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19 Nov 2024
Supermarket Chain Patel Retail Limited has filed its draft red herring prospectus (DRHP) with the market regulator, Securities and Exchange Board of India (SEBI), to raise funds through an initial public offering (IPO).
The IPO, with a face value of ₹10 per equity share, is a mix of fresh issue of shares of up to 90.18 lakh and an offer for sale of up to 10.02 lakh equity shares by Promoter Selling Shareholders.
The sale offer comprises up to 7.68 lakh equity shares by Dhanji Raghavji Patel and up to 2.34 lakh equity shares by Bechar Raghavji Patel, with a provision for eligible employees to subscribe.
Additionally, the company, in coordination with the book-running lead manager, may explore issuing up to 5 lakh equity shares through private placement, preferential allotment, rights issue, or other methods, referred to as a "pre-IPO placement." Should such placement occur, the size of the fresh issue will be adjusted accordingly.
The offer follows a book-building process, with no more than 50% of the net offer available for allocation to qualified institutional buyers, at least 15% for non-institutional investors, and a minimum of 35% for retail individual investors.
Proceeds from the fresh issuance, amounting to ₹60 crore, will be utilized to repay/prepay certain borrowings, ₹115 crore will be allocated to fund working capital requirements, and the remainder will be earmarked for general corporate purposes.
Fedex Securities Private Limited is the sole book-running lead manager, and Bigshare Services Private Limited is the registrar of the issue.
Over the years, Patel Retail has evolved into a notable presence in the value retail industry, overseeing one of the most extensive arrays of stores within the Mumbai Metropolitan Region (MMR), as highlighted in a D&B Report referenced in the DRHP. By December 31, 2023, the company had established and supervised thirty-one (31) stores, encompassing a combined Retail Business Area spanning approximately 1,26,000 square feet..
The company both exports its products under its brand and as unbranded exports. Its major export items include peanuts, whole spices, powdered spices, pulses, staples, groceries, and wheat flour, which are distributed to various countries. Additionally, it conducts domestic and export trading of agricultural products such as rice, sugar, pulses, and edible oil. Patel Retail benchmarks itself against several industry peers, including Avenue Supermarts Limited, Spencers Retail Limited, Osia Hyper Retail Limited, Aditya Consumer Marketing Limited, Sheetal Universal Limited, Kovilpatti Lakshmi Roller Flour Mills Limited, KN Agri Resources Limited, and Madhusudhan Masala Limited.
During the fiscal year 2023, Patel Retail reported a restated revenue from operations of ₹1,018.55 crore, marking a significant 32.94% increase from ₹766.16 crore in the previous year. This growth was primarily attributed to increased domestic and export sales. Profit after tax also saw a notable rise, climbing by 44.06% from ₹11.37 crore in the financial year 2022 to ₹16.38 crore in the financial year 2023. For the six-month period ending on September 30, 2023, revenue from operations totaled ₹445.98 crore, with a profit after tax of ₹9.78 crore.
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