Acquisition of Snowman Logistics Limited (Snowman) by Adani Logistics Limited (ALL) APSEZ 27 December 2019
Table of Contents Executive Summary Adani Logistics Limited Strategy Industry Outlook – Cold Chain Snowman Overview Acquisition Rationale Business Plan Summary Additional Transaction Details 2
1. Executive Summary
Adani Logistics’ Acquisition of Snowman Logistics The Snowman Logistics acquisition would deepen Adani Logistics’ footprint in the ancillary logistics sector Acquisition of largest cold chain vertical - In line with ALL ’s strategy to be an integrated 1 logistics services provider Snowman is a market leader in cold chain services - ready platform for growth 2 Growth from end use segments (pharma, seafood etc.) – visibility to double capacity 3 Business Focus 4 a) Increase in utilization b) Higher realization from product mix change c) Operational efficiencies (eg. Electricity costs, co-location of new facilities) 4
Snowman Logistics: Acquisition Details ALL proposes to acquire majority stake in Snowman on December 27, 2019 ● Promoters : Gateway Distriparks Limited (40.25%) Current Structure and ● Public Holding: 59.75%: Major Shareholders: Mitsubishi Group (11.5%) and IFC (6.8%) Proposal ● ALL proposes to acquire Promoter stake and additional equity upto 26% by triggering Open Offer ● Total Equity value at INR 44 per share = INR 735 Cr [No of shares outstanding = 16.7 Cr] ● 40.25% acquisition from Promoter for INR 296 Cr ● Consideration Upto 26.0% from Public through Open Offer Process for INR 191 Cr ● Implied EV/FY21 EBITDA multiple of 11.6x ● Acquisition represents a 3.2% premium to the market price ● Board Approvals received on December 27, 2019 Timing and ● Condition precedents: Regulatory & Lender Approvals Process ● Expected Closing: Q4 FY20 ● Valuation Report : KPMG India Private Limited ● Legal : Cyril Amarchand Mangaldas Advisors ● Financial & Tax DD : PricewaterhouseCoopers Private Limited ● Tender Offer Bank : JM Financial 5
2. Adani Logistics Limited Strategy
ALL – Integrated logistics services to expand across the country End-to-end Integrated Logistics Services Transportation Facilities Other Services Stuffing / De- Rail Logistics Parks Financial Snapshot stuffing Warehousing Cargo Particulars (INR Cr) FY18 FY19 H1FY20 Road (Incl Cold Storage) Aggregation Revenue 827 583 438 Customs Inland Waterway EBITDA 76 90 127 Inland Waterway Clearance Terminals EBITDA Margin % 9% 16% 29% Air Cargo Other Value Air Complex added services Coastal Sea Ports Shipping Technology Platform Example of Customer Centric End to End Logistics Offerings Ensuring Maximum Synergies 22KM Manesar Mundra Patli, Plant Port Logistics Park 7
ALL Strategy for FY25 Substantial expansion of assets and service capabilities From 4 to 15+ From 49 to 200+ From 0.4Mn to 5Mn Sq.Ft. From 0.5 to 1.5 MMT Multi-modal Logistics Warehouses Silo Capacity Rakes * Parks Cold Storage Air Cargo Inland Waterways New Services / Products 200,000 pallets Capacity 50K MT 25 Barges * Rakes includes GPWIS, Container Trains, Grain Trains & Auto Trains GPWIS – General Purpose Wagons Investment Scheme 8
3. Industry Outlook – Cold Chain
Industry Overview – Cold chain Commodity market in India Estimated Organised sector ~16% of total market, expected to grow at 17% CAGR to reach INR 11,400 Cr by FY24 12% 16% 19% Organised 2019 Organised Organised 2014 2024 Unorganised Unorganised Unorganised 88% 84% 81% Organised Cold Chain Commodity Market (INR in Cr) 11,400 5,200 2,300 2014 2019 2024 Source: Market Research and internal estimates Organised cold chain includes meat, seafood, dairy, ice cream, dairy, chocolates, pharma, quick service restaurant (QSR) etc . Unorganised cold chain includes onion, potatoes, food grain and other commodities 10
Industry Overview – Organised Cold Chain Commodities Commodities in the organized cold chain sector are poised for high growth and have a high realization potential Meat / Seafood / (INR Cr) Quick Service Restaurants (QSR) Ice Cream Frozen Products 1,900 3,750 2,100 950 1,730 750 2019 2024 2019 2024 2019 2024 Pharma Dairy / Chocolates / Chilled Products 1,900 1,750 900 870 2019 2024 2019 2024 Source: Market Research and internal estimates 11
Organized cold chain industry growth drivers Numerous enablers to drive multifold cold chain infrastructure growth Significant ● Organised retail is growing at 25-30% due to urbanization, rising income, quality premium fillips in end- ● user Meat/Seafood, Pharma, Ice Cream and QSRs are expected to grow at 17% in the next 5 years industries Increased ● Urbanization is leading to demand awareness for higher quality awareness & enhanced ● Enhanced regulations and compliances augurs well for Organised cold chain sector regulations ● GST is leading to optimization of supply chain Fiscal policy ● initiatives to With redrawing of supply chains , players with geographical presence providing integrated benefit scale cold chain logistics set to benefit players Rebalancing ● Majority of cold chain investments have been in low value segments (eg. Potatoes) close to of production centers investments – ● Production to Opportunity to establish multi-purpose / multi-commodity Cold chain infrastructure in Consumption consumption centres Centres Source: Market Research and internal estimates 12
Industry Landscape – Organised Cold Chain Service Providers Snowman is the largest integrated cold chain service provider with more than 30% market share in capacity Key integrated cold chain Service providers with 10,000+ pallet capacity 1 1,04,343 66,799 ~ 28,200 ~ 24,000 ~ ~ ~ 20,000 20,000 20,000 ~ 13,000 Snowman Coldman Coldrush Western MJ Stellar JWL Schedulers Logistics Reefer 293 105 175 90 10 NA 30 240 Vehicles Number of 15 9 9 3 3 3 2 4 Locations 1 India has ~500,000 pallet capacity; players with 10,000+ pallet capacity constitute ~60% of the capacity 13
4. Snowman Overview
Snowman – Overview Snowman is in the business of providing integrated temperature controlled warehousing and distribution Leading cold chain service provider with pan India Presence – 31 warehouses across 15 locations Warehousing Segment Market share 30%+ of capacity amongst integrated organized cold chain service providers in India 104,343 pallets Capacity Chandigarh 1 4,150 15 cities in 12 states Locations 2 Ballabgarh 31 (10 on owned Land) Warehouses 4,030 Jaipur 1 ~ 800+ customers 3,620 Customer base Top 20 customers contribute 34% Ahmedabad 1,356 1 High Yield: Seafood, Meat, Ice Cream, Kolkata 2 7,050 QSR, Pharma Surat 1 Key Medium Yield: Ready To Cook, Industrial, 5,130 Bhubaneswar 1 Commodities 3,680 Dairy, Poultry, Confectionary Pune - 6 3 Hyderabad Low Yield: Butter, Agro Mumbai 8,570 4,786 1 22,480 2 Vizag 7,270 Revenue – INR 156 Cr (67% of total) Key Financials EBITDA Margin - 34% (FY19) Krishnapatnam 1 4,180 Bangalore 3 Distribution segment 9,525 Chennai 5 Primary Distribution: 142 13,646 1 Cochin Reefer Vehicles Secondary Distribution: 151 # of Warehouses 4,870 Revenue – INR 72 Cr (31% of total) Key Financials EBITDA Margin - 7% (FY19) Total Employees: 406 Number beneath the city denotes # of Pallets 15
Snowman – Providing end to end services Distribution and Value Added Services provide an integrated solution to customers ● Primary focus on end to end distribution service to warehouse customers ● Primary Primary Customer’s factory to warehouse Transportation Distribution ● Total Fleet – 142 vehicles ● 24x7 tracking ● Offering warehousing solutions and services across a spectrum of temperatures - from ambient to frozen (+25 ° C to -25 ° C) Warehousing ● Pallet Capacity - 104,343 ● 31 warehouses spread across India ● Last mile transport management – Warehouse to end users ● Total Fleet – 151 vehicles Secondary Secondary Distribution ● 24x7 tracking along with POD management Transportation Value Added Services Consultancy Inventory Management Other ● Blast freezers ● ● FIFO driven ERP system for Provides Consultancy and Additional ● Repacking customer inventory project management Services ● Labeling planning and order services ● execution Bundling etc 16
Snowman - Warehousing Product Portfolio Overview High yielding products occupy 43% of the capacity and contribute 64% of the revenue Average Medium High Yield Low Yield Yield Realisation 1,450 2,250 1,870 1,735 1,715 1,625 1,380 1,040 790 Frozen 50% Chilled 23% 84% Dry 33% 29% 43% 44% 57% Ice Cream QSR Sea Food Pharma Meat Others Agro Butter (%) Total 5% 6% 20% 6% 6% 17% 13% 12% Capacity (%) 10% 9% 28% 9% 8% 18% 11% 8% Revenue Capacity and revenue as of FY19 High Yield: >INR 1,500 per pallet; Medium Yield: INR 1,100 - 1,500 per pallet; Low Yield: <INR 1,100 per pallet QSR – Quick Service Restaurant 17
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