Apex Frozen Foods IPO in India Yields Oversubscription

Wow, that was fast!

apex logoThe initial public offering of Apex Frozen Foods (AFF) shares was fully subscribed on the second day of bidding, August 23. The Andhra Pradesh, India-based company is an integrated producer of farm-raised, ready-to-cook shrimp products exported to a diversified customer base that includes retail chains, restaurants, club stores and distributors in the USA, UK, continental Europe and beyond.

According to the Economic Times, bids were tendered for 90,72,080 shares on Wednesday, which was 1.46 times the total issue of 62,10,000 shares. The non-institutional investor category was subscribed 45% and the retail investor portion was oversubscribed 2.90 times.

The company, seeking to divest 28% of promoter shares, floated an initial IPO of 87,00,000 equity shares at face value of Rs 10 each in the Rs 171-175 a share price band. At the upper end, share sales were priced to generate as much as Rs 152.25 crore. The issue comprised a block of 72,50,000 shares and an offer for sale of 14,50,000 shares by promoters.

white shrimpWith frozen shrimp exports to the United States booming for Indian producers in recent years, Apex has been well positioned to boost sales of its Bay fresh, Bay Harvest and BayPremium brand sales.

“We are a 100% export-oriented company, with the US accounting for 82%, and the UK and European countries accounting for 17.8% of the total sales,” said Karuturi Subrahmanya Chowdary, executive director of Apex.

The company’s total revenue has reportedly grown from around Rs 255 crore in fiscal 2013 to Rs 710 crore in fiscal 2017, at a compounded annual growth rate of over 29%. Its net profit has risen from Rs 9.41 crore in fiscal 2013 to Rs 24.4 crore in fiscal 2017, at a compounded annual growth rate of 26%.

AFF primarily produces and sells cultured Penaeus vannamei white shrimp, while small quantities of Penaeus monodon black tiger shrimp and are also offered. Its integrated business model features hatchery operations, farming, pre-processing, processing and exporting farm-raised products that meet stringent quality standards.

Raw material is sourced from 1,032 acres of farms and in Andhra Pradesh. The processing facility in Kakinada has capacity to turn out more than 9,240 MTPA of finished products, and an additional pre-processing and processing arrangement at a facility owned by Royale Marine Impex Private Limited in Bapatla offers added capacity to process around 3,000 MTPA. The plants are supplemented by cold storage facilities located at each location.

Board of Directors

Here is a synopsis of the company’s executive team:

  • With 20 years of experience in the aquaculture industry, Karuturi Satyanarayana Murthy, aged 61, is chairman and managing director. Having set up the Apex Exports partnership in 1997 to export frozen shrimp, which was later converted into Apex Frozen Foods Private Limited, he has been heading the company since then. He is responsible for making strategic decisions and decisions relating to business development and overall administration the operations.
  • Thirty-seven-year old Karuturi Subrahmanya Chowdary serves as executive director. With 12 years of experience in the aquaculture sector, he has been an AFF director since its inception and played a significant role in development of the business.
  • Karuturi Neelima Devi, aged 32 years, is the whole time director. With a Bachelor degree in Science from Andhra University and has over five years of experience in the aquaculture industry, she is engaged in the corporate social activities of our company and serves as chairman of the CSR Committee.
  • Datla Chandra Sekhar Raju, aged 45 years, is a non-executive independent director. He holds a Bachelor degree in Technology from Jawaharlal Nehru Technology University, has 19 years of experience in the information technology field, and worked for several public and private sector firms prior to joining AFF.
  • Venkata Subba Raju Datla, aged 65 years, is a non-executive independent director. He holds a Bachelors degree in law and has a 36 years of experience in the banking sector.
  • Mantena Lakshmipathi Raju, aged 63 years, is a non-executive independent director of our Company. Holding a Doctor of Philosophy degree, he has 37 years of teaching experience and has held prestigious positions at Andhra University.