Varun Beverages Ltd, the second largest bottler of PepsiCo globally, is gearing up to issue an initial public offering (IPO) worth Rs 1,000 crore to expand its operations in India and abroad.
The company is expected to issue the public offer in early 2017, sources familiar with the development told Mint.
"Varun has hired a couple of banks recently and work on the IPO has been started. The company is also in talks to hire a couple of more banks," said a source.
Varun Beverages distributes PepsiCo products in north and east India. It is the largest bottler for the company in South Asia, with operations in India, Nepal and Sri Lanka.
The company is planning to utilise the funds raised through IPO to expand its bottling operations, mainly in overseas markets such as North Africa, according to a source.
However, private equity investors in Varun Beverages have no plans to sell their stakes in the public offer. Standard Chartered Private Equity and Aion Capital Partners invested $48 million and $32 million in Varun Beverages.
Varun Beverages posted a revenue of Rs.2,063 crore for the calendar year 2014, earning a profit of Rs. 43.3 crore. PepsiCo had earlier announced that it would invest about Rs.33,000 crore in the country by 2020. It had sold its entire bottling units in North India to Varun Beverages in November 2014.
PepsiCo. India posted a loss of Rs.177 crore for the last fiscal year ending March 2015, according to a filing with the registrar of companies (RoC). Its revenue rose 13 percent to Rs.8,130 crore in 2014-15, compared to the previous fiscal year.
"There is a trend to move towards healthy drinks, products that are more organic and natural. And therefore, there has been a dip in the growth rates of fizzy drinks sales. Also, there is a strong seasonal impact on sales of these drinks," Dhanraj Bhagat, partner at Grant Thornton India Llp, told the daily.