Anmol Industries has filed its draft prospectus with capital market regulator SEBI. The Kolkata based company plans to list itself on NSE and BSE though sale of shares by existing shareholders. In total, INR750 crore will be mobilized through Anmol Industries IPO. Here is a snapshot of the company’s operations in five points:
Anmol Industries IPO – Business background
The Kolkata-based company is engaged in production and sale of biscuits and cakes. According to the draft prospectus, it has a diversified portfolio of more than 60 varieties of biscuits under categories such as crackers, sweet biscuits, health biscuits, cream biscuits and cookies; and more than 25 varieties of cakes under bar cakes, tiffin cakes, sandwich cakes and cup-cakes. The company has products in the premium as well as mass market categories. The company also exports its products to Asia, Africa, Middle East, Europe and Caribbean Islands but the domestic market contributes over 99% of sales.
Anmol Industries IPO – Distribution and production
Anmol Industries has an extensive distribution network across 17 states in India comprising of three depots; more than 200 super stockists, and more than 2,500 local distributors. In total, its products are sold in approximately 1.8 million retail outlets in India, according to a Frost & Sullivan report.
The company has six manufacturing facilities in India, located at Dankuni and Panchghara in West Bengal, Greater Noida and Ghaziabad in Uttar Pradesh, Hajipur in Bihar and Bhubaneswar in Odisha with an installed capacity of 294,544 MTPA for biscuits and 8,148 MTPA for cakes as of 31 March 2018.
Anmol Industries has another manufacturing facility at Sambalpur in Odisha with an aggregate installed capacity of 3,600 MTPA for rusk. It is yet to commence production at this facility but outsources a fraction of its biscuit production needs to Fortune. For the nine months ended 31 December 2017, the company’s own production accounted for 93.09% of its sales.
Anmol Industries IPO – Bihar, Uttar Pradesh and Odisha
Despite its wide distribution and network in India, the company is heavily dependent on eastern region and specifically Bihar, Uttar Pradesh and Odisha which accounted for 60.09% of its total sale during the nine month period ended 31 December 2017. For the year ended 31 March 2017, the contribution from the three states was 60.99 %.
Similarly, the company has a high dependency on two of its brands – “Butterbake” and “Dreamlite” – which generated 50.90 % and 46.60 % of its total income in FY2017 and nine months of FY2018.
Anmol Industries IPO – No fresh shares, all OFS
The IPO will not involve issue of new shares and all the shares amounting to INR750 crore will be sold by existing shareholders through an Offer For Sale (OFS). This includes Baijnath Choudhary & Family Trust (INR720.4 crore), SKG Land Developers LLP (INR22.5 crore), Delta Nirman LLP (INR4 crore), Anmol Hi-Cool LLP (INR2.5 crore), and Puneet Mercantiles LLP (INR60 lakh). Baijnath Choudhary & Family Trust is the controlling shareholder of Anmol Industries with an equity stake of 82.75%. The trust is held by the promoters of Anmol Industries.
The company has no external investors and the family’s direct and indirect shareholding amounts to 99.95%.
Anmol Industries IPO – Negative working capital cycle but uneven margins
Since the company is into perishable products, it has a high focus on keeping inventory days low. As of 31 December 2017, its inventory days were 6 days for biscuits and 12 days for cakes. Without a doubt, these are low figures although these also pose a challenge when it comes to dealing with sudden spikes in demand.
On the financial performance front, the company has done well in growing business despite stiff competition from more established players like Britannia and Parle. From a top line of INR130 crore in FY2013, Anmol Industries’ revenues increased to INR1,240.8 crore in FY2017. Although revenue figures for FY2017 are inflated as a result of merger with Anmol Bakers Private Limited (ABPL), figures for the prior years also display a growth pattern. Similarly, profits have also expanded from INR15.2 crore in FY2013 to INR71.9 crore in FY0217. However, its margins have swung between single and double digits in these years.
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|Anmol Industries’ financial performance (in INR crore)|
|Profit after tax||15.2||23.3||40.7||58.9||71.9||61.8|
|Net margin (%)||11.7||9.8||14.9||20.1||5.8||7.2|
* Figures for FY2013 and FY2014 are based on IGAAP and subsequent years are based on IND AS