The owner and operator of D Mart supermarket chain sets price band of Rs 295-299 per equity share for the issue
Avenue Supermarts, the owner and operator of D Mart supermarket chain, is set to raise Rs 1,870 crore through an initial public offer (IPO). The price band for the issue, opening on March 8 and closing on March 10, is between Rs 295 and Rs 299 per equity share.
According to Neville Noronha, MD & CEO, Avenue Supermarts Ltd, a significant portion of the funds being raised will be deployed towards debt repayment and balance for expansion and other general expenses. Approximately Rs 1,080 crore from the net proceeds will be for reducing debt, which is currently at Rs 1,400 crore. Of the balance, Rs 366 crore will be utilised for funding expansion including construction and fit outs for new stores and Rs 424 crore for general corporate purposes, the company said in its draft red herring prospectus (DRHP).
Focusing on value-retailing, the company, according to retail consultancy firm Technopak, was one of the largest and the most profitable food and grocery retailers in India in the last fiscal. The supermarket chain offers a wide range of products with a focus on the foods, non-foods (fast moving consumer goods), general merchandise and apparel product categories at very attractive prices, making it a preferred shopping destination for consumers.
The company's total revenue grew at a compounded annual growth rate (CAGR) of 40.28% from Rs 2,222.4 crore in fiscal 2012 to Rs 8,606.1 crore in fiscal 2016. For the nine months ended December 31, 2016, its total revenue stood at Rs 8,803.2 crore. Its net profit after tax increased at a CAGR of 51.56% from Rs 60.4 crore in fiscal 2012 to Rs 318.75 crore in fiscal 2016. For the nine months ended December 31, 2016, the net profit after tax stood at Rs 387.47 crore.
Having opened the first store in Mumbai in 2002, the retail chain currently operates 118 stores (as of January 31, 2017) spread across 3.59 million square feet of retail real estate across the country.
The company's stores are located across 45 cities viz. Maharashtra (59), Gujarat (27), Telangana (13), Karnataka (7), Andhra Pradesh (4), Madhya Pradesh (3), Chhattisgarh (1), NCR (1), Daman (1) and Rajasthan (2). On the supply chain part, it operates distribution centres and packing centres and has 22 distribution centres and six packing centres (as on January 31, 2017) in Maharashtra, Gujarat, Telangana and Karnataka.
The retailer's expansion plans include deepening store network in southern and western India and gradually expand the network in other parts of the country following the cluster-focused expansion strategy. The company will utilise a portion of the net proceeds for setting up new stores aggregating to a built-up area of 21 lakh square feet by 2020.
"We intend to further enhance our position in the retail supermarket business in Maharashtra and Gujarat by increasing our market penetration and expanding our store network in these states. We also intend to strengthen our store network in Andhra Pradesh, Telangana, Madhya Pradesh, Karnataka, Chhattisgarh and northern India. Through our associate company, Avenue e-Commerce Ltd, we plan to venture into e-tailing business," the company said in its DRHP, adding that new stores have already opened in NCR, Daman and Rajasthan in fiscal 2017.
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