Snowman Logistics IPO to open on August 26

Snowman Logistics, an integrated temperature controlled logistics service provider, will hit the country's capital markets on August 26 with its initial public offer (IPO). The public issue would close on August 28, as per the red herring prospectus filed by Snowman Logistics with market regulator Sebi. The Bengaluru-based company is planning to offer 4.20 crore shares to investors through its IPO. According to Snowman Logistics, the proceeds from the public issue would be used towards setting up new temperature controlled and ambient warehouses, long term working capital, and for general corporate purposes.

HDFC Bank is the book running lead manager while Link Intime India is acting as the registrar to the issue. Below is the transcript of CEO Ravi Kannan and Chariman Gopinath Pillai’s interview to CNBC-TV18's Archana Shukla.

Q: How is the IPO structured?Kannan: As of now, the size of the issue is almost around Rs 200 crore and the Qualified Institutional Buyer (QIB) is almost 20 percent of the issue and 10 percent in the retail.Q: Why only 10 percent segregated for retail? Are you not confident that you would see a good response from the retail customers?Kannan: This is as per the statutory law, which states not more than 10 percent can go to the retail.Pillai: I don’t think it is up to us to decide exactly how much is to be given. There is a formula that Securities and Exchange Board of India (SEBI) gives us and we follow that.Q: How would you be utilising the proceeds that come out? Would it go for most of the expansions and what are your expansion plans?Pillai: First would be to settle the bridging finance and then we will use it for expansion.Q: Bottom line margins have been declining and that has been under some sort of pressure, what was the core reason for that and how do you see that improving going forward?Kannan: I don’t think the bottomline has really dipped. Today, if you see the earnings before interest, taxes, depreciation and amortization (EBITDA) margin for the last year, we almost had a blended margin of 25 percent and 40 percent coming from warehousing. Maybe you are looking at the profit after tax (PAT) which is directly with the 35AD which the government has given the benefits. So in our business in the long term you should look at the EBITDA margins rather than looking at PAT.Q: You don’t see that should be an issue for the investors when they look at the profit?Pillai: No, it should not be a concern.Kannan: No, I don’t think so. It should not be a concern at all for the investors as of now.