IPO Analysis Research

Shivalic Power Control coming with IPO to raise Rs 64.32 crore
Jun-21-2024   16:58 Hrs IST

Shivalic Power Control

  • Shivalic Power Control is coming out with initial public offering (IPO) of 64,32,000 shares of Rs 10 each in a price band Rs 95-100 per equity share.  
  • The issue will open for subscription on June 24, 2024 and will close on June 26, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 9.50 times of its face value on the lower side and 10.00 times on the higher side. 
  • Book running lead manager to the issue is Corporate Capital Ventures.
  • Compliance Officer for the issue is Neha Sandal.

Profile of the company

Shivalic Power Control is an ISO-certified LT and HT electric panel manufacturer with an operating. It is a technology-driven company with a strong focus on quality, design and product development, which has allowed it to develop products suited to its customers’ requirements. its 1,25,000 Sq. Feet of in-house manufacturing unit allowed it to manufacture a diversified range of electric panels such as PCC Panels, IMCC Panels, Smart Panels, MCC Panels, DG synchronisation panels, Outdoor panels, HT Panels up to 33KV, VFD Panels, Power Distribution Boards, Bus Duct and LT & HT APFC Panels. it is authorised by industry leaders such as L&T, Siemens, Schneider Electric and TDK to manufacture fully type-tested panels as per IEC 61439 - 1&2 ,IEC 61641, IS1893 which it serves to more than 15 industrial Sectors in India as well as in outside India, viz, Nepal, Bangladesh, African countries such as Uganda, Kenya, Nigeria, Algeria.. 

The company has a dedicated team of engineers who are experts in designing and developing advanced designs which enable it to manufacture the Techno Modular Design - Fully Bolted Panels with Aluminium and Copper Bus Bar, which make it different from traditional welding panel manufacturers with a strong focus on the quality of the panel. It has advanced manufacturing facilities with automated controls to maintain quality and productivity, ensuring rigorous quality control and safety throughout its production process. It manufacturing facility is certified in accordance with international standards of quality management systems, environmental management systems, and occupational health and safety management systems as per ISO 9001:2015, ISO 14001:2015, ISO 45001:2018.

Proceed is being used for:

  • Meeting the working capital requirements of the company. 
  • Meeting out the funding for capital expenditure of the company: (a) Funding for procurement of new machineries; and (b) Construction of new assembly line by shedding the roof 
  • Meeting out the inorganic growth through unidentified acquisition
  • General corporate expenses.

Industry overview

The India - electrical equipment market size is estimated to grow at a CAGR of 11.68% between 2022 and 2027. The market size is forecast to increase by $52,975.77 million. The growth of the market depends on several factors such as an increase in the number of residential and commercial building projects, a rise in power generation from renewable energy sources, and an increase in investments in the power sector.

Demand for electrical equipment in India is increasing, encouraging suppliers to increase production of electrical equipment. India is one of the largest consumers and producers of electricity and India is the third largest electricity producer in the world. Furthermore, the demand for electrical equipment is expected to increase in this region due to the growth of the power sector. This will increase the opportunity for electrical equipment in India. Therefore, the growing domestic electricity demand and the growth of the power sector are encouraging domestic and international suppliers to invest in the country to meet the growing demand and capitalize on the India - electrical equipment market. Hence, the growing opportunity for electrical equipment deployment in India will drive the growth of the market during the forecast period.

The number of cyber-attacks, such as those by hackers and cybercriminals, is increasing in India. In this market, electrical systems are controlled and monitored by IT systems and infrastructure, such as control and data acquisition (SCADA) systems and automated production controls. In cyber-attacks, hackers can attack computer systems to cause infrastructure damage and power supply breakdown, resulting in power outages. Moreover, false data injection (FDI) is a common type of cyber-attack in power systems. A successful FDI attack on a computer system can cause an imbalance between power consumption and power generation in the network. Such actions can damage equipment, and continued failure can lead to widespread power outages. Hence, the threat posed by cyberattacks on the power industry could impede the growth of the market during the forecast period.

Pros and strengths

Ensuring excellence through rigorous quality control processes: At Shivalic, it takes immense pride in delivering products of the highest quality, and its dedication to this standard is certified by its ISO certifications (ISO 9001:2015, ISO 14001:2015, ISO 45001:2018). This certification serves as a testament to its stringent quality management practices and its commitment to meeting and exceeding international standards. Within its organization, it has established QA Lab which is an independent Testing Department that strives to provide best-in-class testing and QA services. Powered by a workforce of professionals and having good experience in the field of Electrical Panels testing, it aims to provide a complete range of testing services, while keeping customer satisfaction at its core. It is well equipped with high-end technical testing devices that make it competent enough to test the panel.

3D Bus Bar unique Bending: The quality of bus bars in electric control panels is crucial for several reasons. First, high-quality bus bars ensure efficient and reliable electrical conductivity, minimizing energy losses and reducing the risk of overheating. Additionally, high quality bus bars contribute to the overall safety of the electrical system by minimizing the potential for short circuits or electrical faults.

Strengthen marketing network: It continues to enhance its business operations by ensuring that its customer base increases through its marketing efforts. Its ability to customize its products for the various applications by its customers can help it diversify its operations across different customer segments. Its core competency lies in the thorough understanding of its customers’ needs and preferences, its vision to engage in sustainable practices and providing unparalleled quality of its products thereby achieving customer loyalty. Its marketing team includes the engineers who identify the required demand in the market and provide suggestion to make required changes in its product line.

Risks and concerns

Depends on top ten customers: Its top ten clients are responsible for a significant portion of its revenue, contributing aroun 40.77%, 53.02%, 56.78%, and 82.97% of its revenues from operations based on Restated Financials for the period nine months ended December, 2023 and for the year ended March 31, 2023, March 31, 2022 and March 31, 2021 respectively. The loss of its major customers or a decrease in the volume of its products may adversely affect its revenues and profitability. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its operations and profitability.

Rely on a limited number of suppliers: It is dependent on limited number of suppliers for procurement of raw materials required for manufacturing its products. The company has a tie up with some of the well-known names such as Siemens, L&T, Schinder Electric and TDK for procurement of MCCBs, Switchgears and other raw material. The company has maintained a tie-up with few of its suppliers which needs to be renew annually. Apart from them it also has others suppliers with whom we have not entered into an agreement. So, the success of its business is accordingly significantly dependent on it maintaining good relationships with its suppliers. Raw materials prices are normally based on the quotes it receives from various suppliers. It relies on pre-booking capacity with its suppliers, based on its demand projections.

Significant amount of working capital: Its business requires significant amount of working capital for carrying-out its activities. Consequently, there could be situations where the total funds available may not be sufficient to fulfil its commitments, and hence it may need to incur additional indebtedness in the future, or utilize internal accruals to satisfy its working capital needs. Its future success depends on its ability to continue to secure and successfully manage sufficient amounts of working capital.

Outlook

Shivalic Power Control is engaged in the business of manufacturing of electrical panels. It is a technology-driven company with a strong focus on quality, design and product development, which has allowed it to develop products suited to its customers’ requirements. It manufactures a diversified range of electric panels such as PCC Panels, IMCC Panels, Smart Panels, MCC Panels, DG synchronisation panels, Outdoor panels, HT Panels up to 33KV, VFD Panels, Power Distribution Boards, Bus Duct and LT & HT APFC Panels. On the concern side, its business is dependent upon its ability to efficiently manage its manufacturing facilities, which are subject to various operating risks, including productivity of its workforce, breakdown of machinery, natural disaster and other inevitable incident. Although it has never encountered any of the risk as on date but any malfunction or breakdown of its machinery may require significant repair costs and consequently cause delays in its operations.

The company is coming out with an IPO of 64,32,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 95-100 per equity share. The aggregate size of the offer is around Rs 61.10 crore to Rs 64.32 crore based on lower and upper price band respectively. On performance front, the total revenue form operation of the company has increased by 43.30% from Rs 5,733.20 lakh in the fiscal year ended March 31, 2022 to Rs 8,215.68 lakh in the fiscal year ended March 31, 2023. Net Profit has increased by 309.73% from Rs 174.81 lakh in the fiscal year ended March 31, 2022 to profit of Rs 716.26 lakh in the fiscal year ended March 31, 2023. The major reason for increase in the net profit margin is because of the rising order size and increases in the margins of the company. Going forward, it is actively looking to execute more EPC projects because of the good margins in these projects. Having successfully executed EPC projects for its clients, it will elevates number of more EPC project in the near future. 

Visaman Global Sales coming with IPO to raise Rs 16.05 crore
Jun-21-2024   14:10 Hrs IST

Visaman Global Sales

  • Visaman Global Sales is coming out with an initial public offering (IPO) of 37,32,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 43 per equity share. 
  • The issue will open for subscription on June 24, 2024 and will close on June 26, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The share is priced at 4.30 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Shreni Shares.
  • Compliance Officer for the issue is Rawal Ankita Harsh.

Profile of the company

Visaman Global Sales is engaged in the business of supply of round pipes, square pipes, rectangle pipes, various specification of structural steels, BGL coils, GP(GI) coils, HR coils, CR coils, colour coated coils, MS sheets, GP and GC sheets, CR sheets, HR sheets and plates, colour coated sheets, roofing PUF panel, wall PUF panel etc. Further, the company also provides the credit facility to its existing customers as value added service. It provides facility to pay later to the existing customers with good financial record in this case if the customers had paid all the outstanding amount in a proper time frame, then it fixes their credit worthiness via fix amount of credit limit and the credit days which varies with customers to customers. 

In addition, it provides the facility of customization to meet the specific requirement of its customers with respect to specific size, length, breadth, thickness etc. of its products. It sends the requisition to manufacturer for customization of specified products. Further, in certain cases, if the manufacturer is unable to do the specified customization, then, the same will be get done by the third-party process houses. The Company outsources the process of modification and alteration to the third party. It outsources the process of modification and alteration to the third party. Additionally, it facilitates onsite delivery of its products to the customers. It is one of the dealers of APL Apollo Tubes. It sells its products through a diversified sales & distribution mix viz. Business-to-Consumer (B to C), Business-to-Channel (B to CH) and Business-to-Business (B to B). Its capabilities as a Company include strict quality assurance system and established marketing and distribution relationships. It strives to deliver customized products and provide quality services.

Proceed is being used for:

  • Funding of capital expenditure requirements of the Company towards setting up of a manufacturing facility at Rajkot, Gujarat, India
  • Funding working capital requirements 
  • General corporate purposes

Industry overview

One of the primary forces behind industrialization has been the use of metals. Steel has traditionally occupied a top spot among metals. Steel production and consumption are frequently seen as measures of a country's economic development because it is both a raw material and an intermediary product. Therefore, it would not be an exaggeration to argue that the steel sector has always been at the forefront of industrial progress and that it is the foundation of any economy. The Indian steel industry is classified into three categories - major producers, main producers and secondary producers. India is the world’s second-largest producer of crude steel, with an output of 125.32 MT of crude steel and finished steel production of 121.29 MT in FY23. India’s steel production is estimated to grow 4-7% to 123-127 MT in FY24. The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour. 

In the past 10-12 years, India's steel sector has expanded significantly. Production has increased by 75% since 2008, while domestic steel demand has increased by almost 80%. The capacity for producing steel has grown concurrently, and the rise has been largely organic. In FY23, the production of crude steel and finished steel stood at 125.32 MT and 121.29 MT respectively. In FY24 (until November 2023), the production of crude steel and finished steel stood at 94.01 MT and 88.81 MT respectively. In FY23, crude and finished steel production stood at 125.32 MT and 121.29 MT respectively. In July 2023, crude steel production in India stood at 11.52 MT. In July 2023, finished steel production stood at 10.53 MT. In FY24 (until November 2023), the consumption of finished steel stood at 86.97 MT. The per-capita consumption of steel stood at 86.7 kgs in FY23. In FY22, the production of crude steel and finished steel stood at 133.596 MT and 120.01 MT, respectively. 

The steel industry has emerged as a major focus area given the dependence of a diverse range of sectors on its output as India works to become a manufacturing powerhouse through policy initiatives like Make in India. With the industry accounting for about 2% of the nation's GDP, India ranks as the world's second-largest producer of steel and is poised to overtake China as the world's second-largest consumer of steel. Both the industry and the nation's export manufacturing capacity have the potential to help India regain its favourable steel trade balance.

Pros and strengths

Wide range of products: The company offers a wide range of steel products used in various industries. Its product portfolio includes different specification of steel pipes, structural steel, coils, sheets, plates. It also provides facility of customization with respect to specific size, length, breadth, thickness etc., by arranging from its vendors. Its comprehensive range of products and this facility of customization enable it to capitalize on growth opportunities and demand in its industry.

Existing supplier relationship: Its existing supplier relationship protects the business with terms of supply and pricing of the products, the quality of the products offered etc. it, being a small and medium size organization, rely on personal relationships with its suppliers. The company enjoys existing relationship with its suppliers. Further it also leverages the past experience of its promoters and management in maintaining effective supplier relationship.

In depth understanding of customers’ requirements: Its strength lies in understanding the requirement of the customer and its execution capabilities to provide the product as per the client requirements. This involves understanding the technical requirements like the tensile strength of the bars, following the bar bending schedules, permitted levels of tolerances as well the schedule of requirement of the client. It act as reinforcement partners of the client and make the product available of the right quality at the right time to meet their construction cycle requirements. This also helps the clients to plan in advance and use the manpower resources available on site to get the optimal output.

Risks and concerns

Business is high volume-low margin business: Its inability to regularly grow its turnover and effectively execute its key business processes could lead to lower profitability and hence adversely affect its operating results, debt service capabilities and financial conditions. Due to the nature of the products, it sells, it may not be able to charge higher margins on its products. Hence, its business model is heavily reliant on its ability to effectively grow its turnover and manage its key processes including procurement of finished goods from suppliers, timely sales/ order execution and continuous cost control of core as well as non-core activities. The table below gives details of its Operating Margins and Net Profit margin based on restated financials.

Dependent on third party transportation providers: It depends on transportation services to deliver its products to its customers. It outsources the delivery of its products to either third-party logistics companies or as mutually agreed shipment terms as decided with the customers. Transportation strikes could have an adverse effect on its ability to deliver its products to its customers. In addition, transportation costs in India have been steadily increasing over the past several years. Continuing increases in transportation costs or unavailability of transportation services for its products may have an adverse effect on its business, financial condition, results of operations and prospects.

Working capital requirements: Its business demands on working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects. It intends to continue growing by expanding its business operations. This may result in increase in the quantum of its current assets. Its inability to maintain sufficient cash flow, credit facility and other sources of fund, in a timely manner, or at all, to meet the requirement of working capital could adversely affect its financial condition and result of its operations.

Outlook

Visaman Global Sales is engaged in the business of supply of round pipes, square pipes, rectangle pipes, various specification of structural steels, BGL coils, GP(GI) coils, HR coils, CR coils, colour coated coils, MS sheets, GP and GC sheets, CR sheets, HR sheets and plates, colour coated sheets, roofing PUF panel, wall PUF panel etc. Further, it also provides the credit facility to its existing customers as value added service. In addition, it provides the facility of customization to meet the specific requirement of its customers. It outsources the process of modification and alteration to the third party. On the concern side, it operates in a highly competitive industry with a number of other distributors that deals in competing products. As a result, to remain competitive in the market it must continuously strive to reduce its distribution costs and improve its operating efficiencies and expand its products offering. If it fails to do so, it may have an adverse effect on its market share and results of operations.

The company is coming out with an IPO of 37,32,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 43 per equity share to mobilize Rs 16.05 crore. On performance front, revenue from operations has increased by 16.05% from Rs 32,403.96 lakh in Fiscal 2022 to Rs 37,603.46 lakh in Fiscal 2023. This increase was due to increase in sales of products during the year. The company reported a net profit of Rs 113.33 lakh in Fiscal 2023 as compared to a net profit of Rs 94.66 lakh in Fiscal 2022 which increased due to growth in companies operations. Meanwhile, the company intends to expand its business operations by entering into segment of processing of slitting and processing of Hot Rolled (HR) coils. Presently the company is engaged in the supply of various specifications and sizes of steel pipes, structural steel, steel coils and sheets. It also provides products to its customers post modification and alteration of steel strips/coils into various customized sizes/ shapes as per their requirements.

Mason Infratech coming with IPO to raise Rs 30.46 crore
Jun-20-2024   17:12 Hrs IST

Mason Infratech 

  • Mason Infratech is coming out with initial public offering (IPO) of 47,60,000 shares of Rs 10 each in a price band Rs 62-64 per equity share.   
  • The issue will open for subscription on June 24, 2024 and will close on June 26, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 6.20 times of its face value on the lower side and 6.40 times on the higher side. 
  • Book running lead manager to the issue is Expert Global Consultants.
  • Compliance Officer for the issue is Ravi Tiwari. 

Profile of the company

Mason Infratech is real estate construction company providing construction services for Residential as well as Commercial buildings of new and redevelopment projects. It specializes in executing civil contracts. It is also working on lifestyle projects and high-value standalone buildings. Its team is well-versed in the latest industry practices, ensuring that it remains up to date with the technological advancements in construction. It understands the unique requirements of each project and tailors its services accordingly. Its comprehensive suite of offerings covers the entire project lifecycle, including planning, designing, procurement, construction, and post-construction services. It provides end-to-end construction services for residential buildings (Residential), corporate office buildings and buildings for commercial purposes (collectively, Commercial). Its capabilities include constructing concrete building structures as well as composite steel structures. It also provides mechanical, electrical, and plumbing (MEP) and finishing works.

The company’s primary operational focus lies within the Mumbai Metropolitan Region (MMR). As a construction Company, it is establishing long-term partnerships with its clients. It leverages its technical expertise, staying up to date with the industry trends and best practices. Its team of professionals is skilled in implementing solutions that address the challenges of each project. It strives for continuous improvement in every aspect of its operations, from project planning and execution to quality control and safety measures. By maintaining a high standard of workmanship, it ensures that its clients receive desired outcomes. It is committed to fulfil its client expectations, embracing new technologies. 

Proceed is being used for:

  • Meeting the working capital requirements.
  • General corporate purposes.

Industry overview

The real estate sector is one of the most globally recognized sectors. It comprises of four sub-sectors -housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodation. The construction industry ranks third among the 14 major sectors in terms of direct, indirect, and induced effects in all sectors of the economy. In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It was also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru was expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi, and Dehradun.

By 2040, real estate market will grow to Rs 65,000 crore ($9.30 billion) from Rs 12,000 crore ($1.72 billion) in 2019. Real estate sector in India is expected to reach $1 trillion in market size by 2030, up from $200 billion in 2021 and contribute 13% to the country’s GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs. India’s real estate sector is expected to expand to $5.8 trillion by 2047, contributing 15.5% to the GDP from an existing share of 7.3%. In FY23, India’s residential property market witnessed with the value of home sales reaching an all-time high of Rs. 3.47 lakh crore ($42 billion), marking a robust 48% year-on-year increase. The volume of sales also exhibited a strong growth trajectory, with a 36% rise to 379,095 units sold. 

Pros and strengths

Customer-Centric Approach: The company focuses on understanding the specific requirements of each client and tailoring its services accordingly. Through personalized attention and clear communication channels, the company aims to build enduring partnerships with clients. Its commitment is to deliver projects meeting the required standards of quality. The company implements strict quality control measures and utilizes construction technologies and materials to ensure that every project meets or surpasses client expectations.

Ownership of modern system formworks and other Core Assets: The company’s construction capabilities involve the use of various technologies, such as temperature-controlled concrete for large-scale pours, self-compacting free-flow concrete for heavily reinforced structures, and specialized concrete for vertical pumping in skyscrapers and high-rise buildings. In project execution, it relies on core assets like formwork, tower cranes, passenger and material hoists, concrete pumps, threading and forging machinery, as well as cutting and bending machines. Additionally, it uses rack and pinion lift externals to enhance project efficiency. Ownership of diverse system formwork further sets it apart, including automatic climbing system formwork, aluminium formwork, table formwork, and composite panel formwork with both vertical and horizontal systems. This range allows it to tailor its approach to the specific construction requirements of different building types. The completion of each building, irrespective of its nature, requires a high level of skill, scalability, and speed. 

Optimal Utilization of Resources: The company consistently works on enhancing its service process and plans to enhance its procurement process to optimize resource utilization. It has allocated significant resources and intends to further invest in its existing Supplier Relationship, Experienced Management Team, Existing Client Base, Optimal Utilization of Resources activities to develop customized systems and processes for effective management control. It regularly reviews its existing policies for operations of the company to identify the areas of bottlenecks, aiding in improved efficiency and optimal resource utilization. 

Risks and concerns

The company’s primary operational focus lies within Mumbai Metropolitan Region: The company’s primary operational focus lies within the Mumbai Metropolitan Region (MMR), which poses a significant risk to its business. While the MMR offers numerous opportunities for growth and development, it also exposes it to various challenges and uncertainties. The performance and stability of its business are heavily dependent on the economic conditions within the MMR. Fluctuations in the local economy, such as changes in GDP growth, inflation rates, or consumer spending patterns, can impact the demand for construction projects. Economic downturns or recessions in the region could lead to reduced project opportunities and lower revenue generation. The construction industry is subject to a range of governmental regulations and policies. Changes in regulations, permits, licensing requirements, or zoning laws can significantly impact its operations. New regulations or delays in obtaining necessary approvals can disrupt project timelines, increase costs, and hinder its ability to execute projects successfully.

Business is manpower intensive: The company’s business is manpower intensive, and it is dependent on the availability of a sufficient pool of the labours from its sub-contractors to execute its construction projects. The number of contract labourers employed by it varies from time to time based on the nature and extent of work contracted to it and the availability of the labours. It may not be able to secure the required number of contractual labourers required for the timely execution of its projects for different reasons including possibility of disputes with sub-contractors, strikes, less competitive rates to its sub-contractors as compared to its competitors or changes in labour regulations that may limit availability of the labours. It is subject to laws and regulations relating to employee welfare and benefits such as minimum wage, working conditions, employee insurance, and other such employee benefits and any changes to existing labour legislations, including upward revision of wages required by such state governments to be paid to such contract labourers, limitations on the number of hours of work or provision of improved facilities, such as food or safety equipment, may adversely affect its business and results of its operations.

Do not have long-term agreements with suppliers for raw materials: The company offers the Service of Lock and Key as well as RCC (Reinforced Cement Concrete) services. In certain projects, it is necessary to supply the raw materials, either by it or by the contractor involved. In certain projects, it relies on the availability of raw materials to remain competitive and maintain cost effectiveness. However, its dependence on a few third-party suppliers for raw materials introduces risks to its business. The discontinuation of production or supply by these suppliers, their failure to adhere to delivery schedules or provide the required quality or quantity, can adversely affect its schedules and overall operations. This dependency also poses challenges in obtaining key materials at reasonable prices, impacting its profit margins and overall financial condition. 

Outlook

Incorporated in 2020, Mason Infratech is a real estate construction company that provides construction services for both residential and commercial buildings, including new and redevelopment projects. The company offers comprehensive construction services for residential, corporate, and commercial buildings. The company mainly operates in the Mumbai Metropolitan Area. The company is young, but the management carries several years of experience in the infrastructure business throughout India. They have extensive expertise in the field of building Residential and Commercial Projects. It uses specialised formwork technologies, including vertical composite panel system for columns, horizontal composite panel system for slabs, crane enabled composite table formwork, aluminium composite panel formwork and automatic climbing system formwork. On the concern side, the company's work may be hindered during the monsoon season when starting construction due to the impact on the foundation and plinth until reaching the ground floor slab. This not only affects the allocation of more resources and working capital but also results in less work being done. Besides, the company cannot assure that its future project development initiatives will be successful or be completed within the anticipated period or budget, or that its newly developed or improvised projects will achieve wide market acceptance from its customers.

The company is coming out with an IPO of 47,60,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 62-64 per equity share. The aggregate size of the offer is around Rs 29.51 crore to Rs 30.46 crore based on lower and upper price band respectively. On performance front, the company's revenue from operations for the financial year 2022-23 is Rs 6,380.93 lakh. This represents Rs 3,371.53 lakh or 112.03% increase compared to the previous financial year's revenue from operations of Rs 3,009.39 lakh. Profit after Tax (PAT) saw a significant upswing, climbing to Rs 337.01 lakh in FY23 from Rs 152.11 lakh in FY22. Meanwhile, as a real estate construction contractor, the company’s primary focus is on the construction of high-rise and skyscraper buildings. Constructing such structures demands precision, innovation, and a deep understanding of structural dynamics. The process involves selecting materials like high-strength concrete, advanced steel alloys, cutting-edge facade materials, aluminium form shuttering, MS safety screens, and specialized tools.


Sylvan Plyboard (India) coming with IPO to raise Rs 28.05 crore
Jun-20-2024   16:19 Hrs IST

Sylvan Plyboard (India)

  • Sylvan Plyboard (India) is coming out with an initial public offering (IPO) of 51,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 55 per equity share. 
  • The issue will open for subscription on June 24, 2024 and will close on June 26, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The share is priced at 5.50 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Finshore Management Services.
  • Compliance Officer for the issue is Rajneesh Mishra.

Profile of the company

The company is engaged into manufacturing of various wood products such as plywood, block board, flush door, veneer and sawn timber across various grades and thickness. In the year 1951, Jai Prakash Singh (Whole Time Director of the company and father of its promoter) through his proprietorship concern, Singh Brothers & Co., started the business as a trading concern of indigenous timber logs and subsequent selling the same in Indian market. Leveraging the knowledge of timber products and domestic market, in the year 2004, the Company acquired ongoing business of Singh Brothers & Co. (Proprietorship Firm). Over the period, after establishing its selves in trading of timber products, it diversified its activities to manufacturing activities by setting up an integrated manufacturing facility in Baidyabati, West Bengal 

It is dedicated to constantly expanding and updating its product range in order to stay ahead in the market. Its range of products under its manufacturing capabilities is summarized as under: Plywood, Block Boards & Flush Doors, Veneer, and Sawn Timber. The company markets its products under the brand name of ‘Sylvan’, through its network of Authorized Dealers and Authorized Sub Dealers. 

It has more than 12 numbers of plywood products in its basket, thickness ranging from 4 mm to 40 mm. Plywood segment (including Block Board and Flush Door) contributes around 81.74% of its revenue from operations. The Company has large range of product offering to wide range of customers, ‘Sylvan Z+ Premium Plus’ is the most premium plywood product of the Company amongst other offerings in premium segment. It has ‘Robusta Premium’ & ‘Primo Plus’ for middle segment and ‘Sylvan Blu’ which is aimed at lower class segment with a view of addressing the growing demand of cheaper plywood and their alternatives. It also offers Boiling Water Proof (BWP) and Boiling Water Resistant (BWR) plywood. Its range of plywood products caters to various customers across various segments.

Proceed is being used for:

  • Funding capital expenditure towards purchase of additional plant and machinery 
  • Meeting the working capital requirements 
  • Meeting the Issue Expenses 
  • General corporate purposes

Industry overview

India was ITTO’s second largest tropical log producer, with production totalling 48.0 million m3 in 2021 and 2022. About 2 million m3 is produced from state-owned forests where the harvesting is severely restricted, with the remaining volume sourced from trees outside forests. The main ITTO plywood producers in 2020-2022 are shown in Figure 2.15. Production of tropical plywood in ITTO member countries increased year-on-year between 2016 and 2021, and amounted to 49.2 million m3 in 2021, declining in 2022 to 48.4 million m3.

India’s tropical plywood production is based largely on imported tropical logs and has also expanded significantly over the last decade, growing year-on-year between 2016 and 2019 and amounting to 10 million m3 in 2019. Production has moderated at 10.0 million m3 annually between 2019 and 2022. India’s tropical plywood production typically uses species such as: keruing (gurjan) from Myanmar for face veneer; balau, merbau and keruing from Malaysia; teak from Myanmar and other suppliers; and domestic plantation species for core veneer. With log export restrictions implemented in most Southeast Asian supplying countries, Indian plywood manufacturers continue to face difficulties in securing raw material along with reduced availability and rising costs of log imports from other supplying countries, intensified by a weakening currency in 2022 and early 2023, and rising costs of labour.

India’s tropical plywood consumption has remained relatively stable over the last five years and totalled 10.0 million m3 in 2021 and 2022. As a proportion of India’s total panel consumption, plywood consumption is relatively high (about 78 percent) although MDF and particleboard are reportedly increasing their market share. The Indian plywood market is primarily driven by construction activity and the home furnishing sector. Growth in consumer disposable income levels along with rising expenditure on home décor has supported demand for wood-based panels, including plywood57, boosted by a government policy shift to demand-side stimulus and more public investment. Although air pollution had slowed construction activity in late 2022, weakening the demand for plywood, later improvements in air quality had allowed construction work to resume and had lifted demand for plywood.

Pros and strengths

Brand recognition: For success and growth in consumer facing industries, recognition of brand name in the mind of customers is vital. Accordingly, it has continuously focused on creating and improving on the brand image of ‘Sylvan’. Its products are sold under the brand name of ‘Sylvan’. To capitalise on the established brand name, it continues to introduce newer products under the same brand name. Its industry experience and strong presence in Eastern India have positioned its brand with quality products.

Large & Integrated manufacturing facility: The company has its manufacturing facility at Baidyabati, Kolkata which is spread over an area of around 11.61 acre (5,05,732 sq. ft.) The entire land area is used for the facility which has vacant space for further expansion. The company currently has 2,43,644 sq. ft. around under plywood manufacturing capacity which can be further expanded within the same facility. Manufacturing unit is an integrated facility where each process in the manufacturing activity is carried out by the Company in-house without any outsourcing. The company has in house resin plants and makes the glue with its research formulations making the products superior at lower manufacturing cost.

Wide dealers’ network: For deeper market penetration, establishment of strong dealers’ network is an integral part of its business operations. It has been working effortlessly on expanding its dealers’ network. At present, the company has an extensive network of 223 Authorised dealers present across 13 states across India with around 83 dealers in West Bengal, 45 dealers in Uttar Pradesh, 33 dealers in Odisha, 16 dealers in Andhra Pradesh and 12 dealers in Maharashtra. Its dealer network is spread in other states like Bihar, Telangana, Jharkhand, Uttarakhand, Karnataka, Kerala, Rajasthan and Tamil Nadu. Further, these dealers also have around 753 sub-dealers under them which look after the operation at retail level. As it continues to introduce newer product in its product range, it needs to maintain strong distribution network enabling it to achieve market penetration of those products in shorter turnaround time.

Risks and concerns

Do not have any long-term contracts with clients: It does not have any long-term contracts with its clients and any change in the business pattern of its existing clients could adversely affect the business of the Company. As a result, its customers can terminate their relationships with it due to a change in preference or any other reason on immediate basis, which could materially and adversely impact its business. Consequently, its revenue may be subject to variability because of fluctuations in demand for its products and services. The company's customers have no obligation to work with us and may either cancel, reduce, or delay the business.

Dependent on authorized dealers: The company has 223 Authorized Dealers present across 13 states and is completely dependent on the dealers. Its business from customers is dependent on its continuing relationship with such customers, the quality of its products and its ability to deliver on their orders, and there can be no assurance that such customers will continue to do business with us in the future on commercially acceptable terms or at all. However, in case of any change in the buying pattern of its end users or disassociation of major customers can adversely affect its business or if its customers do not continue to purchase products from it, or reduce the volume of products purchased from it, its business prospects, results of operations and financial condition may be adversely affected. Further, loss of or interruption of work by, a significant customer or a number of significant customers or the inability to procure new orders on a regular basis or at all may have an adverse effect on its revenues, cash flows and operations.

Delays or defaults in client payments: It may be subject to working capital risks due to delays or defaults in payment by clients, which may restrict its ability to procure raw materials and make payments when due. In addition, any delay or failure on its part to supply the required quantity or quality of products, within the time, to its customers may in turn cause delay in payment or refusal of payment by the customer. Such defaults/delays by its customers in meeting their payment obligations to it may have a material effect on its business, financial condition and results of operations.

Outlook

Sylvan Plyboard (India) is engaged in the business of manufacturing plywood, block board, flush door, veneers and allied products at its factory located at Baidyabati, West Bengal. In addition, it engages in import and trading of timber logs and sawn timber. The company markets its products under the brand name of ‘Sylvan’, through its network of Authorized Dealers and Authorized Sub Dealers. On the concern side, the market in which the company is doing business is highly competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes. Some of its competitors may have longer industry experience and greater financial, technical and other resources, which may enable them to react faster in changing market scenario and remain competitive.

The company is coming out with an IPO of 51,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 55 per equity share to mobilize Rs 28.05 crore. On performance front, the total revenue for FY 2022-23 was increased to Rs 19915.32 lakh as against Rs 17292.63 Lakh in the FY 2021-22 primarily due to increase in revenue from operations of the Company. The restated Profit after Tax for FY 2022-23 has been increased to Rs 352.85 lakh as against Rs 305.31 lakh in the FY 2021-22. This increase was mainly due to increase in volume of operation. Meanwhile, it plans to increase its production and launch of newer products in various segments, it understands the need of setting up a strong distribution network which will enable it to efficiently market the product to the right set of customers at the right time. It will continue its present focus of catering to Tier-1 cities while at the same time increasing its presence in Tier-2 and Tier-3 cities from where demand for most of the lower-middle segment products are received.

Stanley Lifestyles coming with IPO to raise Rs 547.28 crore
Jun-20-2024   12:54 Hrs IST

Stanley Lifestyles 

  • Stanley Lifestyles is coming out with a 100% book building; initial public offering (IPO) of 1,48,31,459 shares of Rs 2 each in a price band Rs 351-369 per equity share.    
  • Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
  • The issue will open for subscription on June 21, 2024 and will close on June 25, 2024.
  • The shares will be listed on BSE as well as NSE.
  • The face value of the share is Rs 2 and is priced 175.50 times of its face value on the lower side and 184.5 times on the higher side.
  • Book running lead managers to the issue are Axis Capital, ICICI Securities, JM Financial and SBI Capital Markets.
  • Compliance Officer for the issue is Akash Shetty.

Profile of the company

The company is a super-premium and luxury furniture brand in India and among the few home-grown super-premium and luxury consumer brands in India operating at scale in terms of manufacturing as well as retail operations. It has the distinction of being among the first few Indian companies to venture into the super-premium and luxury furniture segment and one of the few Indian companies present across various price points, i.e., super-premium, luxury and ultra-luxury segment, through its various brands. The company retail its furniture products under the ‘Stanley’ brand. Over the years, it has developed brand recognition and customer loyalty through its quality products, as well as targeted marketing strategies and advertisement campaigns such as ‘Beautiful Living’, ‘Design Glamour’, ‘Luxury Unlimited’ and ‘Bed of Dreams’. Its customers are its ambassadors, that generate publicity for the ‘Stanley’ brand through testimonials and endorsements and word of mouth advertising.

The company designs, manufactures and retails its products through its own network of ‘company owned and company operated’ and ‘franchisee-owned and franchisee-operated’ store with pan-India presence. Its in-house manufacturing operations coupled with its retailing model, differentiates it from other Indian and foreign furniture brands. Its integrated model provides it with the ability to have complete control over its processes, ranging from procurement of raw materials, designing its products, manufacturing, quality control, marketing, and ultimately sale of its products.

The company market and sell its products through its network of stores. Over the years, it has significantly expanded its network of stores and as of December 31, 2023, it operated 38 ‘company owned and company operated’ or ‘COCO’ stores all located in the major metro-cities of Bengaluru, Chennai, New Delhi, Mumbai and Hyderabad and 24 ‘franchisee-owned and franchisee-operated’ or ‘FOFO’ stores in 21 cities across 11 States and Union Territories in India. In addition, in certain cities in India, it has also experimented with a hybrid concept, where it may have different store formats under one large store in order to efficiently utilize the real estate and provide an opportunity to its customers to experience the complete ‘Stanley’ brand experience under one roof.

Proceed is being used for:

  • Investment in certain Subsidiaries for: opening of new stores by such Subsidiaries under the formats of ‘Stanley Level Next’, ‘Stanley Boutique’ and ‘Sofas & More by Stanley’ (New Stores); opening anchor stores (Anchor Stores) by such Subsidiaries; and renovation of existing stores under the formats of ‘Stanley Level Next’, ‘Stanley Boutique’ and ‘Sofas & More by Stanley’ (Existing Stores) by such Subsidiaries.
  • Funding the capital expenditure requirements for purchase of new machinery and equipment by the company and its Material Subsidiary, Stanley OEM Sofas Limited.
  • General corporate purposes.

Industry overview

The furniture industry is a complex ecosystem involving multiple stakeholders and a dynamic supply chain. From raw material suppliers to furniture manufacturers, retailers, distributors, designers, and customers, each stakeholder plays a crucial role in the design, production, distribution, and sale of furniture products. The boom in the real estate market in India has enabled the furniture market in India to experience a high growth trajectory. Rapid urbanization, high rising incomes, and an increasing shift towards tier-level cities are causing housing properties to flourish across India. Consequently, a high growth trajectory is expected in the demand for furnishing personal places. During Fiscal 21, the home and furniture market contributed approximately 0.38% to the GDP, and this contribution has increased to approximately 0.56% in Fiscal 2023. A paradigm shift is anticipated in the home and furniture industry over the years, driven by the expansion of a well-aware consumer base. The growth is further fuelled by the entry of numerous international brands and the proliferation of branded showrooms across the country. 

The luxury/super-premium furniture & home goods market in India constitutes 8% of the overall market. The rise of dual income households in India will further contribute to the growth of the furniture market as families will have increased discretionary income at their disposal. The desire of the urban millennial and Gen Z population to stay updated with the latest décor trends, largely influenced by social media and influencers, is driving consumer demand towards better quality products, thereby leading to an increase in purchases within the luxury/super premium product segment. The increasing demand for luxury/super-premium products is also fuelled by factors such as the growing number of nuclear families, higher disposable income, and urbanization. India currently offers a luxury/super-premium furniture & home goods market of $ 1.5 billion in Fiscal 2023 which includes sofas, chairs, dining tables, wardrobes, kitchens, home furnishings goods such as bath linens, kitchen, cushions & covers, bed linen, curtains, flooring & mattress, Home décor good such as table décor, tableware, spiritual & wall decors, Lighting (Includes lamps, wall lights, ceiling lights, smart lights, festive lights & LED lights) & others.

Pros and strengths

Largest and the fastest growing brand in the luxury/super-premium furniture segment: The company is a super-premium and luxury furniture brand in India and among the few home-grown super-premium and luxury consumer brands in India operating at scale in terms of manufacturing as well as retail operations and the largest in terms of number of stores and the fastest in term of revenue growth growing brand in the furniture segment. Its Promoters, who are first generational entrepreneurs have focused on building the Stanley brand by using leather products to provide premium crafted automotive seating products under the ‘Stanley’ brand in the Indian market which laid the foundation for its ongoing commitment to craft quality home solution products. It has been able to leverage its Promoter’s experience to position the ‘Stanley’ brand to make it synonymous with exclusivity, premium quality and high degree of personalization. Its stores complement the ‘Stanley’ brand and are dedicated to providing personalized solutions to customers. As part of its design-led sales model, its designers guide customers on various customization options. Its customers have an opportunity to experience its products by selecting the design, type and colour of leather and upholstery to match their preferences and style. 

Comprehensive home solutions provider with offerings across categories and price points: The company endeavors to cater to all home furnishing needs of its customers and establish itself as a one-stop destination for their complete home experience. Its product portfolio includes sofas, cabinetry and furniture for living rooms, dining rooms, family rooms, kitchens, bedrooms (including bedding products), and home offices, offering complete home solutions including installations. It has continuously expanded its product offerings by leveraging the “Stanley” brand in delivering luxury products into mid and premium categories and expanding its capabilities to offer furniture and accessories for every room of the home. As of December 31, 2023, it offered its customers an opportunity to select products across multiple catalogues, designs, configurations and SKUs with options offered in 10 different types and over 300 colours of leathers and fabrics that can be used in various combinations. By offering a diverse range of furniture and home solutions, it enables its customers to achieve a coordinated aesthetic throughout their living spaces.

Focus on design-led innovation: Customer preferences vary across regions. With over 15 years of experience in retailing furniture products, it has been able to understand customer requirements, trends, design and style preferences. Based on its experience, it is able to design and style products that have luxurious international appeal that corresponds to Indian sentiment, style and sizing which is well accepted across the country. As part of its new product development capabilities, it designed and manufactured 88 new products in Fiscal 2023 and 71 new products during the nine months ended December 31, 2023. Its product development division is spread over approximately 15,000 square feet at its Electronic City facility and as of December 31, 2023, it engaged one master Italian and also 48 employees for product design and development. To complement its product development, it has also invested in latest machinery and skill development for its craftsmen. During Fiscal 2021, 2022 and 2023 and the nine months ended December 31, 2023, it introduced 24, 76, 88 and 71 products, respectively, all under the ‘Stanley’ brand which includes, modern power motion recliner sofas, home cinema seating and sofa-cum-beds, dining tables, storage beds, kitchens and cabinetry, walk-in wardrobes and laundry units. 

Vertically integrated furniture manufacturer with skilled craftmanship capabilities: The company is one of the few organized vertically integrated furniture manufacturers with infrastructure capable of manufacturing and producing furniture for every room operating two manufacturing facilities in Bengaluru, Karnataka and retail through its network of COCO and FOFO stores. Over the years, it has developed a vertically integrated model that gives it control over its processes, right from procurement of raw materials, design, production, marketing and retail. Its integration allows it to introduce new products, monitor and control the quality of its products, reduce delivery timelines and gives it the ability to respond to customers’ requirements and preferences which in its experience results into higher margins. It has further optimized its manufacturing operations through streamlining its production processes and digitalization, product innovation based on the feedback of its customers, and brand value while reducing inventory levels and improving quality control. It has also taken steps to reduce its reliance on imports by sourcing certain quantities of its key raw materials such as leather and wood domestically. These measures are aimed at improving its supply chain and sourcing processes to ensure greater efficiency in its operations. 

Risks and concerns

Highly dependent on sale of sofas and recliners: The company's business is currently highly dependent on the sale of sofas and recliners. Its sale of sofas and recliners are dependent on a number of factors, and may decline as a result of increased competition, pricing pressures arising out of increase in raw material costs or fluctuations in the demand for or supply of its products and other factors outside its control. In particular, its business is characterized by rapidly changing customer preferences and customization requirements. Its results of operations are dependent on its ability to attract customers by anticipating and responding to such changes in customer preferences, and modifying its existing sofa and recliner products in line with changes in customer demands and preferences. If it is unable to anticipate and gauge customer preferences, or if it is unable to adapt to such changes in a timely basis or at all, it may lose or fail to attract customers, its sofa and recliner inventory may become obsolete and it may be subject to pricing pressure to sell such inventory at a discount. While it has not faced such issues in the past there can be no assurance that such instances will not occur in the future, which in turn could adversely affect its business, results of operations, financial condition and cash flows. 

Depends on limited suppliers for supply of leather: The company currently relies on limited foreign and domestic suppliers to provide leather, one of its primary raw materials. While it has not experienced any such instances in the past three years and nine months ended December 31, 2023, however, the loss of one or more of its significant suppliers or any increase in the cost of leather it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows. Its reliance on a select group of suppliers may also constrain its ability to negotiate its arrangements, which may have an impact on its profit margins and financial performance. The deterioration of the financial condition or business prospects of these suppliers could reduce their ability to meet its requirements and accordingly result in a significant decrease in its revenues. Further, there can be no assurance that strong demand, capacity limitations or other problems experienced by its suppliers will not result in occasional shortages or delays in their supply of leather. 

The premises of all of COCO stores are leased: As all of the company’s COCO stores are on leased premises, it is exposed to the market conditions of the retail rental market. Most of its lease agreements for its stores contain an early termination clause that permits it to terminate the lease agreement early for the reasons specified therein. While it has renewal options for all of its leases for its stores, it typically needs to renegotiate the terms of renewal with the lessor, who may insist on a significant modification to the terms and conditions of the lease agreement. If a lease agreement is renewed at a rate substantially higher than the existing rate, or if any existing favorable terms granted by the lessor are not extended, it must determine whether it is desirable to renew on such modified terms. While there have been no such instances in the past, if it is unable to renew leases for its stores on acceptable terms or at all, it will have to close or relocate the relevant stores, which would eliminate the sales that those stores would have contributed to its revenues during the period of closure and could subject it to renovation and other costs and risks.

Dependent on third-party transportation providers: The company’s success depends on the uninterrupted supply and transportation of the various raw materials, especially wood and leather, required in the manufacture of its products and supply of its products to its customers, or intermediate delivery points, that are subject to various uncertainties and risks. It transports its raw materials and its finished products outbound by road. It relies on its suppliers, to deliver its raw materials while it uses its own fleet of leased vehicles to deliver its finished products ordered from its COCO stores to its customers. For its FOFO Stores, last mile delivery is borne by the relevant franchisee partner. Transportation strikes may have an adverse effect on supplies and deliveries to and from its customers and suppliers. In addition, raw materials and products may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be a delay in delivery of raw materials and products which may also affect its business and results of operation negatively. It has in the past faced situations where goods were damaged during transit from Italy to India for which it claimed insurance. 

Outlook

Stanley Lifestyles ventured into Leather Sofas in 1999 and then gradually diversified into Full Home Solutions. Today, it offers a spectrum of collections for the Living Room, including Sofas, Coffee Tables, TV Cabinets, Storage Units, and Side Tables. For the Kitchen & Dining area, it provides Kitchen Cabinets, Dining Tables, and Storage Units. Additionally, for Bedrooms, its range includes Beds, Mattresses, and Wardrobes. As India's only Fully Integrated Furniture Manufacturer, Retailer, and Exporter, it takes pride in its comprehensive offerings. The company’s commitment to quality craftsmanship, unbridled creativity, and the use of the finest materials defines Stanley's products. It only collaborates with globally sourced brands that align with its values of Quality and Integrity. Similarly, it carefully selects retail partners nationwide who share its passion for quality. On the concern side, the company appoints independent contractors who in turn engage on-site contract labour for performance of certain of its operations, including its manufacturing operations and operation of its COCO stores. Although it does not engage this labour directly, it may be held responsible to pay their social benefits or shortfall in wages and provide certain amenities and facilities, if the independent contractors fail to do so, by a regulatory body or court, which may adversely affect its results of operations. 

The company is coming out with an IPO of 1,48,31,459 equity shares of face value of Rs 2 each. The issue has been offered in a price band of Rs 351-369 per equity share. The aggregate size of the offer is around Rs 520.58 crore to Rs 547.28 crore based on lower and upper price band respectively. On performance front, total revenues increased by 42.94% from Rs 2,977.55 million in Fiscal 2022 to Rs 4,256.22 million in Fiscal 2023 primarily due to a significant increase in its revenue from operations. The company has recorded a restated profit for the year of Rs 349.77 million in Fiscal 2023 compared to a restated profit for the year of Rs 232.19 million in Fiscal 2022. Meanwhile, the company intends to continue to further develop and increase brand awareness by advertising in traditional media such as newspapers and through targeted digital media advertisements. It also intends to launch format specific target brand campaigns. Further, going forward it will provide an omni-channel experience to customers to purchase products under ‘Sofas and More by Stanley’ for which it will do targeted marketing by utilize algorithms of popular search engines. 


Medicamen Organics coming with IPO to raise Rs 10.54 crore
Jun-20-2024   11:40 Hrs IST

Medicamen Organics

  • Medicamen Organics is coming out with initial public offering (IPO) of 31,00,000 shares of Rs 10 each in a price band Rs 32-34 per equity share.  
  • The issue will open for subscription on June 21, 2024 and will close on June 25, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 3.20 times of its face value on the lower side and 3.40 times on the higher side. 
  • Book running lead manager to the issue is GYR Capital Advisors.
  • Compliance Officer for the issue is Varsha Bansal.

Profile of the company

Medicamen Organics is engaged in developing, manufacturing and distribution of broad range of pharmaceutical dosage including generic dosage in form of Tablets, Capsules, Oral Liquids, Ointments, Gel, Syrups, Suspension and Dry powders for government (including both state and central governments) and private institutions as contract manufacturer / third party manufacturer. It markets its product to private pharma companies in domestic as well as international markets through third party distributors or on loan license basis. Further, the company is also strategically focusing on establishing a direct presence in international market for an instance in fiscal 2023 and 2024, it has directly exported its product in Burundi. It has a track record of operating B2B model which covers contract manufacturing model. Its products are marketed across India as well as African, CIS and south East Asian Countries like Congo, Benin, Cameg, Togo, Senegal, Burkina Faso, Philippines, Myanmar, Mozambique, Togo, Burundi, Kyrgyzstan and Kenya by its third-party distributor.

It has 2 WHO GMP approved manufacturing facilities. Its manufacturing facilities are capable of producing pharmaceutical formulations and products and has fully equipped quality control department with experienced and qualified staff to facilitate smooth manufacturing process. It has in-house testing laboratory and necessary infrastructure to test its raw materials and finished products to match the quality standards. It is ISO 9001:2015 certified company. Its core strength lies in product development and documentation, it is regularly engaged in research and development and launching new products. This gives it an exhaustive product list as well as fair pricing in the market. Its product portfolio consists of 84 products and comprises of wide range of drugs like, Anti-Bacterial, Anti Diarrheal, Anti-Fungal, Anti-Malarial, Anti Diabetic, Proton Pump Inhibitor, Anti Histamine, Anti-Hypertensive drugs, Anti Lipidemic Drug, Anti Parasitic, Multivitamin, Multimineral and Nonsteroidal anti-inflammatory drug (NSAIDS).

Proceed is being used for:

  • Funding of expenses proposed to be incurred towards Product registration in the international markets 
  • Plant updation and increase in production capacity 
  • Funding working capital requirements
  • General corporate purposes

Industry overview

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving into a thriving industry growing at a CAGR of 9.43% in the past nine years. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. India has the most pharmaceutical manufacturing facilities that comply with the US Food and Drug Administration (USFDA) and has 500 API producers that makeup around 8% of the worldwide API market.

The market size of India's pharmaceuticals industry is expected to reach $65 billion by 2024, and around $130 billion by 2030. According to government data, the Indian pharmaceutical industry is worth around $50 billion with over $25 billion of the value coming from exports. About 20% of the global exports in generic drugs are met by India. India is among the top 12 destinations for biotechnology worldwide and 3rd largest destination for biotechnology in the Asia Pacific. In 2022, India’s Biotechnology industry crossed $80.12 billion, growing 14% from the previous year.

The pharmaceutical industry in India is a significant part of the nation's foreign trade and offers lucrative potential for investors. Millions of people around the world receive affordable and inexpensive generic medications from India, which also runs a sizable number of plants that adhere to Good Manufacturing Practices (GMP) standards set by the World Health Organization (WHO) and the United States Food and Drug Administration (USFDA). Among nations that produce pharmaceuticals, India has long held the top spot. Medicine spending in India is projected to grow 9-12% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as cardiovascular, anti-diabetes, anti-depressants, and anti-cancers, which are on the rise.

Pros and strengths

Wide range of products: It deals in Capsules, Tablets, Liquid Ointment, Gel, Syrups, Suspension and Dry powders. Its product portfolio comprises of vide range of drugs like Anti-Bacterial, Anti Diarrheal, Anti-Fungal, Anti-Malarial, Anti Diabetic, Dental Cure, Proton Pump Inhibitor, Anti Protozoal, Anti Histamine, Anti-Hypertensive drugs, Anti Lipidemic Drug, Multivitamin, Multimineral and Non-steroidal anti-inflammatory drug (NSAIDS). Its product portfolio consists of 84 products, as on March 31, 2024. It operates under different brand names across the globe.

Scalable business model: Its business model is customer centric and order driven, and requires optimum utilisation of its existing resources, assuring quality supply and achieving consequent economies of scale. The business scale generation is basically due to development of new markets and products both domestic and international by exploring customer needs, marketing expertise and by maintaining the consistent quality output. 

Quality assurance: Its quality is an ongoing process of building and sustaining relationships. It is approved by WHO GMP since September 21, 2011 for manufacturing facility 1 and July 11, 2018 for manufacturing facility 2. It has obtained ISO 9001:2015 Certification for the Quality Management System from ISC (Global), 11, 7th floor, Bay Square, Business Bay, Dubai, UAE.

Risks and concerns

Dependent on few numbers of customers: Its top ten customers contribute 78.76%, 62.00% and 66.45% of its total sales for financial year ended on March 31, 2024, 2023 and 2022, respectively. Any decline in its quality standards, growing competition and any change in the demand, may adversely affect its ability to retain them. It cannot assure that it shall generates the same quantum of business, or any business at all, and the loss of business from one or more of them may adversely affect its revenues and results of operations. However, the composition and revenue generated from these customers might change as it continues to add new customers in the normal course of business. Though it will not face substantial challenges in maintaining its business relationship with them or finding new customers, there can be no assurance that it will be able to maintain long term relationships with such customers or find new customers in time.

Dependent on third party transportation for the delivery of products: The company uses third party transportation for delivery of its products. Though its business has not experienced any disruptions due to transportation strikes in the past, any future transportation strikes may have an adverse effect on its business. These transportation facilities may not be adequate to support its existing and future operations. Further, such goods may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of products which may also affect its business and results of operation negatively. An increase in the freight costs or unavailability of freight for transportation of its raw materials may have an adverse effect on its business and results of operations.

Delays and/or defaults in payments: It is exposed to payment delays and/or defaults by its customers, especially in the government sector. Its financial position and financial performance are dependent on the creditworthiness of its customers. Such delays in payments may require the Company to make a working capital investment. It cannot assure that payments from all of its customers will be received in a timely manner or to that extent will be received at all. If a customer defaults in making its payments on an order on which the Company has devoted significant resources, or if an order in which the company has invested significant resources is delayed, cancelled or does not proceed to completion, it could have a material adverse effect on the Company’s results of operations and financial condition.

Outlook

Medicamen Organics is engaged in developing, manufacturing and distribution of broad range of pharmaceutical dosage including generic dosage in form of Tablets, Capsules, Oral Liquids, Ointments, Gel, Syrups, Suspension and Dry powders for government (including both state and central governments) and private institutions as contract manufacturer / third party manufacturer. It markets its product to private pharma companies in domestic as well as international markets through third party distributors or on loan license basis. On the concern side, its business requires a significant amount of working capital. In the event, it is unable to source the required amount of working capital for addressing increase in inventory, it might not be able to efficiently satisfy the demand of its customers. Even if it is able to source the required amount of funds, it cannot assure that such funds would be sufficient to meet its cost estimates and that any increase in the expenses will not affect the price of its services.

The company is coming out with an IPO of 31,00,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 32-34 per equity share. The aggregate size of the offer is around Rs 9.92 crore to Rs 10.54 crore based on lower and upper price band respectively. On performance front, the revenue from operations of the company for fiscal year 2024 was Rs 2,527.17 lakh against Rs 2,214.71 lakh for Fiscal year 2023. An increase of 14.11% in revenue from operations. Profit after tax for the Fiscal year 2024 was at Rs 240.41 lakh against profit after tax of Rs 96.93 lakh in fiscal year 2023. An increase of 148.02%. Going forward, it intends to continue to enhance scale in existing products and introduce new products across high end and mid segment to capitalize on the opportunity to cater rising acceptance and demand of new products. Its wide product range provides its competitive edge over its competitors. In order to maintain its competitive edge, it will continue to add newer products to its products portfolio.

Winny Immigration & Education Services coming with IPO to raise Rs 9.13 crore
Jun-19-2024   14:25 Hrs IST

Winny Immigration & Education Services

  • Winny Immigration & Education Services is coming out with an initial public offering (IPO) of 6,52,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 140 per equity share. 
  • The issue will open for subscription on June 20, 2024 and will close on June 24, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The share is priced at 14.00 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Interactive Financial Services.
  • Compliance Officer for the issue is Ishita Shah.

Profile of the company

Winny Immigration and Education Services is mainly in the visa consultancy business. In the company it provides assistance (Service) to individual for study, travel, work, business and migration purpose. As the world becomes increasingly interconnected, the demand for skilled professionals, students, and travelers to cross borders has surged and it has seized this opportunity to expand its business by providing guidance in the complex process of obtaining visa’s for different purposes in current era. It has successfully assisted thousands of clients in navigating the complex immigration and visa processes. By providing Visa consultancy, it is playing pivotal role in facilitating global mobility and connecting individuals with international opportunities. With extensive experience spanning decades, network of 12 strategically located offices (9 Branches, 2 Franchisees and 1 Virtual office), and a dedicated team of over 100 professionals, it has effectively guided over many clients through the intricate procedures of immigration and visa. The array of services provided by Winny encompasses visa guidance, immigration assistance, and documentation services.

The primary objective of the company is to streamline the visa application process for its clients. It is providing consultancy services: Training for Language Proficiency Examinations; Consulting and processing a range of Temporary Residence Visas; and Consulting and processing Permanent Residency Visas. Its majority clients choose to migrate in USA, Canada, Australia, New Zealand, UK and Europe. Its team comprises seasoned immigration and education consultants. In entire process, it is committed to transparency in all its processes, ensuring its clients are well-informed at every stage. In one roof of its organization, its clientele receive end to end services starting from English proficiency exams coaching, immigration process, post visa procedures, post landing services like helping the clients for Airport pick up and arrangement of temporary accommodation by providing references of its clients already settled in destination countries.

Proceed is being used for:

  • Opening of new offices in India 
  • Software development 
  • Repayment of debt 
  • Branding and advertisement 
  • General corporate purpose 
  • Meeting public issue expenses

Industry overview

India is blessed with abundant talent and skills that can be utilized in the global workplace. Its people increasingly travel abroad, whether it is in the quest for education, the search for work or the execution of services. At the same time, travellers and tourists from India have also increased, reflecting its growing interest in other countries and regions.

The Ministry of External Affairs has the responsibility for issuing Passports to Indian citizens. It also renews Passports to those living abroad, while rendering other Consular services that are required for their livelihood and education. Since 2014, it has been the Government’s priority to make it easier for the average Indian to obtain and renew Passports, both at home and abroad. This has been done through a series of reforms across the entire chain, starting with more centres for application, easier paper work, faster processing and more efficient delivery.

Indians abroad, whether on a longer-term stay or a short duration visit, are a special responsibility for the Government. It has again been the approach of the Modi Government that it must reach out to Indians in distress, however difficult the circumstances. Sometimes, this has been demonstrated dramatically through rescue and relief operations. But the day-to-day processes to assist Indians are even more important, precisely because they apply everywhere every day. Expanding resources, reforming their application and changing the mindset and work culture of Embassies abroad have all been part of this change. The usage of digital platforms and tools to this end has been particularly notable.

Pros and strengths

Experienced and knowledgeable team: It has well trained and well-educated staff for its coaching / education department. Along with education it has experienced professional having in depth understanding of immigration laws and regulations, which helps the company to achieve good success ration in its Visa procedure for its clients. It stays abreast of changes in immigration policies and visa norms and always remains informed about global trends. Its specialized knowledge in handling various visa categories, residency, and immigration ensures a smooth experience for its clients.

Customization expertise: It offers individualized advice and guidance tailored to each client's circumstances and goals. Providing all-encompassing services that address specific challenges or requirements is consistently appealing to every client. Customizing application strategies to fulfill the distinct needs of each individual is the key reason why its clients refer it to their friends and relatives.

Technology integration: It has well equipped infrastructure for its clients, which includes advanced classrooms, online lectures, online meetings for doubts solving and client interaction. It also leverages technology for document submission, verification, and communication. It also offers online platforms for clients to track the progress of their cases and access information.

Risks and concerns

Heavily reliant on revenue generated from immigration services: The company's financial performance is heavily reliant on revenue generated from immigration services, particularly those related to Permanent Residency (PR) applications in Canada. Out of its total Revenue, 90.00% in FY 2021-22, 82.00% in FY 2022-23 and 39.00% in FY 2023-24, has been generated from the services provided by the Company to the candidates who want services like Immigrate, Family classes for Canada. Immigration Services for the Canada is the major sources of revenue for its organisation. Changes in immigration policies, regulations, or quotas by the Canadian government could impact the demand for its services or restrict its ability to operate effectively. Economic downturns or changes in economic conditions in Canada could reduce the number of individuals seeking immigration services, thereby affecting its revenue stream. Hence, changes of government policies of Canada in the immigration services sector could erode its market share and revenue.

Changes in the foreign Policy on VISA and Immigration: Any political changes in the government of a foreign country may lead to the changes in the Immigration policy and Visa issue policy of that particular country. Government may change policy with regards to PR, Citizenship, students visa etc. This policy may have significant effect on its Business. If any its foreign government policy is to prioritised the citizen of its own country, then they may frame the strict rules for Citizenship and immigration. In such event its business, revenue and profitability will be adversely affected.

Maximum revenue is generated from Gujarat: The head office of the Company is in the state of Gujarat and the four branches out of eight branches are also located in Gujarat. The two franchises are also operated from the state of Gujarat. Because of that the business generated by the company is from the state of Gujarat. The revenue from the Gujarat was 89.40% and 85.08% for the Financial Year 2024, 2023 and 2022 respectively of the total income of the Company. The majority clients are from the state of Gujarat and if any adverse situation arises in the State of Gujarat, the business of the company will be affected, and it will result into loss of revenue and the profitability and the cash flow of the Company affect adversely.

Outlook

Winny Immigration & Education Services is mainly engaged in the business of providing service relating to Immigration, Visa and Coaching etc. It provides assistance (Service) to individual for study, travel, work, business and migration purpose. As the world becomes increasingly interconnected, the demand for skilled professionals, students, and travelers to cross borders has surged and it has seized this opportunity to expand its business by providing guidance in the complex process of obtaining visa’s for different purposes in current era. On the concern side, it face significant competition in its business from organized and unorganized service providers in the field of Immigration and coaching for IELTS, CELPIP, PTE, TOFEL. It operates in a highly competitive business environment. Growing competition in the domestic market from domestic organized and unorganized players, it is subject to pricing pressures and requires it to reduce the prices of its services in order to retain the existing customers and/or attract new customers, which may have a material adverse effect on its revenues and margins.

The company is coming out with an IPO of 6,52,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 140 per equity share to mobilize Rs 9.13 crore. On performance front, In the F.Y. 2023-24, the company’s total revenue was Rs 1,080.69 lakh, which is decreased by 8.21% in compare to total Income from operations of Rs 998.81 lakh in F.Y. 2022-23. Profit after tax is Rs 39.27 lakh for the F.Y. 2023-24 in compared to Rs 144.71 lakh in F.Y. 2022-23. Meanwhile, the immigration industry is technologically advanced, and while it is currently well-equipped, it is committed to further investing in technology. This investment aims to streamline processes, secure client data, and improve communication. Its focus on technology update is not only to attract more clients but also to ensure data security, facilitate faster transactions, and provide consultations in remote areas.

Dindigul Farm Product coming with IPO to raise Rs 34.83 crore
Jun-18-2024   14:29 Hrs IST

Dindigul Farm Product

  • Dindigul Farm Product is coming out with initial public offering (IPO) of 64,50,000 shares of Rs 10 each in a price band Rs 51-54 per equity share.  
  • The issue will open for subscription on June 20, 2024 and will close on June 24, 2024.
  • The shares will be listed on BSE SME Platform.
  • The face value of the share is Rs 10 and is priced 5.10 times of its face value on the lower side and 5.40 times on the higher side. 
  • Book running lead manager to the issue is Beeline Capital Advisors.
  • Compliance Officer for the issue is Gurunathan Uma Kanth Narayanan.

Profile of the company

Established in 2010, it is primarily engaged in processing of whole milk and skimmed milk to make dairy ingredients including, milk protein concentrates, skimmed milk powder, dairy whitener, whey protein concentrate, milk whey powder, casein, unbranded cream, butter and fat filled powders for infant milk formula. Its processing facility is situated at Dindigul and is spread over 15 acres. Its management system has been assessed and determined to comply with the requirements of Food Safety System Certification Scheme (FSSC) 22000. It also follows and complies with requirements of various relevant authorities in its industry such as Food Safety and Standards Authority of India (FSSAI), Halal, Kosher, Export Import Council of India, Europe Regulations in respect of certain of its products. It has also obtained registration cum membership certificate from Agricultural and Processed Food Products Export Development Authority.

It places significant emphasis on quality control and assurance processes across the business model ensuring and setting the right customer expectation and assurance models. The whole milk procured by it is tested by automatic Milk analysers placed at Village Level Milk Collection centers and a combined quality and sampling methods at Chilling Center Level. Its key products have received and tested in regular intervals by National Accreditation Board for Testing and Calibration Laboratories (NABL) approved food testing labs to comply the requirements of the above stated quality certifying / assuring / inspection authorities Like FSSC etc. Quality food safety forms a part of its policy. It has well defined documented quality system and Standard Operating procedures (SOPs) which are monitored at various stages of procurement and processing.

It markets its products under the brand name ENNUTRICA, ActivDay and currently supply to a wide number of customers from different industries. For financial year 2022-23, It has sold products in more than 15 states domestically and 3 countries internationally. However, it aims to expand its international operations by looking to enter more Association of Southeast Asian Nations (ASEAN) and European countries. IT mainly supplies products to Dairy Industry, Food Ingredients industry, nutrition industry, dairy industry, ice cream industry and baking industry.

Proceed is being used for:

  • Capital expenditure
  • Working capital requirements
  • General corporate purposes 

Industry overview

The Dairy sector in India has grown substantially over the years. As a result of prudent policy interventions, India ranks first among the world’s milk producing nations, achieving an annual production of 221.06 million tonnes during the year 2021-22 as compared to 209.96 million tonnes during 2020-21 recording a growth rate of 5.29%. Food and Agriculture Organization (FAO) Food Outlook (November 2022) reported 1.34% increase in world milk production from 912.6 million tonnes in 2020 to 924.8 million tonnes in 2021 (estimates). This represents a sustained growth in the availability of milk and milk products for the growing population.

Dairying has become an important secondary source of income for millions of rural families and has assumed the most important role in providing employment and income generating opportunities particularly for women and marginal farmers. The per capita availability of milk has reached a level of 444 grams per day during the year 2021-22 which is more than the world average of around 320 grams per day in 2021 (estimates) (Food Outlook November 2022). Most of the milk in the country is produced by small, marginal farmers and landless labourers.

India, about 46% of the milk produced is either consumed at the producer level or sold to no producers in the rural area, the balance 54% of the milk is available for sale to organised and unorganised players. Organised sector comprise of Government, Producers’ Owned Institutions (Milk Cooperatives & Producer Companies) and Private players which provides fair and transparent system of milk collection round the year at the village level. Unorganized/informal sector involves local milkman, dudhias, contractors etc. and they are mostly found to be opportunistic, as there is no uniformity of milk price paid to producers and it varies depending upon the situation. Possibility of adulteration of milk is higher among these unorganized groups.

Pros and strengths

Diverse product basket: It currently manufactures a variety of products. Its diverse product offering allows it to cater to the increasing requirements of its customers in various industries. It is marketing its products under the brand name ‘ENNUTRICA’ and ActivDay and its Milk Protein Concentrates, Casein, Skimmed Milk powder, Whey Powder, Dairy Whitener and Sodium Caseinates are mainly used in nutrition industry, dairy industry, ice cream industry and baking industry. Its relationships and ongoing active engagements with customers also allow it to plan its capital expenditures and enhance its ability to benefit from increasing economies of scale with stronger purchasing power for raw materials and a lower cost base.

Milk procurement process: Whole milk is one of its key raw materials for its business. Its procurement operations consist of an average procurement of approximately 50,000 litres per day of milk directly and around 30,000-1,00,000 litres per day of whole milk from open market or third party suppliers. As on the date of the RHP, it has built a network of more than 150 village collection centers, access to more than 4,000 farmers and more than 50 dairy farms. It procures whole milk directly from the farmers and through third party suppliers.

Manufacturing facility: Its manufacturing infrastructure is a key driver of its business. Its current facility is situated at Dindigul and spread over more than 15 acres. Its processing facility is equipped with machinery and equipment like Micro Filtration, Ultra Filtration, Nano Filtration, reverse Osmosis, Evaporation, Crystallization and Drying processes and Pasteurization Techniques as followed by the International standards for Dairy processing. It has sourced some of its key machineries from international reputed dairy technology brands. It further intends to start with production line of Butter with its planned capital investment.

Risks and concerns

Significant portion of revenue from certain customers: It is dependent on a limited number of customers for a significant portion of its revenues. Revenues generated from sales to its top 10 customers represented 70.56%, 79.36%, 73.11% and 74.87% of its revenue from operations during the period ended December 23, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021. While it has developed strong and long-term relationships with certain of its customers and continue to add new customers in the normal course of business, there can be no assurance that its significant customers in the past or its newly acquired customers will continue to place similar orders with it in the future. The loss of one or more of these significant customers or a significant decrease in business from any such key customer, whether due to circumstances specific to such customer or adverse market conditions affecting the industry in which its customer operates or the economic environment, may materially and adversely affect its business, results of operations and financial condition.

Dependent on third party transportation and logistics service providers: It majorly relies on third party transportation and logistics providers for delivery of its raw materials and products Though its business has not experienced any major disruptions due to transportation strikes in the past, any future transportation strikes may have an adverse effect on its business. These transportation facilities may not be adequate to support its existing and future operations. In addition, such goods may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of products which may also affect its business and results of operation negatively.

Working capital requirement: Its business requires working capital for day-to-day operations, procurement of raw materials and production. Due to seasonal characteristic / nature of the business, it has to stock up in the flush season and hold the material as stocks till the lean season to take advantage of the market dynamics. Its growing scale and expansion, if any, may result in increase in the quantum of current assets, which will increase its working capital requirements. Its inability to maintain sufficient cash flow, credit facility and other sources of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of its operations.

Outlook

Dindigul Farm Product is primarily engaged in processing of whole milk and skimmed milk to make dairy ingredients including, milk protein concentrates, skimmed milk powder, dairy whitener, whey protein concentrate, milk whey powder, casein, unbranded cream and butter and fat filled powders for infant milk formula. Its processing facility is situated at Dindigul and is spread over 15 acres. Its management system has been assessed and determined to comply with the requirements of FSSC 22000. On the concern side, the market wherein it operates is competitive, rapidly evolving and is characterized by frequent introductions of new products. It expects competition to persist and intensify in the future as the market wherein it operates is constantly evolving and growing with new and existing competitors devote considerable resources to introducing and enhancing products. 

The company is coming out with an IPO of 64,50,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 51-54 per equity share. The aggregate size of the offer is around Rs 32.90 crore to Rs 34.83 crore based on lower and upper price band respectively. On performance front, the total revenue from operations for the year ended on FY 2022-23 was Rs 8,157.74 lakh as compared to Rs 2,831.88 lakh during the FY 2021-22 showing an increase of 188.07%. Profit after tax increased to Rs 516.67 lakh in FY 2022-23 from loss Rs 416.58 lakh in the FY 2021- 22. Going forward, it intends to use a portion of Net proceeds for setting up of butter making line, sodium caseinate line (multi product line which can produce different products at different capacities), it proposes to commission a retail packing line which will enable it to move more products in retail chains. It also propose to modify its existing capabilities by commissioning an infant milk retail packing prep line, to capitalise the acquired knowledge and leverage the experience it possess about infant milk powder.

Akme Fintrade (India) coming with IPO to raise Rs 132 crore
Jun-17-2024   15:28 Hrs IST

Akme Fintrade (India) 

  • Akme Fintrade (India) is coming out with a 100% book building; initial public offering (IPO) of 1,10,00,000 shares of Rs 10 each in a price band Rs 114-120 per equity share.   
  • Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
  • The issue will open for subscription on June 19, 2024 and will close on June 21, 2024.
  • The shares will be listed on BSE as well as NSE.
  • The face value of the share is Rs 10 and is priced 11.40 times of its face value on the lower side and 12.00 times on the higher side.
  • Book running lead manager to the issue is Gretex Corporate Services.  
  • Compliance Officer for the issue is Manoj Kumar Choubisa. 

Profile of the company

The company is a non-banking finance company (NBFC) incorporated in the year 1996 registered with the Reserve Bank of India as a Non-systemically important non-deposit taking company with over two decades of lending experience in rural and semi-urban geographies in India. It is primarily engaged in rural and semi-urban centric lending solutions to look after the needs and aspirations of rural and semi-urban populace. Its portfolio includes Vehicle Finance and Business Finance Products to small business owners. It has a long history of serving rural and semi-urban markets with high growth potential and has maintained a track record of financial performance and operational efficiency through consistently high rates of customer acquisition and retention and low cost expansion into underpenetrated areas. Therefore, it strategically focusses on clients in the rural and semiurban sector.

The company’s digital lending platform www.aasaanloans.com is currently under development and will be rolled out in a phased manner. This digital lending platform, www.aasaanloans.com, has been currently deployed to a select group of users for the purpose of User Acceptance Testing (UAT), specifically focusing on Two-wheeler finance as the initial phase. Concurrently, its IT team is actively engaged in developing the product for loan against property, commercial vehicle financing, and secured business loans, which will be introduced in a phased manner. It is rigorously scrutinizing all aspects of Two-wheeler finance and subjecting them to stress testing using various parameters to ensure alignment with the anticipated credit standards before expanding the rollout to a broader audience at its branches.

As a preliminary measure, it has taken the initiative of launching the website aasaanloans.com. This distinct approach facilitates the identification of businesses with low risk and high potential, thereby offering opportunities to individuals who previously lacked access to both short-term and long-term financing options. The company has its footprints in rural and semi-urban geographies in 4 Indian states Rajasthan, Maharashtra, Madhya Pradesh and Gujarat through registered office located at Udaipur, Rajasthan, its Corporate Office located in Mumbai, Maharashtra, 12 branches and over 25 points of presence including digital and physical branches having served over 2,00,000 customers till date.

Proceed is being used for:

  • Augmenting the capital base of the company to fulfil its future capital requirements.
  • Meeting Issue related expenses.

Industry overview

Indian NBFC industry is a minor player in global NBFC space, and accounts for less 1% of the total NBFC asset base globally. Between 2002 and 2020, share of India’s NBFC industry in global NBFC asset base have increased by 50 to 60 basis points. This reflects the aggressive credit growth achieved by Indian NBFC sector, as it supplemented the mainstream bank financing segment. During the same period, the size of India’s NBFC sector as a share of the country’s GDP increased from 18% to nearly 60%, underlining the importance of NBFC to the growth of Indian economy. The last eight to ten years has witnessed strong growth in NBFC credit, due to a mix of favourable regulations, innovative product offering, and high credit appetite by consumers. The credit growth in NBFC sector has come at the expense of bank, with whom they are competing in the small sized retail loan segment. The significance of NBFCs can be gauged by the increasing share of NBFC credit to GDP, as against a declining trend visible in Scheduled Commercial Banks (SCBs).

NBFC sector has over the years, evolved considerably in terms of size, operations, technological sophistication, and entry into newer areas of financial services and products. The number of NBFCs as well as the size of the sector have grown significantly. There is an increasingly complex web of inter-linkages of the sector with banks, capital market and other financial sector entities, on both sides of the balance sheet. Over the last decade, NBFCs have witnessed phenomenal growth. From being around 12% of the balance sheet size of banks (2010), they are now more than a quarter of the size of banks. While the development of a robust non-bank intermediation channel provides a good ‘spare tyre’ to the economy, uncontrolled growth fuelled by lighter regulatory framework can also lead to potential systemic risks. The Department of Non-Banking Supervision (DNBS) is delegated with the responsibility of regulation and supervision of Non-Banking Financial Companies (NBFCs) under the regulatory and supervisory framework of the Reserve bank which provides for, among other things, registration of NBFCs, prudential regulation of various categories of NBFC, issue of directions on acceptance of deposits by NBFCs and surveillance of the sector through off-site and on-site supervision. Deposit taking NBFCs and Systemically Important Non-Deposit Accepting Companies are subjected to a greater degree of regulation and supervision. The focus of regulation and supervision is threefold as mentioned below: depositor protection, consumer protection and financial stability.

Pros and strengths

Proven execution capabilities with a strong rural and semi-urban focus: Rural and semi-urban Areas in India are a highly under-served market for formal banking services in terms of access, availability, and suitability of products and services. The company has a long history of serving rural and semi-urban markets with high growth potential and have maintained a track record of financial performance and operational efficiency through consistently high rates of customer acquisition and retention and low-cost expansion into underpenetrated areas. Therefore, it strategically focusses on clients in the rural and semi-urban sector. Its loan portfolio in rural areas and semi-urban areas was 60.70%, 61.19 %, 60.22% and 61.21% in Fiscal Years 2021, 2022 and 2023 and the nine months period ended December 31, 2023, respectively.

Well established Vehicle Finance, small businesses lending business: The company has established a strong Market of Vehicle Finance Business and business lending which Include Small business, MSME and SME businesses. It has achieved growth while maintaining core focus on conservative credit assessment and risk management, and ensuring, among other criteria, that it lend to borrowers with proven track record and strong cash flow, it obtains sufficient collateral. It has also built a strong Vehicle Finance Business and small business owners lending business focused on extending secured loans to small and medium size enterprises, including businessmen, traders, manufacturers and self-employed professionals. The growth of its Vehicle Finance Business and small business is attributable to its reach to rural and semi-urban areas through its network, comprising strong presence in 4 states including Rajasthan, Maharashtra, Gujarat and Madhya Pradesh including 12 branches and various other locations it is present which are key markets in India for Vehicle Finance business and small business lending business. In addition, all its loans are secured against collateral, granted at competitive rate of interest, and involve monthly and quarterly loan repayment schedule. Its Vehicle Finance Business and business lending businesses provide it with a strong platform for expanding into various geographies in India and new innovative products.

Customer centric approach and deep understanding of target customers: The company has gained a deep understanding of its market and customer base over the years that enables it to meet the financial requirements of its existing and potential customers. Customers prefer a single source for multiple financial services, and accordingly offer a range of credit products and services to address a variety of financing requirements of the customer through its network. These practices helped it to achieve its endeavour of having primary lending relationship. Its main focus is on providing its products and services to lower and middle income group segment customers in its areas of operations. It is a one-stop financial hub for its customers for its financial needs where it operates. As the majority of its customers are individuals from lower and middle income group segments, it has designed its products in a manner such that they are simple to understand, which contributes to their popularity amongst customers. It strategically follows hub and spoke business acquisition strategy which helps it to identify the customer needs effectively and respond with solutions. 

Robust underwriting process and risk management policies: Currently the company’s risk management division is divided into separate teams that are respectively dedicated to managing and mitigating credit risk, market risk and operational risk, and which are subject to oversight by its Risk Management Committee and its Board of Directors. Its customer due diligence procedures encompass multiple levels of checks and controls designed to assess the quality of customers and to confirm that they meet its stringent selection criteria and include comprehensive evaluation of repayment capacity and detailed cash flows analysis of the customer as well as thorough group training sessions and knowledge testing. It utilizes credit bureau data to verify customer details and obtain information on past credit behaviour. Further, it employs proactive practices that involve frequent evaluations of portfolio risk levels on a periodic basis and rigorous monitoring and analysis of cash disbursements and collection, roll rates and customer retention at both branch and head office levels, which minimize the incidence of bad debts. It is further supported by its robust internal controls and processes as well as advanced technology solutions, which ensures proper loan appraisals and sound portfolio management. 

Risks and concerns

Significantly depend on business Loans: Since the company’s business significantly depends on financing under business loans and Vehicle loans. Any adverse developments in these business segments could adversely affect its business, results of operations, cashflows and financial conditions. Consequently, its financial performance significantly depends on its business loans division. Business loans are affected by many other external factors too that are not within the control of the Company. Business finance sectors, particularly the micro and small borrowers, may be negatively impacted by various factors, including due to pandemics, industry downturns, natural disasters, calamities, political and social risks, including any adverse publicity or litigation relating to these loan products thereby adversely impacting the ability of borrowers to repay their loans availed from it. Moreover, it lends to medium enterprises operating in various diverse industries and if it does not develop the requisite industry understanding and expertise, its ability to lend in such industries may be limited. Further, any adverse development in the industries, could adversely affect their ability to repay it, which in turn could have an adverse effect on its business, result of operations, financial condition and cash flow.

The company may face asset-liability mismatches: The company faces potential liquidity risks because its assets and liabilities mature over different periods. Asset and liability mismatch (ALM), which represents a situation when the financial terms of an institution’s assets and liabilities do not match, is a key financial parameter for it. It carefully monitors the contractual maturity periods of its assets and liabilities and categorize them on the basis of the number of years in which they mature. Although it had a positive asset-liability position as of March 23, 2023 across various maturities and had no cumulative mismatch in ALM up to the five years maturity, it cannot assure that it will be able to continue to maintain a favourable asset-liability maturity profile in the future. As on March 2023 the short-term assets of the company were adequate to meet the company’s short term liabilities demand and the long term assets of the company were adequate to meet the company’s long term liabilities demand. So as on March 2023, company has adequate resources to meet company’s all liability demand. It meets a significant portion of its financing requirements through term loans and working capital facilities; proceeds from loans securitized; proceeds from the issuance of NCDs; and principal protected market linked debentures from banks, financial institutions, mutual funds, and other domestic and international development financial institutions. Any ALM in the maturity profile may lead to a liquidity risk and have an adverse effect on its business, cash flows and results of operations.

The risk of non-payment or default by borrowers: The company primarily serves customers in the low and middle-income groups, with majority of its borrowers being small business owners, salaried or working class individuals, and self-employed individuals. A significant portion of its customer base is typically less economically stable than large corporates, and as a result, is usually adversely affected by declining economic conditions. Earning capacity of customers in these segments depends on various macro and micro economic factors that affect them from time to time. Its customers may default on their repayment obligations due to various reasons including business failure, insolvency, lack of liquidity, loss of employment or personal emergencies such as the death of an income-generating family member, including on account of events such as the COVID-19 pandemic. In addition, its customers may have limited credit histories that would enable it to assess their creditworthiness. Further, it may not receive updated information regarding change in the financial condition of its customers and may receive inaccurate or incomplete information as a result of any misrepresentation by its customers or employees. It may therefore be difficult for it to carry out the necessary credit risk analysis on all of its customers. Although it follows procedures to evaluate the credit profiles of its customers prior to sanctioning a loan, it also relies on the value of the property provided as underlying collateral valued by valuer in the case of business loans and value of vehicle hypothecated in favour of company in case of vehicle loans.

Operate in highly competitive industry: The company operates in a highly competitive industry. Given the diversity of its businesses, and the products and services which each of those issue, it faces competition from the full spectrum of public sector banks, private sector banks (including foreign banks), small finance banks, financial institutions and other NBFCs who are active in business finance and vehicle finance. Many of its competitors have greater resources than it does, may be larger in terms of business volume and may have significantly lower cost of funds compared to it. Many of them may also have greater geographical reach, long-standing partnerships and may issue their customers other forms of financing that it may not be able to provide. The competition it faces from other NBFCs is increasing as more NBFCs are targeting products and services similar to its. Competition in its industry depends on, among other things, the ongoing evolution of government policies, the entry of new participants and the extent to which there is consolidation among other financial institutions in India.

Outlook

Incorporated in 1996, Akme Fintrade (India) is a non-banking financial company (NBFC) with over 20 years of experience in lending to rural and semi-urban areas in India. The company mainly provides lending solutions tailored to the needs and aspirations of rural and semi-urban populations. Its portfolio comprises Vehicle Finance and Business Finance Products for small business owners. The company operates in rural and semi-urban areas across four Indian states - Rajasthan, Maharashtra, Madhya Pradesh, and Gujarat. The company finances the purchase of new two-wheelers and three-wheelers, such as scooters, motorcycles, and auto rickshaws, for salaried professionals and self-employed non-professionals. It finances the purchase of used commercial vehicles, including light commercial vehicles (LCVs), which carry goods and passengers, and heavy commercial vehicles (HCVs), which carry goods. Its lending business to small business owners including SME and MSME lending business, primarily involves it extending secured loans for business purposes to small and medium size enterprises, including businessmen, traders, manufacturers and self-employed professionals. On the concern side, at branches in rural and semi urban markets, the company may face difficulties in conducting operations, such as accessing resources, monitoring, and collections. It may also face increased costs and expenses in conducting its business and operations and implementing risk management measures. Besides, the company’s concentration in Rajasthan exposes it to any adverse geological, ecological, economic and/or political circumstances in Rajasthan. If there is a sustained downturn in the economy of Rajasthan or a sustained change in financial patterns in Rajasthan for any reason, its financial position may be adversely affected. 

The company is coming out with an IPO of 1,10,00,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 114-120 per equity share. The aggregate size of the offer is around Rs 125.40 crore to Rs 132.00 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations increased by 3.07% from Rs 6,744.13 lakh in Fiscal 2022 to Rs 6,951.37 lakh in Fiscal 2023. The company’s profit after tax increased by 283.49% from Rs 412.07 lakh in Fiscal 2022 to Rs 1,580.27 lakh in Fiscal 2023. Meanwhile, the company intends to enter in the areas of latest upcoming new age technology. This will enable it to further strengthen its relationships with its clients requiring setting up of new infrastructure or up gradation of the existing one. It seeks to develop new product adjacencies based on the needs of its customers and that complement its existing loan categories. It intends to enter into agreements with IT companies to assist it in setting up its IT infrastructure for its operations. It seeks to provide a differentiated technology framework, enhancing convenience for its customers and reducing operational expenditure at its branches. 

DEE Development Engineers coming with IPO to raise Rs 434.85 crore
Jun-17-2024   14:41 Hrs IST

DEE Development Engineers

  • DEE Development Engineers is coming out with a 100% book building; initial public offering (IPO) of 2,14,21,378 shares of Rs 10 each in a price band Rs 193-203 per equity share.   
  • Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
  • The issue will open for subscription on June 19, 2024 and will close on June 21, 2024.
  • The shares will be listed on BSE as well as NSE.
  • The face value of the share is Rs 10 and is priced 19.30 times of its face value on the lower side and 20.30 times on the higher side.
  • Book running lead manager to the issue are SBI Capital Markets and Equirus Capital.
  • Compliance Officer for the issue is Ranjan Kumar Sarangi. 

Profile of the company

The company is an engineering company providing specialized process piping solutions for industries such as oil and gas, power (including nuclear), chemicals and other process industries through engineering, procurement and manufacturing. It has manufacturing experience of over three and a half decades and has been able to leverage its brand, strategically located manufacturing facilities and engineering capabilities to successfully expand its business. As part of its specialized process piping solutions, it also manufactures and supply piping products such as high-pressure piping systems, piping spools, high frequency induction pipe bends, Longitudinally Submerged Arc Welding pipes, industrial pipe fittings, pressure vessels, industrial stacks, modular skids and accessories including, boiler superheater coils, de-super heaters and other customized manufactured components. The company currently is ranked as one of the leading process pipe solution providers in the world, in terms of technical capability to address complex process piping requirement arising from multiple industrial segments.

The company provide comprehensive specialized process piping solutions including engineering services such as pre bid engineering, basic engineering, detailed engineering and support engineering which includes engineering of process/ power piping systems for projects, and pre-fabrication services such as cutting and beveling on conventional and CNC machines, welding services on semi-automatic and fully automatic robotic welding machines, conventional and digital radiography, post weld heat treatment using CNG fired fully calibrated furnaces and induction heating process, hydro testing, pickling and passivation, grit blasting (manual and semiautomatic) and painting (manual and semiautomatic). It also specializes in handling complex metals such as varying grades of carbon steel, stainless steel, super duplex stainless steel, alloy steel and other materials including inconel and hastelloy in its manufacturing processes. The company has seven strategically located Manufacturing Facilities at Palwal in Haryana, Anjar in Gujarat, Barmer in Rajasthan. Numaligarh in Assam and Bangkok in Thailand, with three Manufacturing Facilities located at Palwal, Haryana. It also operates a temporary Manufacturing Facility in Barmer, Rajasthan which is a dedicated facility set up to cater to the piping and erection requirements of the HPCL Rajasthan Refinery (the Barmer Satellite Facility).

Proceed is being used for:

  • Funding working capital requirements of the company.
  • Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company.
  • General corporate purposes.

Industry overview

A piping system comprise of multitude of pipes as well as in-line components like industrial pipe fittings and flanges. In an industrial setting, often equipment like pumps, heat exchangers, and valves are considered as part of the broader piping system. A process piping system is a specialized piping system that is exclusively used in an industrial plant for transporting input materials that goes into the actual production process. Process piping carries the raw materials or finished products to the desired location i.e., either into the reaction vessel or other containers or to the storage tanks or other equipment for further treatment or next stage reaction. The process piping system typically consists of a network of interlinked piping system comprising different components such as pipes, tubes, pressure hoses, valves, separators, traps, flanges, fittings, gaskets, strainers, and control instruments among others which are required to regulate the movement of liquids and gases in various industries. Process piping systems are widely used across diverse industries such as chemical and pharmaceutical, oil & gas, semiconductor, paper, textiles etc. Depending on their application process piping systems may be simple and limited in scope, or extensive and complex. This core usage separates process piping system from other types of piping systems found in an industrial plant. Hence, piping systems used for heating and cooling processes of liquids and gases, or power processing or pipework that leads to plumbing fixtures or waste-water systems, are considered as part of plumbing system, and not process piping systems.

Steel fabrication industry in India has evolved over the years, graduating from traditional welding of parts to an industry which is capable of designing & executing complex steel structures with diverse applications in the industrial sector. Steel fabrication has strong backwards and forward linkage, and the success / failure of the industry is dependent on numerous factors across the value chain. Easy access to quality raw materials at competitive prices, presence of skilled labour pool, and a robust end use demand landscape are some of the key factors that have a direct impact on steel fabrication industry. From a raw material perspective, India is the second largest producer of both crude steel and finished steel – which ensures a steady supply of steel at competitive price to domestic fabrication industry. On the manufacturing ecosystem front, the country has a well-developed fabrication infrastructure, comprising of small- and large-scale enterprises with a strong pool of technically skilled labour to support it. Meanwhile, the stable industrial activity rapid expansion in industrial / manufacturing capacity and construction have ensured a steady demand for fabricated steel products. Thus, all three factors that are critical for the success of steel fabrication industry is currently aligned in India’s favour, which in turn has helped in fuelling the growth of domestic steel fabrication industry.

Pros and strengths

Leading player in an industry with significant barriers to entry: The company is an engineering company providing specialized process piping solutions for industries such as oil and gas, power (including nuclear), process industries and chemicals through engineering, procurement and manufacturing services. As part of its specialized process piping solutions, it also manufactures and supplies piping products such as high-pressure piping systems, piping spools, high frequency induction pipe bends, Longitudinally Submerged Arc Welding pipes, industrial pipe fittings, pressure vessels, industrial stacks, modular skids and accessories including boiler superheater coils, de-super heaters and other customized manufactured components. Its leadership position can be attributed to factors such as its long-standing relationship with certain of its global customers, business experience, domain expertise and consistent quality of its products. Such leadership position offers it competitive advantages such as product pricing, reduced costs due to economies of scale, its ability to scale its business, customer loyalty and increasing its client base.

Largest player in process piping solutions in India: The company currently is ranked as one of the leading process pipe solution providers in the world, in terms of technical capability to address complex process piping requirement arising from multiple industrial segments. At present, it is the largest player in process piping solutions in India, in terms of installed capacity. It has seven strategically located Manufacturing Facilities at Palwal in Haryana, Anjar in Gujarat, Barmer in Rajasthan. Numaligarh in Assam and Bangkok in Thailand, with three Manufacturing Facilities located at Palwal, Haryana. Its Barmer Satellite Facility is a dedicated facility set up to cater to the piping and erection requirements of the HPCL Rajasthan Refinery. Its wholly owned subsidiary, DFIPL operates its Anjar Heavy Fabrication Facility. Its seven Manufacturing Facilities and the Anjar Heavy Fabrication Facility together span an area of approximately 436,967.87 square meters. The company’s Manufacturing Facilities are equipped with modern equipment and systems which includes fully automated robotic welding systems, in-house non-destructive examination facilities such as radiography test, magnetic particle test, ultrasonic test, liquid penetrant test, visual test, semi-automatic shot blasting machines and separate fabrication shops for stainless steel and a clean room/ dust free manufacturing facility. Its engineering processes are technologically advanced which allow it to offer its customers latest products and advanced manufacturing processes.

Long standing customer relationships with strong order book: The company has, through the three and a half decades of business operations, established long-term relationships with customers across industries it caters to. Its ability to address the various and stringent client requirements over long periods enables it to obtain additional business from existing clients as well as new clients in an industry marked by high entry barriers. It has a balanced mix of domestic and overseas customers including certain Fortune 500 companies in India and various multinational corporations. Its customers include global companies such as JGC Corporation, Nooter Eriksen, MAN Energy Solutions SE, Mitsubishi Heavy Industries and John Cockerill S.A, and Indian companies such as Reliance Industries, Thermax Babcock & Wilcox Energy Solutions India, HPCL–Mittal Energy, Toshiba JSW Power Systems, UOP India, Doosan Power Systems India and Andritz Technologies. One of the entry barriers to the industry in which it operates is the lead time required to build confidence and relationships with its customers. Such long-term association with its customers offers it significant competitive advantages such as revenue visibility, industry goodwill, a deep understanding of the requirements of its customers and is a testament to the quality of its products and services.

Wide range of specialized product offerings and services: As an integrated manufacturing partner providing ‘design-led-manufacturing’ solutions to its customers, it provides designs, engineering solutions, manufacturing and testing to ensure that its customers’ products meet robust standards in reliability, safety and performance. Its diversified product portfolio which includes piping spools, induction pipe bends, industrial pipe fittings, pressure vessels, modular piping (skids and modules), industrial stacks, wind turbine towers and pilot plants allows for limited dependence on individual products and addresses different business cycles across industries where its products are used. The company’s business footprint spans across geographies. As of December 31, 2023, it served customers across 27 countries. In the nine months ended December 31, 2023 and Fiscal 2023, Fiscal 2022 and Fiscal 2021 its revenue from operations outside India was Rs 2,211.10 million, Rs 2,685.92 million, Rs 1,681.48 million and Rs 2,259.62 million, respectively, which represented 40.53%, 45.10%, 36.48% and 45.63% of its revenue from operations, respectively. 

Risks and concerns

Depend on third-party agents for referral of certain portion of customers: The company depends on third-party agents, to source a portion of its customers. Such third-party agents market and promote its products and services. Continued growth in its business is dependent upon identifying, developing, and maintaining strategic relationships with such third-party agents. Its business is dependent on the ability of its third-party agents to promote, sell and market its products and services effectively. Its inability to maintain a stable distribution network of third-party agents and to attract new third-party agents in the future could adversely affect its business, financial condition and results of operations. Further, while it continuously seeks to increase the penetration of its products and services by appointing new third-party agents targeted at different markets and geographies, it cannot assure that it will be able to successfully identify or appoint new third-party agents or effectively manage its network.  While the terms of its agency agreements typically stipulate that the third-party agents are not allowed to enter any contract on behalf of the company, any misrepresentation by a third-party agent to a potential customer, may adversely affect its business, financial conditions or results of operations. Further, its agreements with its existing third-party agents are not renewed automatically and the continuity of its relationship with them is dependent upon their internal policies, applicable law, and is subject to fresh negotiations. 

Dependent on design and engineering teams: The company has developed in-house resources with key competencies to deliver a project from conceptualization to completion which includes its qualified design and engineering team. It relies on its in-house team for timely and efficient execution of its orders. As of March 31, 2024, it had 1,061 full time employees out of which 748 employees were employed in the design and engineering team. In addition to design and engineering, its teams carry out detailed inspection of the relevant area for the installation of its products to record and highlight important features and identify any issues that may be of importance in terms of implementation and operation of such orders. While its teams have the necessary skill and experience in carrying its pre-approval engineering studies, it may not able to assure the accuracy of such studies. The accuracy of the pre-approval studies is dependent on the following key elements; (i) preparing a project road map-based investigation of the order site; (ii) undertaking engineering surveys and preliminary designs which broadly include carrying out inventory and detailed condition surveys, carrying its preliminary investigations, availability of construction materials and implementing design in accordance with environmental and social concerns; and (iii) preparation of bills of quantities covering all the items required in the work. Any deterrence or deviation in the estimation and calculation of the key elements may hamper the quality of the pre-approval engineering study, on which it relies before submitting any tenders for the relevant order. 

Rely on contractors, and therefore exposed to execution risks: The company enters into arrangements with contractors as per its requirements for a fixed period of time. As of December 31, 2023, it has over 200 number of contracts with contractors, which accounts for Rs 475.47 million or 8.82% of its total expenses. Some of its arrangements with contractors will expire on March 31, 2025. There is no assurance that it may be able to renew these arrangements on a timely basis or at all. It does not have direct control over the timing or quality of the services and supplies provided by such third parties. Contractors hired by it may be unable to provide the requisite manpower on a timely basis, or at all, or may be subjected to disputes with their personnel, which, in turn, may affect production at its Manufacturing Facilities and timely delivery of its products to its customers. Although it does not engage contract labor directly, it may be held responsible under applicable Indian laws for wage payments to such labor should its contractors’ default on wage payments, which shall adversely affect its financial condition and results of operation.

Face competition: The company faces competition from companies such as ISGEC Heavy Engineering in certain segments and from the pipe fabrication division of L&T Heavy Engineering in certain areas of its operations, in India as well as other international companies such as Seonghwa Industrial Co.., SUNG IL (SIM) Co, US Pipe Fabrication. And McDermott which either operate in the same line of business as it or offer similar products and services. Few of its competitors may win market share from it by providing lower cost solutions to its customers, with or without adversely affecting their profit margins or by offering technologically advanced products or services. Even if its offerings address industry and customer needs, its competitors may be more responsive to these needs and more successful at selling their products. If it is unable to provide its customers with superior products and services at competitive prices or successfully market those services to current and prospective customers, it could lose customers, market share or be compelled to reduce its prices, thereby adversely affecting its business, results of operations and financial condition. 

Outlook

DEE Development Engineers is the largest player in process piping solutions in India, in terms of installed capacity, providing specialized process piping solutions with strategically located state-of-the-art Manufacturing Facilities. It has been focussed on automating certain manufacturing processes and its Manufacturing Facilities are equipped with equipment such as fully automated robotic welding systems, semi-automatic shot blasting machines, automatic GMAW welding system and fully automatic high frequency induction bending machines having diameter of up to 48 inches. It operates two biomass power generation plants in Abohar and Muktsar, Punjab, with a contracted annual capacity of 8 MW and 6 MW, respectively, which together span an area of approximately 347,511.15 square meters. It has recently expanded its business by entering a new business vertical of design, engineering, fabrication and manufacturing of pilot plants, which it is carrying out from its Palwal Facility III. The company has a management team with extensive industry experience. On the concern side, the company supplies its products in overseas markets such as the United States of America, United Kingdom, Canada and Japan. Although it has not experienced any downward fluctuations in its revenues on a regular basis there can be no assurance that fluctuations on account of unfavourable market conditions shall not occur in the future. Any such fluctuations, if they occur, may adversely affect its profitability, results of operations and financial condition.   

The company is coming out with an IPO of 2,14,21,378 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 193-203 per equity share. The aggregate size of the offer is around Rs 413.43 crore to Rs 434.85 crore based on lower and upper price band respectively. On performance front, total income increased by 30.47% from Rs 4,708.39 million in Fiscal 2022 to Rs 6,143.20 million in Fiscal 2023. Restated Profit for the year increased by 58.25% from Rs 81.97 million in Fiscal 2022 to Rs 129.72 million in Fiscal 2023 primarily due to an increase in total income. Meanwhile, the company intends to increase the level of automation at its upcoming manufacturing facilities at Anjar and the recently established Numaligarh Facility as compared to the current levels of automation at its existing Manufacturing Facilities. The completion of its expansion plans and a consequent increase in its installed capacity, will reduce the pressure on its existing Manufacturing Facilities. This will in turn enable it to re-engineer and automate certain processes and systems at its existing Manufacturing Facilities. It also intends to augment its scale of operations through inorganic expansion strategies, including selectively evaluating targets for technical alliances, in order to consolidate its position as an integrated, comprehensive solution for providing specialized process piping solutions. 

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