Blue Bird (India) Limited IPO – Review – 1
Blue Bird (India) Limited, a leading manufacturer of paper-based notebook and stationery products with the highest market share of 48% amongst large, organised players in India, is entering the capital market with a public issue.
Issue Size: No of 8,775,000 equity shares of Rs. 10 each at a premium to be decided through the 100% book-building process. The price band for the issue has been fixed at Rs. 90 to Rs. 105.
Date: Issue opens for subscription/bids on November 16, 2006 and closes on November 22, 2006.
Out of the net offer to the public, 50% is reserved for allotment to Qualified Institutional Buyers, of which 5% is reserved for allotment to Mutual Funds. Further, 15% is reserved for allotment on a proportionate basis to Non-Institutional Buyers and the balance 35% will be allotted to Retail Individual Bidders on a proportionate basis. The issue constitutes 25.07% of the fully-diluted post-issue capital of the company.
The company has privately placed 1,225,000 equity shares at a price of Rs. 98 per share with India China Pre-IPO Equity (Mauritius) Limited, a SEBI-registered Foreign Venture Capital Investor which has appointed ST Asset Management Limited, wholly owned by Temasek Holdings (Private) Limited, as its investment manager.
The company is raising capital through this public issue to finance the construction of its second major notebook manufacturing and printing unit in South India; to expand capacity at its existing plant in Pune and purchase the registered and corporate office premises presently on leave and licence; to expand its network of sales and distribution offices throughout India; to augment its long-term working capital requirements; and to repay some existing long-term debts.
Blue Bird (India) Limited, under its “Blue Bird” brand of paper-based notebooks, has built a strong presence in western and southern India. According to a survey carried out by AC Nielsen ORG-MARG, approximately 80% of the Indian notebook and stationery market is controlled by unorganized, local players. Of the 20% of the market catered to by the organised segment, 15% is controlled by large, national players and the balance 5% by medium-sized, regional players. AC Nielsen ORG-MARG has estimated that Blue Bird enjoys the highest market share of 48% of the total market share controlled by large, organised players.
In addition to notebooks, the company also manufactures products like files, perforated pads, registers and filler papers as part of its stationery business. Moreover, the company publishes study aids/educational materials and children’s books with in-house developed content and is also engaged in commercial printing of third-party content including textbooks, magazines, catalogues, calendars and annual reports.
During fiscal 2005, Blue Bird began export of notebooks and printed materials to Kenya, Ghana and South Africa. The company plans to expand both its market presence within India and in sub-Saharan Africa, with increased marketing efforts and penetration in the export market.
Financials: Blue Bird had total income of Rs. 401.70 crores and net profit of Rs. 25.12 crores in fiscal 2006. The company has posted improved performance during the first-half of the current year. For the period ending September 30, 2006, the company reported a total income of Rs. 237.55 crores, 18.34% higher compared to the previous year’s first-half total income of Rs. 200.75 crores. During the same period, net profit for the first half of fiscal 2007 at Rs. 15.10 crores was 19.65% higher compared to the previous year’s first-half net profit of 12.62 crores.
