Lovello to go rural

Lovello ice cream maker Taufika Foods and Agro Industries is aiming to reach out to the rural markets fast expanding with the development of the countryside.

To reach the required production capacity it plans to raise Tk 30 crore in funds from the stock market.

The initial public offering (IPO) proceeds will be channelled into acquiring a plant, purchasing machinery, freezers and vehicles, increasing storage capacity and to repay loans.

At present it can annually produce 1.80 crore litres of ice cream. Utilisation of the funds within June 2022 will take it to 2.35 crore litres.

The company has 12 depots nationwide with a combined capacity of over 2.80 lakh litres.

Thanks to an increasing per capita income and availability of electricity, demand in rural areas has been rising fast, said Company Secretary AKM Zakaria Hossain.

"Already we have focused on the outside of Dhaka so you will find our brand in very remotes area where no other brand is available," he said.

"It is costlier to win Dhaka's market share beating other brands," he added.

Responding to a question, Hossain said their sales did not grow in 2019-20 due to the pandemic driving down demand.

The impact on Lovello has been lower compared to its peers because its market has expanded to rural areas, he said, adding that the pandemic also had a lesser impact on rural areas compared to Dhaka.

Ice cream industry insiders expect this year's sales to be reduced by 30 per cent to 35 per cent.

Apart from its rural presence, Lovello has some unique items like mini cone and chocobar alongside kulfi.

The company has already got approval from the stock market regulator to issue 3 crore shares at Tk 10 each.

The subscription for the shares will run from January 3 to 7, said the Dhaka Stock Exchange (DSE) in a disclosure on Tuesday.

Incorporated in Bangladesh in August 2011, the company started its commercial operation in 2016.

Annual sales stood at around Tk 1,500 crore when circumstances were normal, with brands accounting for 65 per cent to 70 per cent of the turnover, according to the industry insiders.

The ice cream industry is fast growing at almost 15 per cent every year so stock investors have the appetite for the stock, said stock investor Arif Hossain.

With Lovello known for its goodwill in the ice cream industry, it might be a good stock for investors, he said, adding that the company must continue to uphold its reputation.

Eligible investor who intends to submit an application needs to maintain a minimum investment of Tk 50 lakh.

For approved pension funds, recognised provident funds and approved gratuity funds, the minimum investment requirement is Tk 1 crore at market price in listed securities as of December 23.