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CHENNAI
JANUARY 18, 2007
Redington India would be the first IT distribution company in India to go
public and raise money to fund its expansion programs. The company is likely to
raise Rs 150 crore from the open market, through 100 percent book-building
route. The IPO will open on January 22 and close on January 25, 2007.
Redington's offering of 1.32 crore equity shares of Rs 10 each comprises
about 16.99 percent of the fully diluted post-issue paid up capital of the
company. The share would be offered at a price band of Rs 95-113.
The company plans to invest the IPO money in setting up more service delivery
centers, besides establishing an LCD repair facility in India. Another major
part of the fund would be invested in its Dubai operations, setting up
distribution centers and putting an ERP system in place for Middle East and
Africa markets. "We will also set up four automated distribution centers in
India," said R Srinivasan, MD, Redington.
Redington has registered a turnover of Rs 6,795 crore in the last fiscal, out
of which 50 percent came from India and remaining from the international
business. The company's standalone net profit from its India operations has
increased from Rs 14.92 crore in 2003-04 to Rs 29.12 crore in 2005-06 with a
CAGR of 39.72 percent.
Though, the company's service revenue constituted only four percent of the
total turnover, Redington wants to strengthen and increase its service business
as the margins are pretty good here. "Service margins are much higher than
our product distribution margins," he quipped.
Redington currently has 43 service centers in India, which will be increased
up to 68 through fresh investments. The company is also betting on the proposed
LCD repair facility, as India is one of the fastest growing markets for LCD
products. It is important to note here that Redington has recently diversified
its business by getting into distribution of white goods, focusing mainly on
consumer electronics and home appliances markets. The company plans to leverage
its core competencies such as logistics, inventory management, order
fulfillment, credit management, to other non-IT products too.
Enam Financial Consultants and Cameo Corporate Services are the lead managers
to the company's public issue. Page(s) 1
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