Home/Article/Keventer Agro One of Indias Largest FMCG Brands Gears Up for an IPO
Keventer Agro One of Indias Largest FMCG Brands Gears Up for an IPO
04 Aug 2023

With a product portfolio of over 90 SKUs, Keventer Agro is one of the dominant Fast Moving Consumer Goods (FMCG) brands in India. The company holds a commanding position in terms of market share in the Eastern and North Eastern regions of the country. 

Keventer Agro, in a bid to raise some capital, is coming up with a public issue. The Draft Red Herring Prospectus (DRHP) has also been filed with the Securities and Exchange Board of India (SEBI) in that regard. Wish to know more about the public issue of Keventer Agro? Continue reading to find out all about it. 

Company Overview 

It is important to first understand the company’s business before proceeding to take a look at the details of its IPO. Here’s a brief overview.

Keventer Agro was incorporated in 1986 as an FMCG brand dealing in dairy, packaged, and fresh food products. Since its incorporation, the company consistently worked towards expanding its product portfolio. As of March 31, 2021, the Keventer Agro has over 90 SKUs across multiple segments. 

The company’s business verticals can be split into two. First is the packaged foods and beverages segment, where the entity is involved in manufacturing and distributing products of Parle Agro such as Frooti, Appy, Appy Fizz, B Fizz, Bailey, and Smoodh, among others. Under this vertical, the company is also involved in producing and distributing frozen and ‘ready-to-cook’ foods under the ‘Keventer’ brand. 

The second business vertical is dairy and fresh food products, where the company sources, manufacturers, processes, and distributes products such as regular milk, UHT milk, curd, ice cream, milkshakes, and lassi, among others under the ‘Keventer’ and ‘Metro’ brands. Additionally, the entity is also involved in the sale of bananas under the ‘Keventer’ brand. 

Company Financials 

Before proceeding to take a look at the details of the IPO of Keventer Agro, let’s get a quick look at some of the key financial metrics of the company. 

(all figures are in ₹ million)

Particulars

FY21

FY20

FY19

Equity Share Capital

131

131

131

Net Worth (Adjusted) 

3,273.19

3,365.44

3,423.45

Total Borrowings

4,674.25

4,159.81

3,807.89

Operating Revenue

8,302

9,451

8,817

Restated Profit / (Loss)

(761.76)

34.19

(1.15)

Diluted Earnings Per Share (EPS)

(29.05)

(0.87)

(0.04)

Return on Net Worth (RoNW) 

(79.27%)

1.97%

(0.07%)

Net Asset Value (NAV) per equity share

39

68

67

Note: Since the DRHP was filed with the SEBI in 2021, only the figures up until March 31, 2021, have been included. 

Key Strengths of the Company 

The company has stated a few points as its key strengths in the Draft Red Herring Prospectus filed by it. Here’s a quick look at what they are. 

  • Leading FMCG player in North Eastern and Eastern regions of India
  • Possess a diversified product portfolio of more than 90 SKUs
  • Extensive usage of technology for achieving distribution efficiency 
  • Strong multi-channel product distribution platform 
  • Exceptional brand visibility due to marketing initiatives 
  • Long track record of innovation and successful new product launches
  • State-of-the-art manufacturing facilities 
  • Sourcing of high-quality raw materials and strict quality and food safety norms
  • Qualified and experienced senior management led by an able Board of Directors 

Key Risks for the Company 

The company has detailed some of the risks that can materially affect its business in the DRHP. Let’s see what they are. 

  • Manufacturing, sales, and distribution operations are concentrated in the Eastern and North Eastern regions of India
  • Inconsistent supply of raw materials and seasonality could affect business operations
  • Raw material price fluctuations can stress cash flows 
  • Non-availability of water, electricity, or fuel can disrupt the business processes
  • Fast Moving Consumer Goods segment is highly competitive 
  • Legal proceedings against the company and its promoter 

Details of the IPO

As of now, the company has only filed the Draft Red Herring Prospectus with the SEBI, which only contains minimal information regarding the IPO. Further details such as the opening and closing dates and pricing of the issue are not yet known. However, more information would come to light when the company files its final Red Herring Prospectus. That said, here’s a quick glimpse of some of the information that’s currently available to the public. 

As with most other upcoming IPOs in India, the public issue of Keventer Agro also consists of two components. One is a fresh issue of equity shares and the other is an Offer for Sale (OFS) from the company’s promoters. From the fresh issue of shares, the company is planning to raise around Rs. 350 crores, which it plans to use according to the objectives mentioned in the DRHP.  

As for the Offer for Sale (OFS) component, the promoter of the company - MANDALA SWEDE SPV is planning to offload around 1,07,67,664 (1.07 crore) equity shares via this IPO. 

The reservation portion of the Keventer Agro IPO is as follows - 75% of the total issue would be for Qualified Institutional Buyers (QIBs), 15% would be for Non-Institutional Buyers (NIBs), and 10% would be reserved for retail investors. 

Objects of the Offer

The proceeds that the company receives from the Upcoming IPO 2023, after accounting for expenses, would be used to satisfy the following set of objectives. 

  • For funding capital expenditures
  • For repayment or pre-payment of borrowings
  • For general corporate purposes 

Conclusion 

Only when the company files the final Red Herring Prospectus, more key details regarding the public issue will be known to the public. And as of now, there hasn’t been any word regarding the upcoming IPO 2023 from the company.

After reading through the company’s business, financials, and available details of the Keventer Agro IPO, would this be something that you might be interested in investing in? If it is, then it is advisable to open a demat account right away so that you can be prepared to apply for the IPO once it is open for subscription. 

If you don’t have an account, simply visit the website of Motilal Oswal to open one for free. You can apply for a 2-in-1 trading and demat account online through a completely paperless process. 

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