Prataap Snacks IPO About To Hit The Market

Sequoia Capital-backed Prataap Snacks Pvt. Ltd sells potato chips and a variety of spicy Indian savouries under the brand name Yellow Diamond. It is eyeing an initial public offering (IPO) that could see the firm raise approximately Rs.400-500 crore.

The Madhya Pradesh-based snacks maker is the new one getting ready for an initial share sale. The discussions have been in progress for some time; they have planned to hire merchant bankers very soon to initiate work on the IPO. The IPO will be a combination of primary offer and an offer for sale from Sequoia, which sought to sell part of its stake in the Indore-based snack-maker. Last March, Sequoia Capital-backed snacks-maker was looking to raise $50-70 million from private equity investors in order to fund its expansion plans.

As of now, more than 25 firms have filed their draft red herring prospectuses (DRHP) with the regulator. With its IPO plans, Prataap clubs with another snacks-maker, Balaji Wafers, which is also devised plans to go public. In January, it was reported that Gujarat-based Balaji Wafers Pvt. Ltd will sell a 10 per cent stake via an IPO.

Prataap Snacks’ issue would constitute fresh equity as well as offer for sale by some of the current shareholders. Through the fresh equity issuance, the company has planned to raise around Rs. 250 crore, according to the draft red herring prospectus. Approximately, 29.82 lakh shares would be on offer via an offer for sale (OFS) and would include sale of around 1.74 lakh shares by SCI Growth Investments II, Sequoia Capital GFIV Mauritius & by some promoter group entities. As per sources, the total IPO size is seen to be more than Rs. 400 crore.

The proceeds from the IPO would be used for funding capital expenditure requirements, repayment of borrowings, modernization of current manufacturing facilities, marketing and brand building activities. As per the company’s filings with the registrar of companies, Prataap Snacks’ revenue shot up 30 per cent in the financial year 2014 to Rs.446.9 crore from Rs.344.3 crore in the previous financial year. The extruded snacks division donated Rs.211.9 crore to revenue, the highest, followed by the potato chips division with Rs.166.9 crore.

They are also aided by the fact that the sector of processed foods has strong growth capacity in India. Overall consumption of processed foods is rising. While in the US around 80per cent of the food consumed is processed, in India the number stands at just 2-3per cent. The demand for snacks has shown considerable growth exponentially in the country. The Indian snacks industry got enlarged nearly six times to Rs.47,000 crore in 2013 from Rs.8,000 crore in 2004.

Lately, many companies have filed their draft papers for IPOs which include include Avenue Supermarts, Security and Intelligence Services, Shankara Building Products and BSE.

To know about the Shankara Building Products IPO, Click "Shankara BuildPro files for Rs 400-450-crore IPO".

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