Agri commodities-focused supply chain firm Shree Shubham Logistics Ltd has filed its draft red herring prospectus (DRHP) with market regulator SEBI to float its initial public offer (IPO). The proposed public issue comprises fresh issue worth Rs 210 crore (34 million) besides an offer for sale which would lead to part-exit for its private equity investor Tano Capital.
This would make it yet another PE-backed firm queuing up for a public float and the first firm to do so in the new year.
Here’s a snapshot of the IPO:
* Total issue comprises fresh issue of shares to raise up to Rs 210 crore ($34 million) in addition to an offer for sale of 7 million shares by Tano Capital.
* Promoters: Shree Shubham is a subsidiary of public listed firm Kalpataru Power Transmission Ltd, promoted by Bafna family.
* Bankers: Inga Capital, Citigroup and IDFC Securities.
Use of proceeds
It would sue Rs 50 crore each for part financing the project cost of establishing new warehouses and further capitalisation of its NBFC unit besides Rs 70 crore for retiring debt.
* Started operations in January 2007 and is engaged in post-harvest value chain for agri-commodities based on an integrated business model. Its activities include warehousing, procurement, primary processing, trading, collateral management, funding facilitation, funding, testing & certification, and pest management in relation to agri-commodities.
* It is into midstream segment of agri value chain and wholesale distribution of agri-commodities.
* As of November 30, 2014, it managed and operated 149 warehouses through a hub and spoke model across the states of Rajasthan, Gujarat, Madhya Pradesh and Maharashtra, with a total storage capacity of around 9.39 million sq ft in terms of storable floor plate area. The warehouses are either owned or hired or are under a public-private-partnership (PPP).
* In particular it manages warehouses on a PPP basis with Rajasthan State Warehousing Corporation (RSWC), amongst others. As of November 30, 2014, it managed 75 warehouses of RSWC at 38 specified locations, which provides for around 3.80 million sq ft in terms of storable floor plate area of its total storage capacity. The storage capacity utilisation level at the RSWC warehouses for the eight months period ended November 30, 2014 was at 107.73 per cent.
* It has recently acquired a non-banking financial company (NBFC), Punarvasu Holding and Trading Company Private Limited to directly provide funding facilities to market participants in the value chain for agri-commodities.
* It is also in an advanced stage of setting up a primary processing plant at Netra, Rajasthan which will replace its existing unit at Salawas, Jodhpur. This unit, which is to start by June 30, 2015, will be able to undertake primary processing of agri-commodities such as cumin, sesame and ground nut and others such as fennel, fenugreek and coriander.
Its revenue growth has been on a tear and has risen from Rs 88.6 crore in FY10 to Rs 378 crore in FY14. In the same period its EBITDA rose from Rs 2.29 crore to Rs 66.6 crore. In the same period it moved from net loss of Rs 3.8 crore to net profit of Rs 23.6 crore.
However, the current year has been relatively slow with the first six months generating revenues of Rs 140 crore with EBITDA of Rs 29.95 crore. Its net profit in the first half of FY15 was Rs 4.9 crore.
PE firm Tano Capital had invested Rs 80 crore in the company through a mix of equity shares (Rs 35.1 crore) and compulsorily convertible debentures or CCDs (Rs 44.9 crore) in May 2013. It currently owns 14.27 per cent in the firm, having converted just under a third of the CCDs. Its remaining CCDs can give it as much as 6.5 million shares, which it would hold post IPO.