APEX Frozen Foods IPO (Share Offer Price Review Last Date)

APEX Frozen Foods IPO : Below is the Review of APEX Frozen Foods IPO (Also APEX Frozen Foods Share Price, IPO Date, DRHP etc). APEX Frozen Foods looks to raise around Rs.2,800 Crore ($44 million dollars) through this IPO. The IPO from APEX Frozen Foods is one of the many companies going for a Public Issue in the coming months, along with Prataap Snacks and also Majestic Research IPO. Below are the details of APEX Frozen Foods IPO such as Share Issue Price, Minimum Order Quantiry, the Draft Prospectus etc. This Editorial has been compiled by CA.Mohith Thadi.

Issue Details : APEX Frozen Foods IPO

Bid Open Date August 22, 2017
Bid Close Date August 24, 2017
Issue Price Rs. 171-175
MOQ 80 shares

The Issue comprises of Fresh Issue of 7,250,000 Equity Shares and the Offer for Sale of up to 1,450,000 Equity Shares by the Selling Shareholders. The issue shall constitute upto 26.56% of the post issue paid up capital.

Utilisation of proceeds summary: APEX Frozen Foods IPO

The company proposes to use the proceeds towards Setting up a new shrimp processing unit with a proposed capacity of 20,000 MTPA at East Godavari District, Andhra Pradesh. While the issue size is about 150 crs, an amount of rs. 90 crs will be used towards the construction of shrimp processing unit and the balance shall go the selling shareholders.

Summary of Industry – Seafood : APEX Frozen Foods IPO

Global seafood consumption, which stood at 151 million tonnes in 2015, has grown at a relatively faster compounded annual growth rate (CAGR) of 3% over the past decade. Based on the type of sourcing, seafood products can be classified as – capture fisheries and aquaculture. In 2015, the share of capture fisheries and aquaculture stood at 55%and 45%, respectively. Twenty years ago, the share was 80% for capture fisheries while the share of aquaculture was relatively low at 20%. Aquaculture has played a very important role in meeting rising global demand even as capture fisheries production has saturated.

 Seafood roughly accounts for about one-sixth of global intake of animal protein and its consumption has been growing at a healthy pace over the last 2 decades. The global per capita seafood consumption rose from 15.0 kg in 1995 to 17.0 kg in 2005 and further to 20.4 kg in 2015, at a compounded annual growth rate (CAGR) of 2% during the period. In absolute terms, seafood consumption grew at 3% CAGR to 151 million tonne in the decade 2005-2015, increasing its share in global food intake by 40 basis points. Global demand for seafood has been growing because of rising population and income level, diversification in varieties of fish offered, and richness in protein content.

By 2020, we expect the India’s share in aquaculture exports to reach 10-12% on account of increasing production following rise in number of aquaculture farms. While the share of China is expected to continue to rise and reach 11-13%, share ofUSA is expected to remain stable. Vietnam’s share is projected to reach 12-14% by 2020 as it recovers from EMS disease.

Indian aquaculture production witnessed a 6% compounded annual growth rate (CAGR) from 1995 to 2015. Up to early 2000s, the development of brackish water aquaculture was mostly confined to a single species, Penaeus Monodon, alsoknown as white tiger shrimp, the scientific farming of which began only in the early 1990s. Majority of the shrimps produced were destined to exports, which fetched high realisations. However, due to the breakout of white spot syndromevirus (WSSV) the production of white tiger shrimp remained stagnant.In 2003, pilot research and small scale production of L. vannamei, also known as Pacific white leg shrimp, was initiated.

After six years of research, large scale production of L vannamei was permitted in 2009 and since then its skyrocketed and grew at a CAGR of 190% to reach 0.4 million tonne in 2015. The export of Pacific white leg shrimp has fetched hefty export realisations. Its production is comparatively easier, as they can be reared at high stocking densities up to 150/ square meters and are tolerant to a wide range of salinities.

Summary of Business : APEX Frozen Foods IPO

Apex Frozen Foods is one of the integrated producer and exporter of shelf stable quality aquaculture products. They supply ready-to-cook products to a diversified customer base consisting of food companies, retail chains, restaurants, club stores and distributors spread across the developed markets of USA, UK and various European countries. The output majorly comprises of variants of processed Vannamei shrimp (White shrimp) and are sold under the brands owned by customers and also through the company’s brands namely Bay fresh, Bay Harvest and Bay Premium.

For over two decades, company’s promoters have been associated with aquaculture business in Andhra Pradesh. The Company leased a shrimp processing facility and commenced operations in the year 1995 after which it has set-up its own MODERN shrimp processing facility in the year 2004.

The processing facility is located at Kakinada, Andhra Pradesh with a capacity to process approximately over 9,240 MTPA of finished products and an additional non-exclusive pre-processing and processing arrangement at a facility owned by Royale Marine Impex Private Limited located at Bapatla, Andhra Pradesh, for a capacity to process around 3,000 MTPA of finished products.

Further, the Company has entered into an addendum to lease agreement dated April 09, 2017 with Royale Marine Impex Private Limited for an additional processing capacity of 3000 MTPA of finished products. The processing facilities are supplemented by cold storage facilities located at Kakinada and Bapatla.

Competitive Strengths of the Company : APEX Frozen Foods IPO

  • Economies of scale on account of integrated operations
  • Strategically located processing plant
  • Established Customer Relationships
  • Focus on quality control measures and research &development initiatives
  • Proven and experienced management

Financial Performance of the company : APEX Frozen Foods IPO

The company’s financial performance has been better than the average performer in the Seafood Industry with an impressive CAGR of 29.10%. The total Revenues of the company have grown from Rs. 255 cr in FY 2013 to Rs. 709 cr in FY 2017. The PAT of the company has increased from Rs. 9.4 crores in FY 2013 to Rs. 24.4 Crs in FY 2017 with a CAGR of 26.89%. A snap shot of financial performance of the company in the said period is as under:

Risk Factors : APEX Frozen Foods IPO

  1. The primary risk factor of the company is its predominant exposure to USA and European countries. The revenue percentage is at an average of 80% in the last five years. Any adverse changes to the export scenario due to the changed political climate in USA is a great risk.
  2. Failure of the company to long term contracts with the suppliers might have an hampering on the favorable rawmaterial prices which the company is enjoying at this stage.
  3. The business of the company is highly sensitive to the environmental factors prevailing in Andhra Pradesh. Accordingly, any natural calamity in the state of Andhra Pradesh shall have an adverse impact on the business of the company.

Final Recommendation : APEX Frozen Foods IPO

The issue price of the company looks at par with its inherent value. The investors should assess the risk factors of the company carefully before taking the final call.