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South-based Dodla Dairy has filed draft prospectus with market regulator SEBI seeking permission to launch its IPO. The company, backed by private equity investor TPG, is looking to raise up to INR150 crore (INR1.5 billion) through issuing fresh shares. Existing investors plan to sell up to 9,543,770 shares in Dodla Dairy IPO. These shareholders include TPG Dodla Dairy Holdings Pte Ltd and Dodla Deepa Reddy.
Dodla Dairy IPO: Use of funds
In its draft prospectus, the company said it will use INR86.3 crore from IPO proceeds for payment of certain borrowings; INR26.8 crore towards purchase of equipments while the remaining amount will go towards general corporate purposes.
Operations in South India
The company, headquartered in Hyderabad, has operations in Andhra Pradesh, Telangana, Karnataka and Tamil Nadu. Dodla Dairy claims to be the third largest player in southern states in terms of milk procurement with an average procurement of 1.00 million litres of raw milk per day (MLPD) as of 31 May 2018. In India, the company procures milk from approximately 220,789 farmers through 3,212 procurement agents including third party suppliers across 7,598 villages and through its own Dodla Dairy Collection Centres (DDCCs). The number of its DDCCs has increased from 322 in March 2014 to 3,544 in March 2018 and stood at 3,717 at the latest count as of 31 May 2018.
On the production side, the company’s installed capacity of packaged milk and production of other dairy based Value Added Products (VAPs) at 11 processing plants is at 1.29 MLPD. It plans to commence operations at its 12th plant near Rajahmundry, Andhra Pradesh next year. On the distribution and marketing front, the company boasts of 14 sales offices, 3,329 distribution agents, 379 milk distributors and 466 milk product distributors across nine states in India.
Apart from India, the company has expanded in international markets with operations in Uganda and Kenya.
In the year ended 31 March 2018, the company reported a profit of INR55.6 crore on revenues of INR1,597 crore. Both figures indicate an improvement from previous year.