Wednesday, 25 June 2014 00:00
Lucky Lanka Milk Processing Company Ltd. is planning to raise Rs. 300 million via an Initial Public Offer to be opened on 7 July. It will be offering 38,000,000 ordinary voting shares at a price of Rs. 6 and 24,000,000 ordinary non-voting shares at a price of Rs. 3. The shares will be listed on the Diri Savi Board of the Colombo Stock Exchange.
The Corporate Advisory & Capital Markets division of Merchant Bank of Sri Lanka PLC will act as the Investment Banking Advisors to the issue whilst and Bank of Ceylon will be the Bankers to the issue.
Out of the proceeds, Rs. 200 m will settle the high cost borrowings, which in turn is expected to boost the net profits immediately. Rs. 75 m will fund the expansion of the existing production plant with new cold room complex with an ammonia refrigeration system, extension to the existing UHT milk processing building and new machinery including conveyer systems and pigging systems. The remaining Rs. 25 m will be utilised for new projects such as Gedarata Kiri, Milk Bar Outlet and School Canteen.
Lucky began its life in 1991 as a domestic business with the excess milk of the household cows. Present Chairman Lal Keerthi Gunawardhana then at the age of 20 started this business with the support of his family members. Today, it operates in Kamburupitiya with a factory capacity of 20,000 litres per day.
At a national level enterprise, it has more than 5,000 farmers and seven milk chilling centres located in Bandegamma, Pannegamuwa, Wellawaya, Embilipitiya, Matara, Welimada and Bandarawela.
Lucky has six warehouses, 105 vehicles with refrigeration facility, over 50 distribution points and more than 15,000 outlets, which allows Lucky to gain significantly with the expansion plans in the post IPO era.
Moreover, the company operates in the Western (35% of sales), Southern (36% of sales) and Central (29% of sales) Provinces in the country. Revenue for 2014 reached Rs. 896.5 m compared to Rs. 841.8 m in 2013 with an asset base of over Rs. 750 m.
As the Investment Banking Advisors to the issue, Merchant Bank of Sri Lanka is confident on the IPO as it will cater to all types of investors and provide market momentum.