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Export firm Nekkanti Sea Foods files for $115 mn IPO

Nekkanti Sea Foods Ltd, a Visakhapatnam-based seafood processing and exporting company, has filed a draft red herring prospectus with Securities and Exchange Board of India (SEBI) to float an initial public offering (IPO).

VCCircle had first reported on March 5 that Nekkanti had picked a merchant banker to help take it public.

Nekkanti’s issue comprises fresh shares worth Rs 250 crore besides a secondary sale of 8 million shares by promoters and other shareholders, according to its regulatory filing.

The estimated size of the IPO is Rs 700-750 crore, two people familiar with the development have told VCCircle.

Two other seafood processing and exporting firms,Visakhapatnam-based Sandhya Marines Ltd and Devi Sea Foods, recently filed their draft proposals to go public.

In addition, VCCircle recently reported that Visakhapatnam-headquartered Devi Fisheries Ltd has hired two merchant bankers to take the company public.

These firms will join listed peers such as Apex Frozen Foods Ltd, Avanti Feeds Ltd, The Waterbase Ltd, and Zeal Aqua Ltd in launching an IPO.

Apex Frozen Foods’ IPO was the most recent offering in the sector. The company, which raised Rs 150 crore from the public issue, went public in September last year. Its shares listed at a 20% premium and have since gained 238% from the issue price.

In the broader food processing segment, Chennai-based Capricorn Food Products India Ltd had filed its draft proposal with SEBI last month.

Here’s a snapshot of the proposed IPO:

Issue

The company will issue fresh issue of shares worth Rs 250 crore besides a secondary sale of 8 million shares by promoters and other shareholders.

The issue size is estimated at Rs 700-750 crore.

Use of Proceeds

The company will use Rs 185 crore out of the net fresh proceeds to meet its working capital requirements besides an undisclosed amount for general corporate purposes.

Banker

Motilal Oswal Investment Advisors Ltd is the sole merchant banker managing the IPO.

Lawyers

Luthra & Luthra is the Indian legal advisor to the company and merchant bankers.

Squire Patton Boggs Singapore LLP is the international legal counsel to the underwriters on the issue.

Company

The firm was originally incorporated as Nekkanti Sea Foods Pvt Ltd in September 1983. It started its operations in 1985 by taking up a leased seafood processing facility in Kakinada, Andhra Pradesh. In 1989, Nekkanti set up its own processing facility in Visakhapatnam.

Subsequently, the firm ventured into deep-sea trawling and processing seafood. It now owns hatcheries, aquaculture farms and processing plants.

Nekkanti's product offerings cater to the packaged food industry, food service companies and distributors catering to the retail segment.

The company mainly exports to European countries, the US, South Africa, Canada, Japan, the UAE, Thailand, Egypt and Fiji Islands, its website shows.

In 2016-17, the company accounted for 2.49% of India’s total shrimp exports in volume terms and 3.31% in value terms.

The company now owns and operates three processing facilities located along the coastal belt of Andhra Pradesh. The state is India’s largest farmed shrimp producer accounting for more than two-thirds of India’s shrimp production.

Nekkanti is in the process of commissioning another processing facility located at Kothapatnam, Nellore, which is expected to be operational by July this year.

Financials

The company reported consolidated net profit of Rs 116.96 crore for the nine months ended December 2017 on a consolidated revenue (from operations) of Rs 1,074.76 crore in the same period.

Nekkanti reported revenue of Rs 830.2 crore and net profit of Rs 55.21 crore in 2016-2017.

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