Ignatius Navil Noronha is no startup whizzkid. He has never been to an Ivy League college. He doesn’t belong, not even remotely, to a business family with old money. But chances are that the 42-year-old will be richer by `. 400 crore (may be even . 500 crore) in a fortnight as ` the company he works for prepares to go public.Avenue Supermarts, the owner and operator of retail chain D-Mart, has set a price band of Rs295-299 for its Rs1,870-crore initial public offering (IPO) which will hit the market on 8 March. The issue will close on 10 March.
The price band of Rs1,870-crore IPO has been set at Rs295-299 per equity share of face value of Rs10 each, the company said on Wednesday. The minimum bid lot is 50 equity shares and in multiples of that thereafter.
In his late 20s, Noronha was handpicked by the reclusive ace investor Radhakishan Damani to head his retail venture D’Mart.Damani spotted the young account manager with Hindustan Unilever, which had regular dealings with D’Mart. Noronha had business interactions with Damani for close to two years before he was hired.
After a decade, the relationship is about to result in a windfall for Noronha, thanks to 13.7 million shares he holds in the soon-to-be-listed Avenue Supermarts -the Damani-promoted company, which owns the D’Mart retail chain. If the high interest among brokers and investors are any indication, the worth of Noronha’s shareholding post Avenue Supermarts’ listing in mid-March could cross the combined value of the shares that HUL managing director Sanjiv Mehta, ITC chairman YC Deveshwar, and Godrej Consumer Products MD Vivek Gambhir hold in their respective companies.
Noronha will not be alone in the likely journey to big bucks. About 2,000 D’Mart employees own 7% shares, which means some of them are set to become millionaires once trading starts in Supermarts’ shares.This is based on an expected price band of around ` . 300 per share. Dalal Street broker Radhakishan Damani’s entrepreneurial journey began in 2001 with D’Mart. Over the years, D’Mart stunned the industry as retail chains backed by corporate houses with deep pockets struggled to break even.
In 2004, Noronha joined the venture as head of business.“Like one of his stock picks, Damani’s bet paid off. I have rarely seen him go wrong in his judgements,“ said an old friend of the D’Mart promoter. Noronha was appointed as managing director in 2006.
In the past 12 years, Avenue Supermarts has built 120 stores -closing FY16 with an annual revenue of ` . 8,600 crore. Unlike other retail outlets, almost all of D’Mart’s stores are standalone entities in residential neighbourhoods and not in malls.
The properties housing 90% of D’Mart stores are owned by the company -a strategy that has shielded the retail chain from spiralling rentals and relocation hassles.
“Developing personnel, understanding customers, de signing the layout are factors that have helped D’Mart score over other retail companies.For this, the credit goes to Navil,“ said a senior person from the D’Mart group.
“D’Mart follows a no-frills approach to save on operating costs and offer discounts to consumers,“ said Mayank Shah, deputy marketing manager at Parle Products, the country’s largest homegrown food firm. Vendor relationship is the other pillar of D’Mart’s model that Noronha closely watches. Against the 12-21 days’ payment cycle in the FMCG trade, D’Mart pays vendors after 11 days.
The company proposes to utilize the proceeds of the issue for repayment or prepayment of a portion of loans and redemption or earlier redemption of NCDs it has availed, it said. The company also plans to use the funds for construction and purchase of fit-outs for new stores and for general corporate purposes.
“The company believes in a cluster-based growth approach. We will continue to grow our businesses in existing regions—western, southern and central India,” said Neville Noronha, MD & CEO, Avenue Supermarts, in Mumbai.The D-Mart owner plans to use Rs1,080 crore of the money raised for debt repayment and Rs366 crore for building new stores, it said.The firm, valued at Rs18,000 crore, is an emerging national supermarket chain, with focus on value-retailing.Nine merchant bankers —Kotak Mahindra Capital, Axis Capital, Edelweiss Financial Services, HDFC Bank, ICICI Securities, JM Financial Institutional Securities, Inga Capital, SBI Capital Markets and Motilal Oswal Investment Advisors — will manage the Avenue Supermarts IPO