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Biscuits maker Anmol Industries files for $110 mn IPO

Biscuits maker Anmol Industries Ltd has filed its draft papers with Securities and Exchange Board of India (SEBI) for an initial public offering (IPO).

The Kolkata-based company plans to go public through an offer for sale of up to Rs 750 crore (around $110 million), where the promoters will sell the majority of shares.

According to the draft red herring prospectus, the public issue will consist of an offer for sale by Baijnath Choudhary & Family Trust (Rs 720.4 crore), SKG Land Developers LLP (Rs 22.5 crore), Delta Nirman LLP (Rs 4 crore), Anmol Hi-Cool LLP (Rs 2.5 crore), and Puneet Mercantiles LLP (Rs 60 lakh).

Baijnath Choudhary & Family Trust is held by the promoters of Anmol, in which the trust has a 82.75% stake.

Gobind Ram Choudhary, managing director of Anmol Industries, had told VCCircle last year that the company was hopeful of launching its IPO after March 2018.

The firm had restructured its operations last year, merging Anmol Biscuits, Anmol Bakers and Anmol Industries into one entity - Anmol Industries - for better management of its businesses.

The biscuits space, which is dominated by established players such as Britannia, Parle and ITC, has not been vibrant in terms of fundraising or acquisition activities.

In the broader snacks space, Prataap Snacks and DFM Foods have gone public over the past couple of years. Prataap Snacks, which makes Yellow Diamond chips, made a strong debut on the bourses last year. It counts venture capital firm Sequoia Capital as an investor.

DFM Foods, which operates under the brand Crax, counts private equity firm WestBridge Capital as a key shareholder.

VCCircle reported at the start of the year that Bikaji Foods International Ltd, a snacks maker which counts mid-market private equity firm Lighthouse Funds as an investor, was finalising plans to go public.

More than 20 companies have received the regulatory nod for IPOs in 2018. As many as 46 firms had received clearance for IPOs in 2017, according to SEBI’s website.

Below is a snapshot of Anmol Industries’ proposed IPO:

Use of proceeds

The company will not receive any proceeds since the IPO is an offer for sale.

Merchant bankers

Edelweiss Financial Services Ltd, ICICI Securities Ltd and Motilal Oswal Investment Advisors Ltd are the managers to the issue.

Company

Anmol sells 62 varieties of biscuits under categories such as crackers, sweet biscuits, health biscuits, cream biscuits and cookies; and 26 varieties of cakes under bar cakes, tiffin cakes, sandwich cakes and cupcakes.

The company has six manufacturing facilities at Dankuni and Panchghara in West Bengal, Greater Noida and Ghaziabad in Uttar Pradesh, Hajipur in Bihar and Bhubaneswar in Odisha.

The firm has a distribution network across 17 states in India comprising three depots and more than 200 super stockists, who in turn sell products to more than 2,500 local distributors.

The biscuits market was valued at Rs 230 billion and accounted for 35% of the bakery products segment in India in the financial year 2016-17, according to a study by consultancy and market research firm Frost & Sullivan.

It is expected to grow at a compounded annual growth (CAGR) rate of 8.2% from between 2018-19 to 2021-22. The cakes and pastries market is expected to grow at a CAGR of 15.1% in the same period.

The company competes against other biscuit manufacturers such as Parle, Britannia and ITC, which account for 75% of the market. In cake manufacturing, it competes with firms such as Parle, Britannia, Elite and Monginis, which make up 69% of the market.

Financials

The company’s total income rose more than four times to Rs 1,240 crore in the financial year 2016-17 from Rs 293.73 crore in the previous fiscal. Its net profit increased to Rs 71.68 crore from Rs 58.85 crore during the same period.

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