Redington to go public, raise Rs 150 crore

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.

DQWeek