Annapurna Swadisht
Annapurna Swadisht is coming out with a 100% book building; initial public offering (IPO) of 43,22,000 Equity Shares of face value of Rs 10 each in a price band Rs 68-70 per equity share.
The issue will open for subscription on September 15, 2022 and will close on September 19, 2022.
The shares will be listed on NSE Emerge Platform.
The face value of the share is Rs 10 and is priced 6.80 times of its face value on the lower side and 7 times on the higher side.
Book running lead manager to the issue is Corporate Capital Venture.
Compliance Officer for the issue is Shakeel Ahmed.
Profile of the company
The company is manufacturer of snacks and food products, namely, Fryums, cakes, candys, namkeen, chips and Gohona Bori. Its key raw materials include refined flour, palm oil, spices and laminates. The company use raw material of premium quality sourced from reputed local suppliers, which help it to ensure the quality of its products. It is a Bharat FMCG Company. It is one of the largest FMCG player in Eastern India and it is the fastest growing segment in Fryums, Cakes, Candies, Namkeen and Potato Chips. The company has a unique price point of Rs 5 which makes it the dominant player in Rural Area. The company sells more than 12 Lakh packets of products daily. The company has a hub in Asansol with a constructed area of approximately 50,142 sq. ft. and at manufacturing unit in Siliguri with a constructed area of approximately 35,000 sq. ft. It has generated employment to over 235 people. The daily production capacity of the Asansol manufacturing unit is 15 MT of Fryums, whereas the daily production capacity of manufacturing unit at Siliguri is 10 MT of Fryums.
The company’s products are marketed under its own brand names Jackpot, Chatpata Moon, Balloon, Finger, Rambo, Makeup Box, Dhamaka, Phoochka, Jungle Adventures, Ringa, Bachpan Ka Pyaar, Kurchure, Cream Filled Cake Vanilla, Cream Filled Cake Litchi, Cream Filled Cake Mix Fruit, Cream Filled Cake Orange, Cream Filled Cake Chocolate, Mixed Fruit Flavoured Cake, Chocolate Flavoured Sliced Cake, Pluss, Malai Pop, Imly Pop, Coconut Crunch, Kaju Candy, Coffico, Masala Teekha, Salted Chips, Paprika Spices, Tomatina Classic, American Cheese, Gram Gathiya, Gram Chana Jor, Crispy Diet Chidwa, Gram Bhawnagri Sev, Gram Badam Pokora And Gram Masala Muri.
It maintains hygienic norms and use good quality raw materials for manufacturing of its products. With a client centric approach, the company strives hard for utmost contentment of the customers. The manufactured products are prepared completely under hygienic atmosphere by the professional makers. It has been certified by Food Safety and Standards Authority of India (FSSAI) for the quality management systems of the company in relation to its products.
Proceed is being used for:
Industry overview
The Fast-Moving Consumer Goods (FMCG) sector is the fourth largest sector in the Indian economy with a market size of $110 billion in 2020. The industry is expected to reach a market size of $220 billion by 2025 registering a CAGR of 19% over the forecast period. Within the FMCG sector, Household and Personal Care category accounts for 50% of the sales, Healthcare category contributes to 31% and Food & Beverages category contributes to 19% of the overall sales in this sector. The Food & Beverages sector contributes to approximately 30% of household spending in India. Rising income levels, increasing Urbanisation, change in consumer preference towards healthy and organic foods drives the growth of this segment. Rural segment is growing at a rapid pace and accounted for a revenue share of 45% in the overall FMCG sector in India. In the last decade, India's rural FMCG market has recorded a CAGR of 11.3% and has contributed 75% growth in the FMCG sector. The growth is mainly driven by increased brand awareness arising from media exposure and higher penetration of internet and mobile phones.
The snacks industry of India is the most promising and booming segment of the FMCG category. Consumers always prefer healthier and flavorful options in the food market. Besides, snacks are more popular with the younger generation, and India has one of the world's highest number of the younger population. There is a rise in demand for snacks in India; it is driving the companies to grow and operate in this segment lucratively. The India Snacks Market is expected to reach $ 23.36 Billion by 2026. The packed snacks such as instant and ready-to-cook snacking food items act as the primary growth drivers for the snacks industry in India. The consumption of package snacks is growing in India due to hygienic factors, easy availability, numerous choices, and a rise in its citizens' personal disposable income. The Indian snack processing industry is an encouraging as well as a thriving arm of the FMCG category. Snacking industry has shown remarkable growth in last few years owing to factors such as growing middle-class population, demographic shifts, youth entering the workforce, rise in busy lifestyles, increasing nuclearisation of households, rising urbanisation, local availability of snacks at small pack sizes and low price along with enhanced offerings covering regional flavours and taste.
Pros and strengths
Strong distributor network: The company has an extensive sales and distribution network, that covered approximately 300 nos. of Distributors and 80 Super Distributors as of June 30, 2022, spread across West Bengal, Bihar, Assam, Odisha and Jharkhand in India. The company’s success lies in the strength of its relationship with its distributors. Due to strong distributors network and branding in Tier II and Tier III cities and rural areas in the state West Bengal, Odisha, Assam, Jharkhand and Bihar, its product is known to public. Its team, through their vast experience and good rapport with distributors is able to achieve increased level of business for the Company. To retain its customers, its team regularly interacts with retails and focuses on gaining an insight on changing taste and preference of customers.
Experienced & skill management team: The company has experienced & skill management team to motivate the sub-ordinates and staff to step towards their achievements and organizational goals. With their efficient management skills and co-ordination with sub-ordinate, they are always working as a catalyst to encourage the entire team for the development and nourishment of the organization.
Testing and quality control facilities: From start to end of the manufacturing process, strict measures are put in place to emphasis on quality and product safety. From the procurement of raw ingredients and materials to the packaging and shipping of products, it has a team of 25 personnel dedicated to ensuring that each manufactured product adheres to its internal and external quality control standards and regulations. In order to ensure that such policies, standards and regulations are complied with, the quality control team has been trained to impart such knowledge of quality, regulatory and statutory standards and their various updates, to the manufacturing staff in general.
Risks and concerns
High working capital requirement:: Due to manufacturing activities, the company’s business requires significant working capital. It depends on internal accrual, creditors and borrowed fund to meet its finance for working capital. It may also be required to depend on the additional borrowed capital to fund the working capital in future with increase in volume of operations and production. The additional borrowed fund may require it to dedicate a substantial portion of its cash flow from operations to payments of interests, thereby reducing the availability of its cash flow to fund capital expenditures and other general corporate expenditures. It limits its borrowing ability and places it at a competitive disadvantage relative to competitors that have less debt or greater financial resources.
Do not have long term agreements with suppliers: Production quantity and cost of the company’s products are dependent on its ability to source raw materials and packaging materials at acceptable prices, and maintain a stable and sufficient supply of its major raw materials. Its key raw materials include refined flour, palm oil, spices, and other additives. It procure majority of raw material from local suppliers with whom it has no formal arrangements. There can be no assurance that it will be able to procure all of its future raw material requirements at commercially viable prices. Furthermore, in the event that such suppliers discontinue their supply to it or if it is unable to source quality raw material from other suppliers at competitive prices, it may not be able to meet its production and sales targets. Interruption of, or a shortage in the supply of, raw material may result in its inability to operate its production facilities at optimal capacities or at all, leading to a decline in production and sales.
Operate in competitive markets: The company operate in highly competitive market segments that are highly fragmented among several market participants. In the food product segment, it compete with numerous multinational and Indian companies with sizeable market shares as well as the broader industry comprising numerous small competitors. Its competitors including ITC, Pratap Snacks, Haldiram, DFM Food and Bikaji to name a few. Free information available on internet about manufacturing food items may also poses a competitive risk. Moreover, barriers to entry for the market segments in which it operate are generally low as the investment cost is very high. It anticipate these low barriers to entry, combined with forecast growth potential in the food industry, will lead to increased competition both from established players as well as from new entrants in the industry.
Outlook
Incorporated in 2015, Annapurna Swadisht is a manufacturer of snacks and food products, namely, Fryums, cakes, candy, namkeen, chips and Gohona Bori. It sells more than 12 lakh packets of products daily. The company is one of the largest FMCG players in Eastern India and it is the fastest growing segment in Fryums, Cakes, Candies, Namkeen and Potato Chips. It has two manufacturing units one in Asansol with a constructed area of approx. 50,142 sq. ft. and in Siliguri with a constructed area of approx. 35,000 sq. Its manufacturing facilities are generally equipped with modern and automated production processes, with specialized custom-made manufacturing equipment obtained from national and international suppliers. The company's products are marketed under the own brand names Jackpot, Chatpata Moon, Balloon, Finger, Rambo, Makeup Box, Dhamaka, Phoochka, Jungle Adventures, Ringa, Bachpan Ka Pyaar, Kurchure, Cream Filled Cake Vanilla, Cream Filled Cake Litchi, among others. On the concern side, the company may require several statutory and regulatory permits, licenses and approvals in the ordinary course of its business including Food Safety and Standards Act, 2006, environmental approvals, factory license, labour related and tax related approvals, some of which the vompany has either received, applied for or is in the process of application. Besides, the company may be required to recall some of its products from the market due to a specific quality issue or the product not meeting customer requirements. While it has not been required to make any sales recall of its products in the past, it cannot ensure that it would not be required to recall its products in the future.
The issue has been offered in a price band of Rs 68-70 per equity share. The aggregate size of the offer is Rs 29.38 crore to Rs 30.25 crore based on lower and upper price band respectively. On performance front, total revenue has increased by Rs 4,075.47 lakhs and 200.76% from Rs 2,029.99 lakh in the fiscal year ended March 31, 2021 to Rs 6,105.46 lakh in the fiscal year ended March 31, 2022. The increase in revenue is on account of increase in sale with the expansion of geography. Net Profit has increased by Rs 189.77 lakh and 371.17% from profit of Rs 51.13 lakh in the fiscal year ended March 31, 2021 to profit of Rs 240.90 lakh in the fiscal year ended March 31, 2022. Meanwhile, the company intends to cater to the increasing demand of its existing customers and also to increase its existing customer base by enhancing the distribution reach of its products. Enhancing its presence in additional regions will enable it to reach out to a larger market. The company plans to increase its customers by increasing the product & geographical base, maintaining its client relationship and renewing its relationship with existing buyers.
