GEF India IPO: Major edible oil firm Gemini Edibles plans Rs 1,800 crore IPO

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MUMBAI: Golden Agri-Resources, the world’s second-largest palm oil plantation company, plans to float an initial public offer (IPO) for its Indian subsidiary Gemini Edibles & Fats India Private Limited (GEF India).

Four investment banks – Nomura, Axis, Credit Suisse and Kotak have been hired to run the process. A draft red herring prospectus (DRHP) for the Rs 1500-1800 crore IPO will be filed by next month, said multiple people aware of the development.

Rs 6,555-crore Gemini Edibles is backed by global PE fund Proterra Investment Partners which owns about 25% stake in the company.

Mails sent to Golden Agri-Resources, Gemini Edibles & Fats India and Proterra Investment Partners did not elicit any responses.

In 2014, Indonesian billionaire Widjaja family, which owns $7 billion Golden Agri-Resources, acquired Gemini Edibles and Fats India from promoters and investor Ruchi Soya Industries. Currently, Golden Agri-Resources holds about 56% stake in Gemini Edibles.

Gemini sells its products in the edible oil segment under the brands Freedom and First Klass. Freedom, the flagship brand of Gemini Edibles, is the largest selling brand in the Sunflower oil category in Telangana, Andhra Pradesh & Odisha.

It holds around 57%, 49% and 32% market share (sunflower oil) in Andhra Pradesh, Odisha and Telangana, respectively. Gemini has a diversified product portfolio including sunflower oil, palm oil, vanaspati, soya bean, rice bran, mustard and groundnut.

Gemini’s sales volumes have been consistently growing since FY16 with a CAGR of 19.37% over FY16 (4.4 lakh metric tonnes) – FY20 (8.9 lakh metric tonnes). During first half of FY21, Gemini witnessed the end-user demand shifting away from HoReCa (Hotels-Restaurants-Café) segment which is operating at a low efficiency level on account of the pandemic, to the retail segment where the end-consumers prefer branded sunflower oil. This thereby helps the company to increase their retail sales share, according to a recent report by India Ratings & Research.

Set up in 2008, Gemini Edibles has three manufacturing facilities in Andhra Pradesh, one unit in Krishnapatnam and two units in Kakinada. The combined refining capacity of all the manufacturing units is 2,450 metric tonnes per day.

The edible oil industry in India is characterised by intense competition and fragmentation, attributable to low-entry barriers such as low capital and low technical requirements of the business and a liberal policy regime. As a result, profitability in the edible oil business tends to be thin, said India Ratings & Research report.

Largest selling edible oil brands in India include Fortune by Adani Wilmar, Saffola by Marico, Sundrop by Agro Tech Foods, Dhara by Mother Dairy, Dalda and Gemini by Cargill India.

India’s total demand for edible oil is around 230 lakh tonnes annually, while the country produces mere 75-80 lakh tonnes. Hotel, Restaurants and Cafeterias (HoReCa) segment accounts for 40 per cent of the country’s total edible oil demand.

Palm oil accounted for 60% of the total imports (62 per cent), followed by soya oil and sunflower oil. The country imports palm oil from Malaysia and Indonesia, soya oil comes from Argentina, Brazil; and Argentina, Ukrain, Russia supply Sunflower oil to India.

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