Gemini Edibles & Fats Limited was established in April 2008. The company is engaged in the business and manufacturing of refined edible oils and fats. It is also involved in the sales, distribution of the commodity. The company has three manufacturing facilities with a combined capacity of 2,500 metric tonnes per day. The company’s flagship brand is ‘Freedom’ which has a huge market share in southern India. Through its wide distribution network, the company has set up a PAN- India presence in the sunflower oil category. In this article, we take a closer look at the Gemini Edibles IPO Review and its possible future prospects.
The major business operation of the company can be divided into three major segments.
| Branded retail consumer Business | Manufacturing palm kernel oil, sunflower oil, groundnut oil, rice bran oil, mustard oil, and palm olein oil under Freedom and First Klass. The company carries out its operation through wholesalers, supermarkets and retail store owners. |
| Industrial consumer Business | Manufacturing palm oils, inter-esterified vegetable fats, high stability frying oils and cocoa butter substitutes. It is used in the making of snacks at confectioneries. The company sells these products under Be- Rite, Fabula and Magik brands. |
| Bulk Merchandising Business | Manufacturing of sunflower and soybean oils. The business is carried out via wholesale and supermarket dealers. |
OBJECTS OF THE IPO ISSUE:
- Prepayment of all the company’s loans, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
BASIS OF THE GEMINI EDIBLES IPO ISSUE:
- Gemini Edibles & Fats India Limited has renowned brands in its sector of operation. The company is one of the major companies specializing in producing fats and oils.
- The company has a modern industrial setup facility with a strategic location.
- Gemini Edibles & Fats India Limited has an excellent distribution and sales network that has helped him establish PAN India’s presence.
- The company’s distribution, manufacturing and sales capacity and capability are facilitated by innovation and technology.
- Gemini Edibles & Fats India has a team of excellent top management and professionals.
- It uses an integrated and efficient OS with a risk control and quality control focus in all the company processes.
- The company has a very good financial and risk profile.
GEMINI EDIBLES IPO DETAILS:
Gemini Edibles & Fats India Limited, a company engaged in manufacturing oils, has its headquarters in Hyderabad. The company has recently filed its DRHP with the SEBI to float its IPO in the market. The IPO of the company is a full OFS based IPO of Rs. 2500 Crore. The IPO is brought by the company’s promoters and other selling stakeholders. Currently, the company is waiting for approval to float its IPO in the market. Check Day by Day IPO Subscription Details (Live Status)
The selling stakeholders through the IPO are as follows:
| Pradeep Chowdhry | Rs 25 crore |
| Alka Chowdhry | Rs 225 crore |
| Golden Agri International Enterprises | Rs 750 crore |
| Black River Food Pte Ltd | Rs 1,250 crore |
| Investment and Commercial Pte Ltd | Rs 250 crore |
| IPO Opening Date | |
| IPO Closing Date | |
| Issue Type | Book Building Type |
| Face Value | Rs.1/ Equity share |
| IPO Price | |
| Market Lot | |
| Min Order Quantity | |
| Listing At | BSE, NSE |
| Issue Size | Rs. 2500 crore |
| Fresh Issue | – |
| Offer for Sale | Rs. 2500 crore value Equity shares |
| Basis of Allotment Date | |
| Initiation of Refunds | |
| The Credit of Shares to Demat Account | |
| IPO Listing Date | |
| Qualified Institutional Buyer | 50 |
| Non – Institutional Investor | 15 |
| Retail | 35 |
STRENGTHS AND GROWTH ASPECTS OF GEMINI EDIBLES IPO:
- Gemini Edible has a very diversified Product Portfolio. The product range of the company lines from many industrial consumer businesses to branded retail segment fats and oils.
- Gemini Edibles and Fats India is a leading, fastest-growing company engaged in the manufacturing, sales and distribution of edible oils’ fats. The company is also the market leader in the sunflower oil category in Southern India.
- The company has a well-established brand named Freedom and First Klass. These brands hold a market share of nearly 56% in Andhra Pradesh and 47% in Odisha.
- Gemini Edible has a diversified revenue stream that doesn’t allow the company to rely heavily on any type of business. The company generates 57% of its revenue from branded sales, 38% from unbranded loose sales, and 5% from value-added products.
- The company benefits a lot from its quality governance and a strong promoter and parentage.
- In the last ten years, Gemini Edibles have upgraded their infrastructure and manufacturing capacity at Krishnapatnam and Kakinada. The company has installed new innovative technological support that has led to better plant efficiency for the company.
- The company’s manufacturing facility is at the strategic and locational benefit with large-scale integrated facilities.
- The company has Adequate Liquidity. The business operation of the company is based on the offset mechanism. Fixed deposits of the company back the short-term debt of the company.
- Gemini Edibles have a strong financial and risk profile. The company’s margins are low but are protected due to a higher volume of sales that cover up for the logistic, working capital and procurement process capital requirement.
- Gemini Edible has a well-established and excellent sales and distribution network. It consists of 30 depots, 1100 wholesalers and distributors that help them cater their service to 640 towns in the country with a majority stake in Telangana, Odisha and Andhra Pradesh. Their product range under ‘Freedom’ has a market reach of 260,000 retail outlets.
- The company stated that it would expand its market presence outside southern India to strengthen its brand image and distribution reach. It stated that the company would enter the sunflower oil market in Tamil Nadu and Kerala in FY22.
WEAKNESS AND THREATS OF GEMINI EDIBLES IPO:
- The company’s major challenge is implementing its growth and sustainable operation strategies effectively.
- Gemini Edibles & Fats Limited have their refineries in Andhra Pradesh and Odisha. Any unfavorable circumstance in the location can hamper their production capacity and sales and distribution.
- The company was hit badly on the operational and financial terms due to the COVID-19 pandemic.
- The company is vulnerable to the availability, supply-demand, distribution and pricing of the raw materials. Also, the company is dependent on a third party to support raw materials.
- Exposure to Forex Risk is also another challenge to the company’s profitability. It also faces the threat of the cost of imports along with the yield of cultivation and the climatic conditions.
- Gemini Edibles & Fats Limited must comply with many quality control, risk profile, industrial and other regulatory guidelines. Any non-compliance with these statuary norms will affect the operation of the company.
- The company needs to effectively manage its inventory and the working capital requirement for better operational efficiency.
- The company is engaged in a highly competitive sector where it faces stiff competition from many organized and unorganized firms.
- Gemini Edibles & Fats Limited relies on small clients for some of its products.
- The company is currently facing a trial under a legal procedure. Any negative news from there could lead to a detrimental impact on the company’s image.
FINANCIAL TRENDS OF GEMINI EDIBLES IPO:
| Particulars | For the year/period ended ( in Cr.) | ||||
| 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |||
| Total Assets | 3,293.40 | 2,523.25 | 1,909.40 | ||
| Total Revenue | 7,863.11 | 6,571.31 | 5,533.98 | ||
| Profit After Tax | 570.77 | 185.85 | 109.35 |
| PARAMETERS | MARCH 21 | MARCH 20 | YoY % |
| Earnings Per Share (Rs) | 554.79 | 180.65 | 207.11 |
| CEPS(Rs) | 586.82 | 206.88 | 183.66 |
| Book NAV/Share (Rs) | 1579.09 | 1025.56 | 53.97 |
| Tax Rate (%) | 25.40 | 23.73 | 7.05 |
| Core EBITDA Margin (%) | 9.41 | 3.96 | 137.49 |
| EBIT Margin (%) | 10.24 | 4.64 | 120.95 |
| Pre-Tax Margin (%) | 9.85 | 3.71 | 165.67 |
| PAT Margin (%) | 7.35 | 2.83 | 159.84 |
| Cash Profit Margin (%) | 7.77 | 3.24 | 139.99 |
| ROA (%) | 19.74 | 8.39 | 135.35 |
| ROE (%) | 42.60 | 19.31 | 120.64 |
| ROCE (%) | 37.43 | 17.95 | 108.55 |
| Asset Turnover(x) | 2.69 | 2.97 | -9.42 |
| Sales/Fixed Asset(x) | 16.05 | 19.81 | -19.00 |
| Working Capital/Sales(x) | 7.08 | 10.54 | -32.82 |
| Fixed Capital/Sales(x) | 0.06 | 0.05 | 23.45 |
| Receivable days | 5.35 | 5.29 | 1.13 |
| Inventory Days | 50.16 | 45.63 | 9.91 |
| Payable days | 26.44 | 21.68 | 21.95 |
| EV/Net Sales(x) | -0.07 | 0.00 | -3921.53 |
| EV/Core EBITDA(x) | -0.68 | 0.04 | -1927.47 |
| EV/EBIT(x) | -0.71 | 0.04 | -1848.27 |
| EV/CE(x) | -0.17 | 0.00 | -3631.68 |
| Net Sales Growth (%) | 19.47 | 19.87 | -2.00 |
| Core EBITDA Growth (%) | 149.84 | 5.22 | 2772.00 |
| EBIT Growth (%) | 161.15 | 2.44 | 6493.54 |
| PAT Growth (%) | 207.11 | 69.97 | 196.02 |
| EPS Growth (%) | 207.11 | 69.95 | 196.09 |
| Total Debt/Equity(x) | 0.49 | 0.73 | -32.89 |
| Current Ratio(x) | 1.66 | 1.44 | 15.28 |
| Quick Ratio(x) | 1.00 | 0.71 | 40.99 |
| Interest Cover(x) | 26.29 | 5.00 | 425.72 |
PROMOTERS:
- Pradeep Chowdhry
- Alka Chowdhry
- Golden Agri International Enterprises Pte. Ltd.
- GAI
| Pre-Issue Share Holding | 68.40% |
| Post Issue Share Holding |
CONTACT DETAILS:
Gemini Edibles Limited
“Freedom House”, 8-2-334/70 & 71, Opposite SBI Executive Enclave,
Road No.5, Banjara Hills, Hyderabad 500 034, Telangana, India
Tel: +91 40 6735 7868
E-mail: investors@gefindia.net
Website: www.gefindia.com
REGISTRAR:
KFin Technologies Private Limited
Selenium Tower-B, Plot 31 & 32
Gachibowli, Financial District
Nanakramguda, Serilingampally
Hyderabad 500 032
Telangana, India
Tel: +91 40 6716 2222
E-mail: gefil.ipo@kfintech.com
Website: www.kfintech.com
LEAD MANAGER(S):
- Axis Capital Limited
- Credit Suisse Securities (India) Private Limited
- Kotak Mahindra Capital Company Limited
- Nomura Financial Advisory and Securities (India) Private Limited
