Mrs Bectors Food IPO Review

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Mrs Bectors Food IPO

7.5

Company Background

8.0/10

Price Band

7.0/10

Financial Health

7.5/10

Industry Situation

8.0/10

IPO Proceeds Usage

7.0/10

Pros

  • Well Known Brand Portfolio
  • Leading Biscuit Exporter
  • Positive Financially

Cons

  • Fierce Competition
  • Insufficient supply of raw materials

Mrs Bectors Food Background

The company is engaged in the manufacturing of non-glucose biscuits and premium bread in North India. They operate under two of their well-known brands “ Mrs Bector’s Cremica” and “English Oven“.

Their range of products like biscuits, bread and buns cater to retail customers in 11 states within India and institutional customers across entire India. They also export their biscuits under their label as well as under third-party private labels to around 61 countries.

In Delhi NCR area, their brand “English Oven” is one of the largest players of premium bread segment supplying over 0.12 million loaves per day.

As per the Technopak Report, Mrs Bectors Food is the largest supplier of buns in India which also cater to famous QSR chains such as Hardcastle Restaurants Private and Burger King India Private Limited.

They have 6 strategically located manufacturing facilities in Phillaur and Rajpura (Punjab), Tahliwal (Himachal Pradesh), Greater Noida (Uttar Pradesh), Khapoli (Maharashtra) and Bengaluru (Karnataka) where all their products are manufactured in-house.

They constantly keep on introducing new products and maintain high levels of quality in their existing products.

As of June 30, 2018, their portfolio of products consists of 542 SKU’s products across all their product segments.

They have started supplying frozen pizzas, croissants and muffins to hotels, restaurants and cafés and introduced ‘Golden bytes’, ‘Kalonji Cracker’, a range of digestive biscuits including ’oatmeal’ and ‘cornflakes’, ‘100%’ whole wheat bread and “Bunfills” in the financial year 2018.

They have obtained quality certifications and accreditations like certification from the Food Safety and Standards Authority of India (FSSAI) and the FSSC 22000.

Also, the U.S. Food and Drugs Administration has provided the certification to their biscuit manufacturing facility situated in Phillaur (Punjab). They have received British Retail Consortium to certify global standard for food safety for manufacturing of sweet and semi-sweet cookies, crackers and biscuits and Halal certification for manufacturing biscuits.

Their distribution network consists of 135 super- stockists and 570 distributors. They export to 61 countries through their global distribution network and tie-ups with buying houses like Monteagle International (UK) Limited.

Mrs Bectors Food Management Information

Currently, the Board of Mrs Bectors Food consists of 8 Directors. Mr Subhash Agarwal is the Chairman and Independent Director, Mr Anoop Bector is the Managing Director, Mr Ishaan Bector and Mr Parveen Kumar Goel are Whole Time Directors.

Ms Rajni Bector is the Non – Executive Director, Mr Rahul Goswamy is the Non – Executive Nominee Director, Mr Nem Chand Jain and Mr Rajiv Dewan are the Independent Directors of Mrs Bectors Food Limited.

Subhash AgarwalChairman and Independent Director

He is a Commerce Graduate from Shri Ram College of Commerce, Delhi University and holds a bachelor’s degree in law from Punjab University, Chandigarh. He is an advocate and has been practising for around 60 years.

Since 1995, he has been a member of the District Taxation Bar Association, Ludhiana. He is an awardee of Life Time Achievement Award and an Award of Appreciation by the District Taxation Bar Association (Direct Taxes), Ludhiana.

Mrs Bectors Food IPO Data Points

Mrs Bectors Food IPO will open on (undisclosed) and close for subscription on (undisclosed).

The offer consists of an offer for sale of up to (undisclosed) lakh equity shares, aggregating up to ₹8000 million by selling shareholders.

  • Up to (undisclosed) lakhs equity shares aggregating up to ₹338 million are being offered by Mr Anoop Bector,
  • (undisclosed) lakh equity shares aggregating up to ₹3755 million by Linus Private Limited,
  • (undisclosed) lakh equity shares aggregating up to ₹630 million by Mabel Private Limited,
  • (undisclosed) lakh equity shares aggregating up to ₹2777 million by GW Crown Pte. Ltd.,
  • rest (undisclosed) lakh shares aggregating up to ₹500 million by GW Confectionary Pte. Ltd.

(undisclosed) equity shares will be reserved for market makers and (undisclosed) shares will be issued to investors.

The price band range has been set at ₹(undisclosed) – ₹(undisclosed) per share. The IPO size is expected to be up to ₹8000 million or ₹800 Crore implying this to be one of the biggest IPOs of the year.

Also Read: Upcoming IPOs in 2018

The market lot size is of (undisclosed) equity shares and the shares will be listed on the Bombay Stock Exchange (BSE).

Pursuant to a resolution on July 10, 2018, the offer has been authorised by the Board of Directors and pursuant to a resolution of the shareholders on August 1, 2018, the offer has been approved by them.

Mrs Bectors Food Financial Performance

The company has shown a consistent increase in total revenues and total assets over the last 3 years.

 

Revenues showed an increase of 8.73% in the fiscal year 2018 as compared to fiscal 2017. The PAT increased by 29.56% to ₹320.18 million in the financial year ended March 1, 2018, as compared to ₹250.56 million reported in the previous year.

The Return on Net Worth of the company in the financial years ended March 31, 2016, 2017 and 2018 was 19.15%, 11.02% and 12.54% respectively.

Mrs Bectors Food IPO Objectives

The proceeds of the IPO will not be received by the company. The main objectives of the Mrs Bectors Food IPO are to provide liquidity to its shareholders, enhanced corporate image, brand name and increased visibility

Mrs Bectors Food IPO Events

Mrs Bectors Food filed the Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) on August 10, 2018, for the 100% Book Building IPO.

The offer will open on (undisclosed) and close on (undisclosed). The finalisation of basis of allotment is expected to happen by (undisclosed) and the initiation of refunds is expected to start by (undisclosed).

The transfer of shares to demat accounts is expected to start on (undisclosed) and the expected listing date will be (undisclosed).

Mrs Bectors Food IPO Recommendation

Let us examine various strengths and risks related to the business of Mrs Bectors Food Limited.

The biggest strength of the business is their well-known brands and a portfolio of the myriad of medium and premium products. Their focus on quality and recipes of their products make them enjoy a comfortable market share in their industry. They keep on innovating and launching new products in the market while maintaining the quality of their previous products.

Also, they are a leading exporter of biscuits with about 23% share of the Indian biscuit export market according to the Technopak Report in 2017.

Their revenues from the export of biscuits were ₹2,063.41 million constituting 45.52% of the Biscuit Revenue from Direct Sales in Financial Year 2018, which has grown at a CAGR of 13.21% during the period between the financial years 2014 to 2018.

Their exports mainly help them in operating across business cycles and mitigate seasonality risk in the domestic market. They are also the preferred supplier of buns to Hardcastle Restaurants Private for the last 11 years.

Their stringent quality standards have helped them to cater to other multinational QSR chains as well. They have 6 manufacturing facilities that have been located strategically and have developed a strong network of distributors across India and globally as well.

The experience and skills of promoters and management team is also an added strength for the business. Also, they have a strong financial profile and track record.

Now, listing down some important risk factors for the business of the company.

The demand for their products depends on demographics, local preferences, food consumption trends, the level of consumer confidence of their consumers. Any shift in these and their inability to anticipate these may affect the business negatively.

Any negative publicity due to any contamination or deterioration of their products may cause legal problems and restriction on the use of their well-recognized brand name may affect the profitability of the company.

Also, the company faces fierce competition from many of their peers like Britannia, Parle and ITC in the biscuit segment and Britannia, Modern and Harvest Gold in the bread and bakery segment.

Failure to protect confidential information from their competitors like product recipes, pricing or launch information may affect the operations negatively.

Insufficient supply of raw materials due to any reason like seasonality, price fluctuation and adulteration may affect the operations of the company.

Inability to adhere to strict food safety laws, environmental laws and other mandatory regulations of their industry or the loss of their existing certifications for their products also pose risks to the business.

After analysing the market position of the company, its growth and expansion strategies and its financial performance as well as risks related to the business, it can be said that the investors may subscribe to the Mrs Bectors Food IPO.

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Mrs Bectors Food IPO Advisors Information

Edelweiss Financial Services Limited, IDFC Bank and IIFL Holdings are acting as Book Running Lead Manager to the issue. Link Intime India Private is acting as the Registrar for the Mrs Bectors Food IPO.

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