Hyderabad-based Dodla Dairy Ltd has filed a draft red herring prospectus for the initial public supplying (IPO) with the capital industry regulator Sebi. The public concern comprises a fresh concern of equity shares worth up to Rs 50 crore and an provide for sale (OFS) of up to 1 crore equity shares by promoters and an investor. The OFS consists of 83 lakh equity shares by TPG Dodla Dairy Holdings Pte Ltd and up to 4.16 lakh equity shares by Dodla Sunil Reddy and up to 10.41 lakh equity shares by Dodla Family Trust and up to 3.27 equity shares by Dodla Deepa Reddy.
The enterprise plans to utilise the net proceeds of the fresh concern towards repayment and/ or prepayment, in complete or element, of specific borrowings availed by the enterprise funding capital expenditure specifications, and common corporate purposes. The enterprise will join listed peers such as Hatsun Agro Products, Heritage Foods and Parag Milk Foods. Hatsun Agro Products has a price tag to earnings (P/E) ratio of 102.3 x though Parag Milk Foods has a P/E of 9.7x. ICICI Securities Ltd and Axis Capital Ltd are the book operating lead managers to the concern, though KFin Technologies Private Ltd is the registrar.
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For the six months ended on September 30, 2020, Dodla Dairy posted a profit of 74.7 crore though in the monetary year, its profit stood at Rs 49.8 crore. India is the biggest milk producer globally and milk production is expanding at a healthier price. Per capita availability (PCA) of milk in India has grown at 5.2% CAGR more than FY15-19. According to the DRHP, even ahead of a nation-wide lockdown was announced on March 24, 2020, numerous urban cities had ordered a closure of restaurants and public eateries to include the spread of COVID-19. This made provide chain disruption temporarily up to June 2020.
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The strengthening of the co-operatives model has aided the development of the milk processing segment. a subsidy of Rs.4-5 per litre of milk supplied to the farmer by the co-operative dairies, has also encouraged new farmers to enter milk production, enabling co-operative organizations to establish a sturdy foothold of their brands. To counter this, private players like Nestle and Britannia are investing in differentiated merchandise like higher-high-quality tetra pack ultra-higher-temperature processed milk (UHT) and flavored milk. These merchandise sell at a 50-60% premium compared with milk sold in pouches and cater mostly to quite wellness-conscious customers.