Moneycontrol Bureau
Kwality shares rallied 6 percent intraday Wednesday on capital infusion by PE fund for aggressive expansion plans.
"...has received capital commitment of upto Rs 520 crore via structured finance from KKR India to fuel its aggressive growth plans as the company continues to rapidly shift its business model towards B2C/retail segment," says the private dairy company.
The proceeds will be utilised to fund capex to further strengthen milk procurement infrastructure solely for high-margin value-added product categories including cheese, paneer, table butters, tetra-packs, flavoured milk and yoghurt among others.
The company says it intends to roll out a series of such products in the near future.
Additionally, funds will be deployed for part repayment of debt to improve cash flows and augment brand building activities. Current debt of the company is around Rs 1,300 crore.
Kwality has engaged reputed advertising and marketing firms for its brand building initiatives, namely McCann for creative, Zenith Optimedia for media planning, and Digital Quotient for social media. Additionally, the company has roped in Ernst and Young (E&Y) as its IT transformation partner.
Sanjay Dhingra, MD of Kwality believes KKR's strong pedigree and rich experience combined with our management capabilities is going to unlock significant value and will benefit all stakeholders.In an interview to CNBC-TV18, Kwality Vice President Naval Sharma said investment will be in the form of debt and there will be no equity dilution.The investment will be structured finance spread over a period of 6 years with a large chunk coming in the first year and thereafter, depending on business needs, Sharma said.
ICICI Securities PD Limited is the financial advisor to the transaction.
At 09:25 hours IST, the scrip of Kwality was quoting at Rs 115.00, up Rs 3.75, or 3.37 percent on Bombay Stock Exchange.Posted by Sunil Shankar Matkar
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