Hatsun Agro raising $4.8M from HNIs, to enter ready to eat food range

Hatsun Agro Product Ltd, India’s largest private sector dairy firm, is raising Rs 30 crore ($4.8 million) through preferential issue of equity shares to a clutch of individuals. The firm is also planning to add a range of ready-to-eat food items to its product portfolio, it disclosed on Thursday.

The company said it plans to issue shares at Rs 300 each to a few non-promoter individuals, who are existing investors in the firm, subject to shareholders’ approval. The funds will be used to meet working capital requirement and capital expenditure.

Of Rs 30 crore, Rs 12 crore will come from P Vaidyanathan, who is already a non-executive director with Hatsun. Three individuals, Satyanarayanan Dhanushkodi, Sankaranarayanan Dhanushkodi and Jegamohan Aravandy, all of whom are believed to be US-based professionals and academics, are putting in Rs 12 crore together. Another Rs 6 crore will come from V V V & Sons Edible Oils Ltd.

V V V & Sons besides Dhanushkodis had previously invested Rs 4 crore together in the company in 2009.

The four investors are estimated to pick just under 1 per cent stake in the firm with this preferential allotment.

The dairy company which produces and markets the Arokya brand of liquid milk and a wide range of dairy products under the Hatsun brand also plans to carry out on experimental basis production and sale of a range of ready-to-eat food items. A commercial decision will be taken at a later date, it said.

Recently, WestBridge, a public markets focused PE firm picked 1.23 per cent stake in Chennai-based listed firm Hatsun Agro for an estimated Rs 35-40 crore (around $6 million).

Hatsun Agro’s offerings range from liquid milk under the brand name Arokya and ice cream under the brands Arun and Ibaco, besides a range of dairy products, including ghee, butter, dairy whitener and milk powder. It has a strong market positioning with its flagship brands Arokya and Arun Icecreams in southern India.

Last year in October, Hatsun Agro acquired milk dairy products manufacturer Jyothi Dairy for an undisclosed amount.

Hatsun closed last financial year with revenues of Rs 2,493.54 crore, up around 15 per cent over FY13 but its net profit almost doubled in the same period to Rs 81.69 crore.

The dairy sector has seen a lot of activity in the last few months. Last month, Orissa-based Milk Mantra raised $13 million in Series C led by Fidelity Growth Partners with participation of existing social venture investor Aavishkaar.

Recently, media reports stated that Sequoia Capital is close to investing $25 million (Rs 150 crore) for a minority ownership of Milky Mist Dairy Foods Pvt Ltd.

Apart from this, in the last three to four years the dairy sector has been attractive for PE players. Black River Asset Management, an arm of US-based agribusiness giant Cargill, invested Rs 110 crore in Dodla Dairy. Parag Milk Foods raised funding from Motilal Oswal Private Equity and IDFC Alternatives and is also expected to raise another round from World Bank’s arm International Finance Corporation (IFC).

IFC has also backed Modern Dairies in the segment, while Prabhat Dairy raised private equity funding from Rabo Equity Advisors and French development finance institution Proparco last year.

(Edited by Joby Puthuparampil Johnson)

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