India: Agri-business firm Godrej Agrovet files IPO papers with markets regulator

Photo: Godrej Agrovet website

Godrej Agrovet Ltd, a seller of animal feed and crop protection solutions, on Wednesday filed draft IPO papers with markets regulator Securities and Exchange Board of India (Sebi).

In a press statement, Godrej Agrovet said the company will sell new shares worth Rs300 crore in the initial public offering (IPO). Promoter Godrej Industries Ltd will sell shares worth up to Rs300 crore, while V-Sciences Investments Pte Ltd (a Temasek investment firm) will sell 12.3 million shares. Shares worth Rs20 crore will be set aside for employees.

Kotak Mahindra Capital Co. Ltd, Axis Capital Ltd and Credit Suisse Securities (India) Pvt. Ltd will manage the initial share sale. The proceeds of the IPO will be used for repayment or prepayment of working capital facilities, repayment of commercial papers and general corporate purposes, the statement said.

Godrej Industries FY16-17 annual report says it is the largest shareholder in the company with a 63.7% stake.

The company operates across five business verticals including animal feed—the largest segment—crop protection, oil palm, dairy, and poultry and processed foods.

During FY2015-16, the company also acquired Creamline Dairy, a south India-focused milk and milk products firm along with Astec Lifesciences Ltd, an agri-chemical and pharma intermediates firm, further strengthening the company’s presence across the agri- and food business value chain.

Godrej Agrovet is the leading compound animal feed company in India, on the basis of installed capacity for the financial year 2016, according to the CRISIL Animal Feed report from 2016.

Godrej Agrovet reported a 30.5% year-on-year increase in revenue to Rs4,985 crore in FY16-17, according to the Godrej Industries annual report, while profit before tax was up 12% to Rs375 crore.

Equities brokerage firm Axis Capital has valued Agrovet at Rs7,000 crore, based on estimated earnings for 2017-18.

“With only 10% of the feeds market-organized, along with the kind of 30-40% PAT CAGR the company has been making while operating in a niche business, there is a lot of interest in the issue,” said an analyst with an equities brokerage firm, requesting anonymity.

“Besides, there has not been an IPO from the Godrej group for nearly a decade; the last being Godrej Properties (which went public in 2010),” he said, adding that the calibre of promoters like the Godrej family only makes the issue more attractive to potential investors.

“The markets have been euphoric and there have been successful recent IPOs including CDSL, Eris Lifesciences, and D-Mart earlier in the year,” the analyst said.

This article was first published on LiveMint.com.

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.