Gemini Edibles & Fats files DRHP to raise ₹25 billion via IPO

India’s edible oil consumption was approximately 21 million metric tonnes in 2020 and is forecasted to grow to 25 million metric tonnes by 2025. India’s per capita consumption of edible oil is estimated to be 16 kgs to 17 kgs per annum versus the world average of 24 kgs per annum, which suggests a significant opportunity for growth.

Gemini Edibles & Fats Indiа Ltd hаs filed а draft red herring prospectus with the SEBI tо raise ₹25 billion through аn IРО. The issue will entirely be аn offer for sale by existing shareholders аnd promoters.

Gemini Edibles will not receive any proceeds from the offer and all the offer proceeds after the deductions will be received by the shareholders who offered their shares as a part of the offer.

Company Profile

Gemini Edibles & Fats Indiа Ltd is one of the leading manufacturers of edible oils and fats in the country. The company is also engaged in the business of distribution and branding of edible oils and specialty fats.

The Hyderabad-based company is a market leader, with its sunflower oil brand ‘Freedom’ in the states of Telangana, Andhra Pradesh, and Odisha, and holds the third-largest market share in the state of Karnataka. The company is amongst the top two companies by market share in the branded sunflower oil category on a pan-India basis as of fiscal 2021.

Gemini Edibles has three port-based manufacturing facilities on the eastern coast of India, with two in Kakinada and one in Krishnapatnam. The company’s branded retail consumer products are sold in approximately 640 towns in Andhra Pradesh, Karnataka, Odisha, and Telangana through a network of over 1,100 distributors and traders, serviced by 130 sales personnel and over 30 depots.

Financials

For fiscal 2021, Gemini Edibles reported revenue from operations at ₹77.6 billion versus ₹65 billion a year ago. Net profit was at ₹5.7 billion against ₹1.85 billion last year.

Meanwhile, The company requires crude edible oils for manufacturing its products and their prices are highly volatile in the world market for reasons like currency fluctuation, changes in global inventory levels, inflation, etc.

The company incurred around ₹66.2 billion as a material cost out of, which crude oil alone costed approximately ₹64.5 billion. Price volatility in crude edible oils may impact the profitability as the company would be holding higher-priced inventory and the market price could fall by the time it sells the inventory leading to a financial loss.