Mumbai-Kabir Ali ..
Varun Beverages Ltd, the world’s second largest PepsiCo Inc. bottler, on Wednesday said its Rs1,100 crore initial public offering (IPO) will open on 26 October. The company has set a price band of Rs440-445 per share for the IPO, which will close on 28 October.
Promoters Ravi Jaipuria and his son Varun Jaipuria will sell 5 million shares each in the IPO, while the company will sell 15 million new shares. The beverages manufacturer has hired Kotak Mahindra Capital Co. Ltd, Axis Capital Ltd and CLSA India Pvt. Ltd and YES Securities (India) Ltd to manage the IPO.
The company will use proceeds from the IPO to repay part of its Rs1,700 crore debt, taken on to fuel its expansion in the last few years. Rs600 crore of the debt is from PepsiCo and interest-free. However, the company still pays close to Rs110 crore in interest charges per annum on the remaining Rs1,100 crore, which will reduce by Rs70 crore following the IPO, said Raj Gandhi, president and group chief finance officer.
Varun Beverages accounts for 45% of PepsiCo’s volumes in India. The company is the sole bottler and distributor for the North and East with the exception of Jammu and Kashmir, Odisha, Bihar and Jharkhand regions, Ravi Jaipuria said at a press conference.
Between fiscal 2013 and June this year, the company invested Rs2,459.14 crore on expansion and modernization of its production capacities and increasing the penetration of its chilling equipment such as visi-coolers.
In 2015, the company expanded its operations by acquiring new sub-territories in the North, including four production facilities in Uttar Pradesh, Uttarakhand and Haryana. In 2016, it acquired two production facilities in Goa. It is also in the process of setting up a greenfield facility in Zimbabwe in anticipation of getting franchise rights for the region.
The inorganic growth helped it grow revenues on a compounded annual basis by 31.5%, from Rs1,147.25 crore in financial year 2011 to Rs3,394.14 crore in financial year 2015, even as the overall beverages industry was impacted by excessive rain in 2013 and then two consecutive years of drought in 2014 and 2015.