Shares of Prabhat Diary Ltd. hit the upper circuit of Rs 78.15 apiece, surging as much as 19.95 percent after it announced its delisting plans. The company said its founder promoters plan to voluntarily delist its equity shares from the bourses.
Chairman and Managing Director Sarangdhar Nirmal and his family, who hold 50.1 percent stake in Prabhat Dairy, are considering acquiring the remaining 49.9 percent equity held by public shareholders, according to an exchange filing by the maker of dairy products. The board, it said, will consider the proposal on Sept. 10.
In its exchange filing, Prabhat Diary listed these rationales for delisting:
- The company no longer operates in its core business, which constituted its majority revenue and profit.
- The company intends to undertake new ventures and potentially raise capital which may include raising debt and dilute equity that may have risk profiled different to the dairy business.
- The company may undertake corporate restructuring through mergers and acquisitions.
- Delisting to provide shareholders an exit opportunity.
This came months after Prabhat Dairy sold its core milk processing business to Tirumala Milk Products, the India arm of France-based Groupe Lactalis', for Rs 1,700 crore. The company now aims to pivot into an animal feed and genetics company.
Prabhat Dairy, which had a debt of Rs 320 crore then, said that it will use part of the proceeds to “strengthen its balance sheet” and also share a “substantial portion” with shareholders.
Since January, when the deal was announced, shares of the company tumbled 29 percent till Thursday.
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