warrants in the name of Mr. Devendra Prakash Shah along with 50,00,000 to Mrs. 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%.

Commenting on the same, Mr. 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 focussing on key consumer categories and have focussed to enhance the long-term performance of the company."

He further added, "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 freeup 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.

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."

Shares of Parag Milk Foods Ltd was last trading in BSE at Rs.111.35 as compared to the previous close of Rs. 105.55. The total number of shares traded during the day was 54606 in over 1019 trades.

The stock hit an intraday high of Rs. 111.95 and intraday low of 106. The net turnover during the day was Rs. 5976750.

Source : Equity Bulls

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