July 16, 2018
admin
Short Note about the Company:
Qualitative factors
The company believe the following business strengths provide it with a competitive advantage in the Industry:
* Its position as a leading shrimp processor and exporter
*Strategically located processing facilities
* Strong product mix with focus on value-added products
* Strong relationships and established customer base
* Consistent track record of financial performance
* Experienced and dedicated management team
Detailed notes about this business and the company have been given in Page bottom box.
The promoters :
Nekkanti Seetha RamchandraMurty,Nekkanti Venkata Lakshmi & Nekkanti Seetha Ramchandra Murthy (HUF)
Main object of the issue is:
The object of the Offer for Sale is to allow the Selling Shareholders to sell an aggregate of up to 8,000,000 Equity Shares held by them. The objects for which the Company intends to use the Net Proceeds is Funding the working capital requirements of the Company
IPO Particulars:
IPO Opens on : ?
IPO Closes on 😕
Issue Type: Book Built Issue IPO
INITIAL PUBLIC OFFERING OF UP TO [?] EQUITY SHARES OF FACE VALUE OF Rs 2 EACH OF NEKKANTI SEA FOODS LIMITED FOR CASH AT A PRICE OF Rs [?] PER EQUITY SHARE AGGREGATING UP TO Rs [?] MILLION (THE “OFFER”) COMPRISING OF A FRESH ISSUE OF UP TO [?] EQUITY SHARES BY the COMPANY AGGREGATING UP TO Rs 2,500 MILLION (THE “FRESH ISSUE”) AND AN OFFER FOR SALE OF UP TO 8,000,000 EQUITY SHARES AGGREGATING UP TO Rs. [?] MILLION BY THE SELLING SHAREHOLDERS
Face Value: INR 2 per share
Price Band: Per Equity Share: Not declared
Minimum Order Quantity: ?
Listing will at: BSE,NSE
Shares offered to
Anchors ? Shares = INR ? Crs
QIB ? Shares = INR ?Crs
NII ?Shares = INR ?Crs
RII ?Shares = INR ?Crs (Lot size: 20 = ? Forms)
Tentative timeTable:
? – Price Band announced
? – Anchor List
? – Offer Opens
? – Offer Closes
?– Finalisation of Basis of Allotment
?– Unblocking of ASBA
?– Credit to Demat Accounts
?– Listing on NSE & BSE
Financials:
Total Income of 2016-17 INR 840.16 Crore
Total Income of 2017-18(9M) INR 1085.86 Crore
Net Profit of 2016-17 INR 55.22 Crore
Net Profit of 2017-18 (6M) INR 116.96Crore
Earnings per Share (EPS) INR 8.16
Earnings per Share 2017-18 (9M) INR 17.49
Equity Capital as on 31.12.2017 INR 13.53 Crore
Upper Price Band/last EPS: ?
Book Value of the Share as on 31.12.2017 INR 49.10
Upper offer price/Book Value Ratio:
Return on Net Worth: 25.73%
Return on Net Worth17-18 (9 M) : 35.68%
Peer Comparison:
Apex Frozen Foods Ltd
Total Income Rs. 709.68
PE: 67.49
NAV:Rs. 39.56
Avanti Feeds Ltd
Total Income Rs. 2754.47
PE: 51.56
NAV: Rs. 141.03
Lead Managers:
Motilal Oswal Investment Advisors Limited
Registrar to theIPO:
Karvy Computershare Private Limited
Registrered Office of the Company :
D.No.15-1-37/6,
G-1, Jayaprada Apartments,
Nowroji Road,
Maharanipeta,
Visakhapatnam – 530 002
Total Subscription:
on Day 1(on 00.00.2018 at 17.00 IST)
QIB : shares offered:xx Subscribed
NII : Shares offered: xx Subscribed : xx
RII : Shares offered : XX Subscribed : xx
Total : Shares offered :XX Subscribed : xx
IPO Analysis by Experts / Fund Managers
Global seafood consumption has grown at a compounded annual growth rate (“CAGR”) of 1.6% over 2006 to 2016, higher than meat (which includes bovine, poultry, pig meat and sheep meat) which grew at a CAGR of 0.8% during the same period. Global demand for seafood has risen because of rising population and incomes, availability of a variety of fish, and high protein content.In terms of per capita consumption, Organisation for Economic Co-operation and Development (“OECD”) countries (25.39 kg) and Asia (24.71 kg) topped the chart, while Africa and Latin America were at the bottom as per the provisional estimates of 2017. Per capita seafood consumption for India stands at a mere 6.64 kg in 2017, indicating
considerable potential for further growth.
Overfishing, or exploitation of seafood stock exceeding the maximum sustainable yield level, has resulted in stagnation in capture fisheries over the past 10 years. Within capture fisheries, the share of marine capture, which expanded continuously to reach a peak level of 86.4 million MT in 1996, has been on a declining trend. Based on Food and Agriculture Organization (“FAO”) analysis, the share of fish stocks within biologically sustainable levels has declined from 90% in 1974 to 68.6% in 2013. This indicates that 31.4% of global fish stocks were estimated to
be over-fished, i.e., biologically unsustainable, thereby increasing the importance of aquaculture in meeting global seafood demand. During 2006 and 2016, while the global aquaculture production grew at 5.2% CAGR, capture fisheries rose at a 0.2% CAGR. Consequently, during the corresponding period, the share of aquaculture in overall
seafood industry increased by approximately 1,200 bps from 34% in 2006 to 46% in 2016. Going forward, the trend is expected to continue as per the OECD-FAO agricultural outlook 2017-2026 report, thereby increasing the share of aquaculture to 53% by 2026. However, as per the OECD-FAO report, capture fisheries is expected to remain stagnant (at approximately 92 million MT similar to 2016 level) during following decade (2017 to 2026)
Shrimp production in 2017 was the highest-ever production recorded. Among the types of production, aquaculture method of shrimp production has steadily increased due to improved quality of feed, higher raw material availability, better disease management, government support for aquaculture for shrimps, developing new markets and higher realisation for produce.
The share of aquaculture shrimp production stood at 72% of the global shrimp production in 2017 growing at a CAGR of 5.5% between 2010 and 2017. However, growth of capture shrimp production grew at a comparatively slower rate of 1.6% CAGR during the corresponding period.
Global exports of shrimps including value added products has risen at a CAGR of 3% between 2012 and 2016 in volume terms from 2.2 million MT in 2012 to 2.5 million MT in 2016. However, the growth of global shrimps exports rose at a CAGR of 4.8% during 2012 and 2016 from 18.4 billion USD in 2012 to 22.3 billion USD in 2016.
Developed countries such as the United States, Japan and the European Union are highly dependent on imports of fishery products, as they are not self-sufficient in meeting their domestic requirement. South-east Asian countries such as Thailand source seafood products from countries such as India, add value and re-export to countries in the west, thereby earning better margins. China is one of the largest importers as well as exporters of these products.
Rising demand for aquaculture products such as shrimp and tuna has helped the United States in maintaining the pole position. Japan, which was once the largest importer, now occupies a distant second, after being overtaken by the United States. Factors such as declining demand, especially from the youth, coupled with weaker currency has made imports expensive in Japan.
The United States, Japan, Spain, China and France are the key importing countries of shrimp products, together accounting for approximately 54% of total shrimp imports (in volume terms as of 2016). Apart from its own production, China imports from countries such as India, and re-export value-added products to markets in the United States and Europe. Also, consumption of certain species, which are not domestically produced, is on the rise in China. All these factors make the country one of the largest importers for aquaculture products.
The rising demand for shrimp is met by top exporting countries such as India, Ecuador, Argentina, Indonesia and China, accounting for 60% (in volume terms as of 2016) of total shrimp exports. India’s share in the total shrimp exports to the world increased approximately 500 bps from 16% to 21% between 2010 and 2015. Advantage of tropical weather, availability of long coastline and brackish water, improved farming techniques, entrepreneurial nature of farmers, backward and forward integration supporting shrimp aquaculture and government backing for
setting up aquaculture farms have helped India ramp up its production and gain significant share in the exports market
Top five countries exporting shrimps to the United States in 2017 were India, Indonesia, Thailand, Ecuador and Vietnam by both volume as well as value. These five countries account for approximately 80% share by volume and approximately 82% share by value as of 2017. India holds the top position accounting for 32% share by volume and 33% by value during 2017. India has depicted the highest CAGR of 27% between 2012 and 2017 in shrimp exports
to the USA followed by Indonesia at a CAGR of 10% during the same period.
The United States market is slowly moving towards value-addition in shrimp imports, with peeled category enjoying the highest share at 42% in volume and value terms as of 2017. While cold-water shell-on shrimp products have reduced to negligible quantities, share of warm-water shell-on shrimp products, imported mainly from Asian and south-east Asian countries has maintained a strong share of 35% in volume and value terms during 2017. Average “56
realisations were the highest for cooked category at USD 11,254 per MT during 2017 followed closely by coldwater shell-on category at USD 11,091 per MT for the same period. The warm-water shell-on category, with average realisations of USD 9,661 per MT grew at CAGR 4.1% during 2012 and 2017.
NSFL is among India’s leading processors and exporters of processed frozen shrimp products with over three decades of operations .It has been consistently profitable since incorporation and have declared dividends for more than 25 years of our operations. It serves customers in the packaged food industry, food service companies and distributors catering to the retail segment with a focus on exports to the United States and Europe.
In Fiscal 2017, it had a volume share in the Indian shrimp industry of 2.49% with a value share of 3.31% of the total exports in such periods (Source: Based on information derived from the CRISIL Report). itsrevenues from operations have grown at a CAGR of 29.33% from Fiscal 2013 to Fiscal 2017. In comparison, India’s shrimp exports grew at a CAGR of 15% over fiscal 2013 and 2017 .
As of the date of DRHP, it owns and operates three processing facilities located along the coastal belt of Andhra Pradesh .Andhra Pradesh is India’s leading farmed shrimp producer by far, accounting for more than two-thirds of Indian farmed shrimp production in 2016 – 2017 .Its processing facilities have been accredited by leading global certification bodies including Best Aquaculture Practices . Aquaculture Stewardship Council ,British Retail Consortium and International Feature Standard .It is also in the process of commissioning another processing facility located at Kothapatnam, Nellore, which is expected to be operational by July 2018. Its processing facilities are also approved by the customers who source their shrimp products from it, and certified by various regulatory bodies, including the Export Inspection Agency, the Marine Products Exports Development Authority and United States Food and Drug Administration. It sources raw shrimp used in the processing facilities from third party farms, as well as our ASC certified shrimp farms spread across 330 acres.
Its products are frozen using individual quick freezing or block freezing technology. Its IQF products represented 88.67% and 89.31% of its revenue from operations in Fiscal 2017 and in the nine months ended December 31, 2017, respectively.
In Fiscal 2015, 2016 and 2017 and in the nine months ended December 31, 2017 its revenue from operations were Rs 6,860.94 million, Rs 7,741.50 million, Rs 8,302.07 million and Rs 10,747.60 million, respectively. Its EBITDA was
Rs 812.61 million, Rs 556.03 million, Rs 944.01 million and Rs 1,817.33 million in Fiscal 2015, 2016 and 2017 and in the nine months ended December 31, 2017. Its restated profit for the year was Rs 473.54 million, Rs 296.19 million, Rs 551.03 million and Rs 1,182.26 million, respectively in such periods.