IPO Synopsis
Sresta Natural Bioproducts Ltd, Hyderabad-based organic food company, has filed preliminary documents with SEBI to raise approximately Rs 500 crore through an initial share-sale.
The initial public offering (IPO) comprises fresh issue of equity shares aggregating up to Rs 50 crore and an offer-for-sale of up to 70.30 lakhs equity shares by the selling shareholders.
The OFS would include Peepul Capital Fund III LLC (upto 22.50 lakh shares); and Ventureast Life Fund III LLC, Ventureast Trustee Company (on behalf of the Biotechnology Venture Fund and Ventureast Life Fund III), who together plan to sell nearly 47.80 lakh shares.
JM Financial and Axis Capital are the book running lead managers to the issue.
Objective of the issue
The proceeds from the company will be used for:
1. Funding the working capital requirements of the company
2. Repayment or pre-payment in full or part, of certain outstanding unsecured / secured borrowings availed by the company
3. General corporate purposes
About Sresta Natural Bioproducts Ltd
The Hyderabad-based Sresta Natural Bioproducts owns the largest brand in the packaged organic food segment '24 Mantra' with 29% market share in FY 2020.
It is engaged in the business of procuring, processing, manufacturing, marketing and research and development of organic food products. It is also one of the leading Indian organic food brands in the USA with presence in 39 states across Indian Ethnic Stores and Mainstream and have a presence in a total of 34 countries and leading ecommerce channels like Bigbasket in India in 2021.
It offers all types of grocery staples, spices and condiments, edible oils, packaged food, beverages, meal accompaniments, etc.
The company has the highest acreage under organic cultivation among the B2C organic food companies in India and have an extensive sourcing relationship with farmers across 12 states in India. The company has a procurement network included 34,516 farmers, 190,610 acres of certified organic land across 12 states in India, 65 vendors/ companies and various aggregators.
Sresta Natural Bioproducts Ltd Financial Status
Profit and Loss
Balance Sheet
| Particulars (in Rs. Crores) | FY21 | FY20 | FY19 |
|---|---|---|---|
| Revenue | 31.21 | 26.23 | 20.55 |
| EBITDA | 2.49 | 2.37 | 0.62 |
| PAT | 1.04 | 0.95 | -0.35 |
| Particulars (in Rs. Crores) | FY21 | FY20 | FY19 |
|---|---|---|---|
| Total Assets | 19.36 | 16.95 | 15.89 |
| Share Capital | 1.83 | 1.83 | 1.82 |
| Total Borrowings | 5.26 | 4.45 | 4.90 |
| Particulars (in Rs. Crores) | FY21 | FY20 | FY19 |
|---|---|---|---|
| Net cash generated from / (used in) operating activities | 2.05 | 16.49 | 11.40 |
| Net cash from / (used in) investing activities | -0.13 | 0.59 | -6.71 |
| Net cash flow from / (used in) financing activities | -1.48 | -15.28 | -8.02 |
| Net increase (decrease) in cash and cash equivalents | 0.44 | 1.79 | -3.32 |
Peer Comparison
Key Points of Sresta Natutal Bioproducts IPO are:
IPO Key Points
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Strengths:
1. Market leader and one of the pioneers in the rapidly growing organic foods industry in India with a diversified and innovation driven product portfolio through research and development efforts
2. Pan-India presence and market leadership fostered by an omni-channel distribution network
3. One of the leading Indian organic food brands in the USA with exports to a total of 34 countries
4. Asset-light model with strategically located processing facilities and end-to end control over the integrated supply chain with a focus on quality -
Risks:
1. Inability to procure adequate amounts of organic agricultural produce from farmers, aggregators and organic certified vendors/ companies at competitive prices or at all, may have an adverse effect
2. Any disruption of operations at such third-party facilities or termination of agreements for primary processing of the organic raw material by third party facilities could affect the business
3. Inability to meet the tastes, preferences or consistent quality requirements of the customers or to accurately predict and successfully adapt to changes in market demand
4. The organic food industry in India is in nascent stage and the lack of awareness among Indian consumers and farmers regarding organic food products make them vulnerable to misconceptions around organic farming
5. The improper handling, processing or storage of the products or raw materials, or spoilage of and damage of such products or raw materials
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