MRS BECTORS FOOD SPECIALITIES LTD - IPO ANALYSIS.
Welcome you all to a brand new IPO article which is about MRS BECTORS FOOD SPECIALITIES LTD. Let's understand the purpose why the company is coming up with an IPO.
The company is within the premium and mid-premium biscuits segment and therefore the premium bakery segment in North India. It manufactures and markets a variety of its biscuits like cookies, creams, crackers and digestives under flagship brand ‘Mrs. Bector’s Cremica’. It also manufactures and markets bakery products in savoury and sweet categories which include breads, buns, pizza bases and cakes under the brand ‘English Oven’.
ABOUT THE COMPANY
Mrs Bectors Food Specialities Limited was incorporated on September 15, 1995, by Mrs Rajni Bector. Mrs Bector’s Cremica’ is one of the leading biscuit brands in the premium and mid-premium segment in Punjab, Himachal Pradesh, Jammu and Kashmir and Ladakh and ‘ ‘English Oven’ is the one of the largest selling brands in the premium bakery segment in Delhi NCR, Mumbai and Bengaluru.
They are the largest supplier of buns in India to reputed QSR chains such as Burger King India Ltd., Connaught Plaza Restaurants Pvt. Ltd., Hardcastle Restaurants Pvt. Ltd. and Yum! Restaurant ( India ) PVT. LTD and multiplexes such as PVR.
For Biscuits distribution, the corporate features a widespread network of 196 super-stockists and 748 distributors supplying to a good range of consumers through 458,000 stores and 4,422 preferred outlets.
EXPORTS BISCUIT
During the financial year ended March 31, 2020, its biscuits were exported to 64 countries. In the financial year 2020, export sales were ₹168 crore representing 22% of its revenue from operations.
North America and the Caribbean region represents its most significant markets.
Mrs Bectors Food is one of the leading exporters of biscuits from India, with approximately 12% share of the Indian biscuit export market in calendar year 2019.
The company exports various types of cookies such as danish cookies, choco chip cookies and centre filled cookies, creams, crackers and some glucose biscuits under its flagship brand ‘Mrs. Bector’s Cremica’. They also manufacture a wide range of biscuits for international retail chains under their private labels.
MANUFACTURING FACILITIES
Company’s all products are manufactured in-house at their six manufacturing facilities located in Phillaur and Rajpura, Tahliwal, Greater Noida, Khopoli and Bengaluru.
PRODUCT DETAILS
Product portfolio can be classified under two key categories - Biscuits and Bakery Products.
Biscuits
It primarily manufactures premium and mid-premium category of biscuits including cookies, creams, crackers and digestives. It manufactures glucose biscuits catering to certain domestic further as export customers. It manufactures ‘Oreo’ biscuits and ‘Chocobakes’ cookies on contract basis for Mondelez India Foods Private Limited. It also manufactures and provide biscuits for a few of our international customers under our brand ‘Mrs. Bectors Cremica’ and under their private labels respectively.
Breads
It primarily manufactures premium category of breads and other bakery products including breads, garlic breads, pav breads, kulchas, pizza base, buns, cakes, muffins and frozen products for retail customers branded through ‘English Oven’ and institutional clients. These products are primarily classified under following categories: breads, other bakery products, buns and frozen products.
OUTLOOK OF THE SECTOR
The Indian biscuits and bakery retail market is valued at ₹450 billion and is anticipated to grow at a CAGR of roughly 9% over the following five years. Biscuits and other snacking bakery products like rusks, wafers, tea cakes contribute almost ₹400 billion or 89% to the overall market share. The balance 11% is contributed by breads including loaves, buns, pizza bases which together account for ₹50 billion. Biscuit industry is characterized by some large players, regional brands further as small scale enterprises. within the unbranded sector, over 30,000 small, very small and tiny units are spread everywhere the country. Per capita, yearly consumption of biscuit in India is barely 2.5 kg, compared to quite 10 kg in USA and Western European countries and quite 4.25 kg in south-east Asian countries like Singapore, Hong Kong, Thailand and Indonesia.
In the unbranded sector, there are about 75,000 bread manufacturers spread everywhere including a number of those operating even residential premises. Average per capita yearly bread consumption is estimated at 1.4 kg in India compared to 96 kg within the UK and 46 kg within the USA. The bread industry is split between branded and unbranded players. within the branded segment, Britannia, Modern and English Oven are the market leaders within the country with over 45% of the whole market share. These brands have a nationwide presence.
OPEN ZERODHA ACCOUNT FOR INVESTING
The Indian biscuit market is dominated by branded play. The penetration of branded biscuits will still grow thanks to increasing consumer preference and spending power. Non-branded biscuit is dominated by small bakery units, cottage and household type manufacturing units, which thrive on catering to local taste and shut relationship with retailers. rate of growth for branded biscuits in terms of import has been greater than the amount of growth over the amount of FY15 to FY20. it's driven by the movement of consumers towards mid and premium biscuits. The Indian branded biscuits market is predicted to grow at the speed of 9.20% over the following five years.
Indian biscuit market is dominated by lead brands like Britannia, Parle and ITC which have 65% of market share. While Parle drives an outsized portion of its revenues from mass product Parle-G and therefore the company has the biggest market share (volume). Britannia’s revenue is driven by Mid-Premium and Premium products.
PROMOTER'S SHAREHOLDING
Promoter of the company is Mr Anoop Bector who has 25 years of industry experience and is additionally the managing director of the company. He holds an aggregate of 1.25 crore equity shares,
comprising 21.89% of the pre-offer equity share capital of the company.
The company was founded by Mrs Rajni Bector, mother of Anoop Bector and also the recipes are inspired by the first recipes created by her. Mr Ishaan Bector, son of Anoop Bector it's Whole
Time Director and heads the bread business under the brand ‘English Oven’
Key members of the senior management team includes Mr Manoj Verma, the national sales director (domestic sales), Mr Rajeev Dubey, the director (bread sales), Mr Asim Bhaumik, the group head of quality, technical, research and development Mr Deep M.S Bajaj, the group senior corporate chef and Mr Suvir Bector, the vice-president (exports).
Why the company is coming up with an IPO?
The proceeds of the Fresh Issue (₹40.5 crore) are proposed to be utilised for financing the project cost towards expansion of the Rajpura manufacturing facility by establishing a brand new assembly line for biscuits (“Rajpura Expansion Project”).
Building and civil works- It's for the manufacturing facilities include site development, construction and engineering-related work including construction of pre-engineered building, construction of biscuit building, construction of roads, floor finish, construction of super-structure, etc.
Plant & Machinery- While it proposes to utilise ₹26.4 crore towards purchasing plant and machinery, the precise number and nature of such plant and machinery, to be procured by the corporate will rely on business requirements.
Contingencies- They need to create a provision for the contingency of ₹3.5 crore to hide the value of other smaller electronic equipment, related taxes, levies and other duties, as applicable, logistics costs associated with the procurement of plant and machinery, any charge per unit fluctuations and any increase within the estimated cost for the proposed Rajpura Expansion Project.
COMPETITIVE LANDSCAPE
BRANDED BISCUIT MARKET
Indian biscuit market is dominated by lead brands like Britannia, Parle and ITC which have 65% of market share.
BAKERY MARKET
The Indian premium bakery market is extremely fragmented, which the unbranded players contributing to about 45% important share within the overall Indian bakery market. Within the branded bakery market, it faces competition from Harvest Gold Foods India Private Limited, Britannia Industries Limited, Modern Food Industries (India) Limited and Bonn Nutrients Private Limited which currently have larger manufacturing capacity and have larger market presence.
FINANCIAL STATEMENTS
STATEMENT OF PROFIT AND LOSS
STATEMENT OF ASSETS AND LIABILITIES
KEY METRICS
RISK FACTORS
The biscuits and bakery market is extremely competitive in nature and therefore the company hasn’t been ready to grow significantly during the previous few years. Also, the valuation appears to be stretched.
The company is exposed to foreign currency fluctuations because it earns ~20% of its revenue from the international markets. Any unfavourable move within the exchange rates will have a substantial impact on the financials of the corporate. It hedges such exposures from time to time but still runs the chance of being inadequately hedged in adverse times.
It has received three notices from certain food safety officers under the FSS Act which is in reference to misbranding of samples of certain products which belong to its erstwhile customers for whom it undertakes contract manufacturing of biscuits.
Rising health consciousness may affect demand of biscuits and bakery products within the long term.
COMPARISON WITH LISTED INDUSTRY PEERS
MRS BECTORS FOOD IPO DETAILS
| IPO Opening Date | Dec 15, 2020 |
| IPO Closing Date | Dec 17, 2020 |
| Issue Type | Book Built Issue IPO |
| Face Value | ₹10 per equity share |
| IPO Price | ₹286 to ₹288 per equity share |
| Market Lot | 50 Shares |
| Min Order Quantity | 50 Shares |
| Listing At | BSE, NSE |
| Issue Size | Eq Shares of ₹10
(aggregating up to ₹540.54 Cr) |
| Fresh Issue | Eq Shares of ₹10
(aggregating up to ₹40.54 Cr) |
| Offer for Sale | Eq Shares of ₹10
(aggregating up to ₹500.00 Cr) |
Mrs Bectors Food IPO Tentative Timetable
The Mrs Bectors Food IPO open date is Dec 15, 2020, and the close date is Dec 17, 2020. The issue may list on Dec 28, 2020.
| IPO Open Date | Dec 15, 2020 |
| IPO Close Date | Dec 17, 2020 |
| Basis of Allotment Date | Dec 22, 2020 |
| Initiation of Refunds | Dec 23, 2020 |
| Credit of Shares to Demat Account | Dec 24, 2020 |
| IPO Listing Date | Dec 28, 2020 |
Mrs Bectors Food IPO Lot Size
The Mrs Bectors Food IPO market lot size is 50 shares. A retail-individual investor can apply for up to 13 lots (650 shares or ₹187,200).
| Application | Lots | Shares | Amount (Cut-off) |
|---|
| Minimum | 1 | 50 | ₹14,400 |
| Maximum | 13 | 650 | ₹187,200 |
Mrs Bectors Food IPO Promoter Holding
| Pre Issue Share Holding | 52.45% |
| Post Issue Share Holding | 51% |
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