Source: moneycontrol.com

The bulls may be bleeding and broken, but there are a few companies which believe the situation will ease up by the end of the month. Case in point: dairy firm Parag Milk Foods, which owns brands like Gowvardhan Milk and Go Cheese. The company is firming up plans to tap the capital market in the first week of February. As things stand, the issue will consist of a fresh issue of equity shares worth Rs 300 crore, and an offer for sale of upto 19.85 million equity shares. The funds will go towards brand building and expansion. Devendra Shah, Chairman of the company said: “We are expanding our consumer business, expanding our milk based beverages and whey protein business. Total for cheese, whey and milk based beverages, (we) have planned capex of Rs 150 crore for expansion.”

Parag Milk Food
                        Parag Milk Food

This expansion is aimed at taking the company’s revenues, which already stand at Rs 1,440 crore, to new highs. The focus over the next 12 to 18 months for the company will be to grow presence in tier-2 and tier 3 cities. With presence already in the North and West, the company is looking to expand reach in the South and in the East. Expansion plans also involve capturing market share in the niche health and nutrition vertical, which means adding infrastructure to support new processes. As part of the IPO, the company says existing private equity investors like Motilal Oswal and IDFC Alternatives, which own around 35 percent of the company, may sell a part of their holding. “Investors are partly exiting because their fund size and period is ending. That’s why they have exited 70-80 percent,” Shah said. A lot of this will depend on the pricing of the IPO, which is still being worked out. But the company is confident that its business plan and strong track record will prevail over the currently negative market sentiment.

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