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Avenue Supermarts, the parent company of D-Mart supermarket retail chain, has received market regulator : SEBIs approval. The company is planning to raise up to Rs.1,870 crore through the IPO. Avenue Supermarts is owned by top notch stock market investor Radhakishan Damani The IPO is expected to enter the capital market in the first fortnight of January 2017
About the Industry:
Economic reforms during early 1990s catapulted Indian economy on a high growth path. The country registered a real GDP growth of about 9.5% in the period 2006-2008 and averaged 8% from 2006-2011. The Indian economy has a significant presence on the global economic stage. During FY 2010 to FY 2016, India‘s Real GDP grew at a CAGR of 7.3% and at 7.5% during 2015-2016 making it the fastest growing major economy in the world. India‘s GDP was 2.5% of world GDP in 2013 and it is expected to rise to 3.1% and 3.8% of world GDP in 2016 and 2021 respectively. IMF has pegged India‘s real GDPgrowth between 7.5% -7.7% for FY 16-20. IMF and other agencies have predicted India to be in the top three global economies by 2050. Sustained high Real GDP growth of over 6% since 1991, has led to a fundamental transformation of the Indian economy.
Globally India is seen as one of the key consumer markets from where future growth is likely to emerge. It is estimated that India‘s consumption expenditure will increase to USD 2,000bn by 2020 and will surpass the consumption expenditure of developed economies like Italy, France and United Kingdom. By 2030, India is expected to rank among the top 5 economies in terms of consumption
About the Company:
The Company is an emerging national supermarket chain, with a focus on value-retailing. According to Technopak, in Fiscal 2016 the Company was one of the largest and the most profitable F&G retailer in India. It offers a wide range of products with a focus on the Foods, Non-Foods (FMCG) and General Merchandise & Apparel product categories.
It opened our first store in Mumbai, Maharashtra in 2002. As of September 15, 2016, we had 112 stores with Retail Business Area of 3.40 million sq.ft, located across 41 cities in Maharashtra (58), Gujarat (26), Telangana (13), Karnataka (7), Andhra Pradesh (3), Madhya Pradesh (3), Chhattisgarh (1) and NCR (1). At the end of Fiscals 2014, 2015 and 2016, it had
75, 89 and 110 stores with Retail Business Area of 2.14 million sq. ft., 2.66 million sq. ft. and 3.33 million sq. ft.,respectively. It plans to deepen the store network in southern and western India and gradually expand its network in other parts of India pursuant to its cluster-focused expansion strategy.
For Fiscal 2016, Maharastra contributed a majority of its Revenue from Sales (62.57%) followed by Gujarat (18.83%), Telangana (10.15%), Karnataka (6.14%) Andhra Pradesh (1.03%), Madhya Pradesh (0.85%) and Chattisgarh (0.43%).
It operates and manages all its stores. It operates predominantly on an ownership model (including long-term lease arrangements, where lease period is more than 30 years and the building is owned by it) rather than on a rental model. It opens new stores using a cluster approach on the basis of adjacencies and focusing on an efficient supply chain, targeting densely-populated residential areas with a majority of lower-middle, middle and aspiring upper-middle class consumers.
It operates distribution centres and packing centres which form the backbone of its supply chain to support its retail store network. As of September 15, 2016, the company had 21 distribution centres and six packing centres in Maharashtra, Gujarat, Telangana and Karnataka.
Objects of the IPO:
Rs.1,080 crore from IPO will be used towards debt reduction while Rs.366 crore will be used to construct or purchase new outlets. The remaining amount will be used for general corporate purposes.
Total Revenue ( In Million)
2014-15 Rs. 64,576.89
2013-14 Rs. 47,023.25
20112-13 Rs. 33,551.04
2011-12 Rs. 22,224.09
Net Profit/(Loss) as Restated( in millions)
2014-15 Rs. 2,116.89
2013-14 Rs. 1,613.72
2012-13 Rs. 938.55
20111-12 Rs. 604.06
The Company has a strong track record of revenue growth and profitability. Its total revenue has grown at a CAGR of 40.28% from Rs. 22,224.09 million in Fiscal 2012 to Rs. 86,061.05 million in Fiscal 2016. Its net profit after tax, as restated has grown at a CAGR of 51.85% from Rs. 604.06 million in Fiscal 2012 to Rs. 3,212.07 million in Fiscal 2016.
As per Restated Consolidated Financial
Basic EPS for the year 2015-16 is Rs. 5.72
RoNW for 2015-16 is 21.13%
Net Asset Value per Equity Share as on March 31, 2016 Rs. 27.08.
The Company has generated strong cash flows from operations for the last five Fiscals.This has enabled it to further invest in the business. Its liquidity position enables it to consistently pay the suppliers on or before the due date, allowing it to benefit from supplier discounts.
The Promoters of the Company are:
1. Radhakishan S. Damani;2. Gopikishan S. Damani;3. Shrikantadevi R. Damani;4. Kirandevi G. Damani;5. Bright Star;6. Royal Palm Trust;7. Bottle Palm Trust;8. Mountain Glory Trust;
9. Gulmohar Trust; and10. Karnikar Trust.
As on date of DRHP, the Promoters hold, in aggregate, 512,910,000 Equity Shares, representing 91.34 % of the issued and paid-up Equity Share capital of the Company.
Lead Managers & Registrar :
Kotak Mahindra Capital Company ,Axis Capital, Edelweiss Financial Services, HDFC Bank and ICICI Securities, Inga Capital, J M Financial Institutional Securities, Motilal Oswal Investment Advisors and SBI Capital Markets are other book running lead managers to the issue and Link Intime India has been appointed the registrar
Detailed Information and analysis relating to Financials of the Company will be provided once the priceband is announced.