KKR commits to invest up to Rs520 crore in Kwality

Kwality Ltd will use the money to strengthen its own brand and expand into more profitable retail business

article source:Livemint : July 14, 2016.

Kwality reported consolidated net sales of Rs.6,416 crore in the year ended 31 March.

Mumbai: India’s largest private dairy company Kwality Ltd Wednesday said private equity fund KKR India has agreed to invest up to Rs.520 crore in the company in a structured finance deal.

Delhi-based Kwality earns more than 70% of its revenue by selling dairy products to companies such as Hindustan Unilever Ltd, ITC Ltd and Britannia Industries Ltd. The company will use the money to strengthen its own brand and expand into more profitable retail business.

“We are in a critical stage of growth where we are shifting our business model from B2B to B2C, which encompasses revamp of all business functions across the value chain including procurement and product mix shift,” Sanjay Dhingra, managing director, Kwality Ltd, said in a statement.

The company will use the money to strengthen milk procurement infrastructure for high-margin value-added product categories including cheese, paneer, table butter, tetra-packs, flavoured milk and yoghurt, the statement added.

On 5 June, Mint had reported that KKR India was set to invest about Rs.600 crore in Kwality in a structured debt transaction. Kwality, formerly Kwality Dairy Ltd, sold its ice-cream brand to Hindustan Unilever in 1994. The company that was set up to supply milk to Kwality Ice Creams India Ltd was acquired by the Dhingra family in 2002. Sanjay Dhingra held 65% in the company as of 9 April, according to BSE data.

Kwality reported consolidated net sales of Rs.6,416 crore in the year ended 31 March. The company is in the process of introducing flavoured milk, tetra pack milk, and several variants cheese and table butter, the company had said after announcing its latest earnings.

“We are confident of the business strategy employed by Kwality to expand its footprints in the retail dairy segment and are positive that the company is on track to become a prominent player in the B2C category in a short span of time,” said Sanjay Nayar, chief executive officer, KKR India.

KKR so far has invested more than $3 billion in about 60 companies in India, including GMR Holdings Pvt. Ltd, Avantha Group and Apollo Hospitals Enterprise Ltd.

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