Dairy company Kwality Ltd (formerly known as Kwality Dairy India Ltd) has received approval from its board of directors to raise Rs 60 crore (about $9 million) by way of preferential allotment of equity shares, convertible warrants and compulsory convertible debentures.
The company will issue the shares/warrants/debentures to “persons/entities other than promoter group”. Further details of the transaction, however, have not been disclosed.
As on March 2016, the promoter holding in the company stood at 64.95 % while institutions and non-institutions held 1.8 % and 33.26 %, respectively.
Last week, the Mint reported citing sources that the private equity major KKR India is looking to invest about Rs 600 crore in Kwality through a structured debt transaction.
The funds will help the Delhi-based Kwality, which is the country’s largest private dairy by revenues, strengthen its own brand and expand its more profitable retail business, the paper had said.
Kwality produces a range of products, including ghee, flavoured milk, yogurts, butter, cheese and curd. In 1994, the former owners of Kwality sold the ice-cream brand to Hindustan Unilever.
The company that was set up to supply milk to Kwality Ice Creams India Ltd was acquired by the Dhingra family in 2002. Unlike peers, it is mostly a business to business (B2B) supply firm. It gets more than 70% of its revenues by selling its products to companies such as Hindustan Unilever Ltd, ITC Ltd and Britannia Industries Ltd.
It has six milk processing units in Uttar Pradesh, Haryana and Rajasthan, and retails products under its Dairy Best brand. Kwality also supplies to Mother Dairy, Cadbury’s and ice cream makers Vadilal Enterprises Ltd and Cream Bell.
India is the world’s largest producer of milk but the country’s dairy market is highly fragmented and is dominated by local milkmen, regional brands and milk cooperative Amul. The sector has attracted several investors in the recent years, and has also seen consolidation moves.
In 2014, social venture investor Aavishkaar was among investors who put money in Odisha-based startup Milk Mantra Dairy Pvt Ltd.
French giant Groupe Lactalis SA recently bought the milk products business of Mumbai-listed Anik Industries Ltd for Rs 470 crore ($70 million) in its second acquisition in India in as many years. The deal helped Lactalis go neck and neck with India’s top private dairy firm Hatsun Agro Product Ltd in terms of revenue.
Kwality scrip rose 0.9% to touch Rs 111.40 a share at 2.45pm on BSE in a strong Mumbai market on Wednesday.
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