Magson Retail and Private Distribution Limited has come out with a fresh issue of 21,14,000 shares and wants to mobilise Rs 13.74 crore. The issue price is set at Rs 65. While the subscription for the Initial Public Offer (IPO) opens on June 23, the bidding process will end on June 27.
The company is engaged in the retail and distribution of frozen, gourmet, and specialty foods. In December 2021, the company started its brand of premium products- Rf Gourmet, which offers products like French Fries, Chilli Garlic Potato Shots, Delhi Aloo Tikki, Veggie Burger Tikki, Chicken Seekh Kababs, etc. Magson also has a presence in e-commerce, where customers can order and get delivery of Magson products. The company also owns a separate store under the brand name- ‘My Chocolate World’. Magson operates 26 stores across Maharashtra, Rajasthan and Gujrat. Magson has one warehouse in Ahmedabad from where it manages inventory.
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Magson’s revenue from operations for FY23 increased 13 percent year-on-year to Rs 62.81 crore. The frozen food maker’s net profit grew 12 percent year-on-year to Rs 2.51 crore for the same period.
The retail company does not have any direct peers. “We are unable to identify the direct listed peers of our company hence we are unable to mention the accounting ratio of listed peers for comparison of the same,” said Magson in its prospectus. Magson however, said that they face competition from organized retail supermarket chains like D‐Mart, Big Bazaar, Reliance Retail, and Star Bazaar. It also faces competition from e‐tailing companies such as Big Basket, Amazon Pantry, Blinkit, Jio Mart and Swiggy Instamart because of their online sales and schemes.
The company is holding a large portion of raw materials as compared to its sales, which can be a potential risk for the company if sales don’t do well. Magson does not have any alternate arrangements for meeting capital requirements. If there is a shortfall in funds and the company is not able to raise debt, operations of the business will be affected.
The proceeds from the IPO will be used for starting new stores, storage facilities, and backward integration of business by food processing and packing under brand “MagSon”. Rest of the proceeds will be used for working capital requirement and corporate purposes.
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