V-Mart Retail to double presence with IPO proceeds
New Delhi-based departmental store operator V-Mart Retail plans to double its number of outlets with the help of funds raised from its initial public offering, a top company official said on Monday.
January 29, 2013 / 08:44 IST
Moneycontrol Bureau
New Delhi-based departmental store operator V-Mart Retail plans to double its number of outlets with the help of funds raised from its initial public offering, a top company official said on Monday.The company, which operates stores mainly in tier II and tier III towns in west and North India, will hit the stock markets with its maiden share issue on Feb 1 and close on Feb 5.The issue comprising 44.96 lakh shares has been priced at Rs 195-215 a share, and it will include a fresh issue of 27.61 lakh shares. Aditya Birla Group firm Naman Finance and Investment, which has been an investor in V-Mart since 2008, will offload 17.35 lakh shares to pare down its shareholding to 8.74 percent from 21.74 percent.Overall, the company hopes to raise around Rs 127 crore (median range) from the IPO, which includes a pre IPO placement of 12.50 lakh shares at Rs 210 a share, totalling a little over Rs 26 crore, Deepak Sharma, CFO, said. V-Mart will get ar ound Rs 90 crore, he added."We have focussed on tier II and tier III cities for growth as we get a first mover advantage in most place. We currently own and operate 62 outlets across 53 cities and plan to use the IPO proceeds to open 60 more stores and expand distribution centres, apart from general working capital requirements," Lalit Agarwal, the promoter and presently the chairman and managing director of V-Mart.He says the company has focussed on cluster-based model for expansion and no store is at a distance of over 150km from the other store. Out of the current 62 stores, 23 are pure apparel stores, while 39 stores also have kirana bazaars, through which it sells branded packaged food and non-food items like personal care products. It doesn't sell perishable goods like fruits and vegetables.Presently, apparels account for 68 percent of the company's total sales and 19 percent comes from groceries. The plan is to further reduce the share of groceries on account of lower margins, Agarwal said during its IPO press conference.V-Mart's profit after tax has grown at a compounded rate of 33 percent to Rs 11.04 crore in FY2012 from Rs 3.5 crore in FY2008, while total income has risen 30 percent to around Rs 282 crore. In the current financial, for the eight-months ended Nov 30, it had a net profit of Rs 13 crore on revenue of Rs 250 crore.As of Nov, the company had a working capital debt of Rs 45 crore and debt equity ration was at 0.6:1. Agarwal said that V-Mart has no long-term capex loans, which has held them in good stead. and most of the past expansion has been via internal accruals and investment by Naman Finance.Agarwal, is a cousin of Ram Chandra Agarwal of Vishal Retail, which went bankrupt and was taken over by private equity firm TPG and Chennai-based Shriram Group in 2011. The two brothers worked together untill 2002, when Lalit Agarwal quit and moved on to open the first V-Mart in Ahmedabad in 2003.Anand Rathi is the sole book running lead manager to the V-Mart IPO. Anand Rathi officials don't feel the issue is at high valuations. On a PE basis the issue is priced at about 50 percent discount to some of its peers, they said.Also Read: Mkt Cap to be around Rs 380 crore post IPO, says V-Mart RetailNachiket Kelkar
nachiket.kelkar@network18online.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
