Chairman of Temasek-backed Godrej Agrovet mulls over IPO

Mr Godrej said Agrovet is growing very rapidly and is open to more purchases domestically.
Mr Godrej said Agrovet is growing very rapidly and is open to more purchases domestically.PHOTO: BLOOMBERG

MUMBAI • Billionaire Adi Godrej is considering an initial public offering of his group's animal-feed unit, the largest producer in India, as business thrives in the biggest milk-drinking country in the world.

Godrej Agrovet may be listed in the future, group chairman Godrej said in a recent interview, without providing details on the timing or valuations.

Agrovet, which made two acquisitions last year, is growing very rapidly and is open to more purchases domestically, he said.

An IPO of the unit, which is partly owned by Temasek Holdings, would be the first such deal for the 119-year old conglomerate - whose businesses range from locks to soaps, appliances and real estate - since 2010.

It would also come as rising stock prices increase the number of initial share sales in the world's fastest-growing major economy.

"There will be investor appetite for a Godrej company" listing whenever it happens, said Lkp Shares & Securities analyst Yashas Bhat, who has predicted that Agrovet is headed for an IPO. "Temasek may also look to monetise its investment, expediting the listing process."

An IPO of the unit, which is partly owned by Temasek Holdings, would be the first such deal for the 119-year old conglomerate - whose businesses range from locks to soaps, appliances and real estate - since 2010.

Temasek bought almost 20 per cent in Agrovet for 5.72 billion rupees in December 2012 - months before the Indian feed maker crossed the milestone of earning more than 1 billion rupees in net income during a fiscal year, which ends in March.

Profits at Agrovet have since doubled, surging to 2 billion rupees (S$40 million) in the year ended March 2015 amid rising demand for food in the world's second-most populous nation, according to data compiled by Bloomberg. Revenue climbed more than 20 per cent to 34.65 billion rupees in that period.

Behind some of the success is India's growing protein needs - Mr Bhat estimates India's animal feed market will probably double to a US$30 billion (S$40.6 billion) industry in the next five years.

Then there are the cows. Though eating beef is often taboo in India because the animal is revered in Hinduism, the country produces more than 160 million tonnes of milk a year as demand rises for cheese and other dairy products.

Agrovet has seized on milk's prospects in India by buying control of Creamline Dairy Products last year for an undisclosed sum. Dairy has been so popular in India that Kwality, a local producer that KKR & Co invested in recently, has seen its stock soar 9,000 per cent in a decade.

Any intentions by Temasek to cash out could spur an IPO of the company, said Mr Godrej during the interview. Temasek declined to comment on its plans for any companies it is invested in.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 22, 2016, with the headline 'Chairman of Temasek-backed Godrej Agrovet mulls over IPO'. Print Edition | Subscribe