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Dec 05, 2017 10:52 PM IST | Source: Moneycontrol.com

Future Supply Chain Solutions IPO to open on December 6; 10 things to know before investing

Future Supply said revenue earned from services related to contract logistics, express logistics and temperature-controlled logistics represented 69.8 percent, 21.7 percent and 6.2 percent of revenue from operations in fiscal 2017, respectively

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The Rs 650-crore initial public offer of Future Supply Chain Solutions is set to open for subscription on December 6, with a price band of Rs 660-664 per share.

Bids can be made for a minimum lot of 22 equity shares and in multiples of 22 equity shares thereafter.

ALSO READ: Future Supply Chain Solutions raises Rs 195 crore from anchor investors

Equity shares are proposed to be listed on the BSE and the National Stock Exchange of India.

The global co-ordinators & book running lead managers to the offer are Edelweiss Financial Services, CLSA India and Nomura Financial Advisory & Securities (India). The book running lead managers are IDFC Bank, IIFL Holdings and YES Securities (India).

Here are 10 things to know about the public issue before investing:-

About the Issue

The public issue of 97,84,570 equity shares will close on December 8.

The issue comprises an offer for sale of up to 78,27,656 equity shares by Griffin Partners and up to 19,56,914 shares by the promoter, Future Enterprises.

The offer will constitute up to 24.43 percent of the post-offer paid-up equity share capital.

Objects of the Issue

Future Supply will not receive any proceeds from the offer for sale.

The objects of the offer for the company are to achieve the benefit of listing the equity shares on the stock exchanges and for the sale of equity shares by the selling shareholders. Further, the company expects that listing of equity shares will enhance its stability and brand image.

Company Profile

Future Supply is one of India’s largest organised third-party logistics service operators, according to the A&M Report. It is promoted by Kishore Biyani-owned Future Enterprises.

The company offers automated and IT-enabled warehousing, distribution and other logistics solutions to a wide range of customers. Its service offerings, warehousing infrastructure, pan-India distribution network, “hub-and-spoke” transportation model and automated technology systems support its competitive market position.

As of September 2017, it ran contract logistics operations through 42 distribution centres across India and also operates 2 distribution centres of customers. Further, during September 2017, it operated approximately 687 containerised vehicles, including 257 GPS-enabled vehicles of which 144 are refrigerated (reefer) trucks that are owned by the company. The Company also operates 9,616 pallets as a part of its temperature-controlled logistics services.

Strengths

> One of the largest service providers with an extensive network of facilities in a fast-growing third-party logistics market;

> Comprehensive solution for supply chain requirements;

> Diverse customer base across many sectors;

> At the forefront in introducing new standards of technology and automation in the logistics industry in India;

> Longstanding relationship with Future entities;

> Experienced management team with logistics and retail sector-specific knowledge

Financials

Future Supply said revenue earned from services related to contract logistics, express logistics and temperature-controlled logistics represented 69.8 percent, 21.7 percent and 6.2 percent of revenue from operations in fiscal 2017, respectively; and 70.7 percent, 19.8 percent and 4 percent of revenue from operations for the six months ended September 2017, respectively.

Image75122017

Customers except promoter and group companies accounted for 30.3 percent, 37.5 percent, 50.5 percent and 53.5 percent of revenue from operations for the six months ended September 2017 and FY17, FY16 and FY15, respectively.

Image65122017

Promoter

Future Enterprises is the promoter of the company, which currently holds 2,24,72,831 equity shares (equivalent to 56.10 percent of the pre-offer paid-up equity share capital).

Promoter will continue to hold 51.22 percent post offer.

Future Enterprises is promoted by Kishore Biyani, who is the Chairman and a Non-Executive Director of Future Supply. He has over 25 years of experience in the retail, supply chain and logistics, and fashion industries.

Shareholding

Here are top 10 largest equity shareholders:-

Image35122017

Management

Mayur Toshniwal is the Managing Director and Chief Executive Officer of company. He has around 25 years of experience in the industry for manufacturing paint, fast moving consumer goods and retail industries, including five years of experience as an entrepreneur.

Board of Directors

Image55122017

Management Organisation Structure

Image45122017

Dividend Policy

Future Supply has not declared any dividends in the last five Fiscals and the six months ended September 30, 2017.

Risks and Concerns

Here are some risks and concerns highlighted by brokerage houses:-

> Slowdown in the parent’s business and overall economy could impact the company’s earnings;

> Competition from international/domestic 3PL logistics companies and other unorganised players;

> Consolidation by mid-sized players in the sector;

> Quality and availability of infrastructure could impact performance;

> Express logistics industry is sensitive to high operating costs;

> Need to continuously invest in and evolve technology;

> Stretched receivable from the customers;

> Delays or defaults in payment by its customers could affect their cash flows and may adversely affect their financial condition and operations;

> Inability to pass through increased prices from business partners to the customers;

> Large dependence on distribution centre in Nagpur;

> Faltering of the business partners to fulfil their contractual obligations.
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