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Prabhat Dairy to sell Milk Business to French Major Lactalis for Rs 1700 crore

Abha Toppo
Abha Toppo

Prabhat Dairy Ltd. has announced to sell its milk processing business that generates almost all its sales, to the France-based Lactalis Group for Rs 1700 crore as the company looks to turn into an animal feed and genetics company. Lactalis’ India wing Tirumala Milk Products has agreed to purchase Prabhat Dairy’s milk business along with its step-down subsidiary Sunfresh Agro Industries through a share-purchase accord, the seller told in a statement.

Joint Managing Director of Prabhat Dairy, Vivek Nirmal said, "The association with Lactalis group, which is one of world's largest dairy players - will provide this business a strong platform for accelerated growth impetus in becoming one of the largest private dairy businesses in the country".

Prabhat Diary incorporated in 1998, has total milk processing capacity of 1.5 million litres/day and yearly revenue of Rs 1,554 crore. Moreover, milk-processing contributed up of 98.24 % of Prabhat Dairy’s consolidated revenue.

As per reports, the deal is likely to be concluded by June and the transaction will be made in two parts. Prabhat Dairy will obtain Rs 1,227 crore for sale of its stake in Sunfresh Agro and will get Rs 473 crore for the dairy business.

The company’s shares opened 20 % higher as the declaration came before trading started in Mumbai. However the stock removed gains and tumbled above 30 % from the day’s high. It closed about 15 % lower. Prabhat Dairy has lost almost 63 % from its record high of 2017 and is now trading below its issue price. The company contends with the likes of Gujarat Cooperative Milk Marketing Federation, Amul owner; Parag Milk Food Ltd., the maker Go-branded products; and other regional players.

The diary company, which had a debt of Rs 320 crore since September, will use part of the profits to ‘reinforce its balance sheet’ and will share a ‘considerable portion’ with the shareholders.

However, the promoters will continue to be connected with the business for the next 2 years according to the agreement.

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