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| Edited By: Ashish K Tiwari |Source: DNA |Updated: Jul 05, 2018, 06:40 AM IST
Global duty-free retailer Flemingo Travel Retail Ltd (FTRL), which recently got approval to launch an initial public offering (IPO) from the Securities and Exchange Board of India (Sebi), is planning to raise around Rs 2,423 crore. Promoted by Atul Ahuja and Flemingo International (BVI) Ltd, the company plans to issue both new shares and 1,129,500 further shares of subsidiary Flemingo Duty Free Shop Mumbai Pvt Ltd and the offer will include up to 1,50,000 equity shares to be made available to its employees. Atul Ahuja, chairman and non-executive director, FTRL, in conversation with Ashish K Tiwari, speaks about the duty-free retailing market in general and the company's business in particular.
The market size of duty-free business globally is pegged at approximately $70 billion. It's growing at a compounded annual growth rate (CAGR) of 5-6% over last 10 years. Asia Pacific is the largest piece at about 46% of the overall market and airports is the largest channel at about 56%. Asia Pacific is also the fastest growing part of the duty-free business globally, growing at a CAGR of about 6%. Airport channel is growing at 5% and the cruise line business is growing at about 7% annually.
In 2016, it was about $374 million as per the industry reports and it is expected to hit $592 million in 2021. The Indian market has been growing at a CAGR of 18% over the last five years, we are seeing growth at 30% largely because traffic is growing at 10%. We are also adding retail space. So another 10% is coming from there, and the additional 10% is coming from spending growth. We are seeing higher growth for our business at this point in time.
I got into duty-free retailing by accident back in 2003. I came across non-resident Indians who had started duty-free shops in Kenya and Tanzania in partnership with four other non-resident Indians. I was looking to exit furniture manufacturing as the business was going south owing to cheap Chinese imports. Over the years, I built the business piece-by-piece through acquisitions across the globe and we are now among the largest players globally. We operated in 26 countries at the time of filing the draft red herring prospectus (DRHP). We have added a couple of more since then, and the details are being updated in the red herring prospectus (RHP).
We closed at Rs 4,500 crore, with Sri Lanka and Indian operations contributing 36% to the overall revenues this year. In India, we are the largest and by locations in Mumbai, we run exclusive luxury and fashion stores apart from the presence in all product categories. Markets like Delhi, Mumbai and Colombo form part of our biggest operations, in addition to operations in Chennai and Kolkata. We also have duty free operations across a lot of secondary airports like Ahmedabad, Amritsar, Jaipur, Lucknow and Goa
Typically, every top category is a reflection of biggest duty saving for the customer. In the Indian Subcontinent, alcohol forms 55% of all purchases. In European markets, tobacco is the largest category. In the cruise line, it's luxury goods like watches and jewellery because you have time out there and you are in a spending mood.
