IPO Analysis Research

Chatha Foods coming with IPO to raise upto Rs 33.39 crore
Mar-18-2024   11:01 Hrs IST

Chatha Foods 

  • Chatha Foods is coming out with initial public offering (IPO) of 59,62,000 shares of Rs 10 each in a price band Rs 53-56 per equity share.  
  • The issue will open for subscription on March 19, 2024 and will close on March 21, 2024.
  • The shares will be listed on BSE SME Platform.
  • The face value of the share is Rs 10 and is priced 5.30 times of its face value on the lower side and 5.60 times on the higher side.
  • Book running lead manager to the issue is Indorient Financial Services.
  • Compliance Officer for the issue is Priyanka Oberoi.

Profile of the company

The company is engaged in the business of food processing in India. It is engaged in frozen and ready to eat meat and vegan foods manufacturer and retails an array of ready to eat and frozen meat and vegan products under the brand ‘Swiss Naturen’ and ‘The Field Grill’. It seeks to differentiate ourselves from its competitors through introduction of new products, including launching innovative flavours targeted at addressing diversified consumer tastes, market trends and providing products which are value for money to the consumers.

All Its products are produced at its Manufacturing Facility, located in District Mohali. This enables the company to have an effective control over the manufacturing process and to ensure consistent quality of its products. Its commitment to quality is demonstrated through its attainment of various certifications and accreditations, including those from the U.S. Food and Drugs Administration, British Retail Consortium (BRC - Issue 9), Halal Certification and Export Inspection Council.

It manufactures and sells non-vegetarian & vegetarian products such as pizza toppings, sandwich fillings, burger patties, snacks and more to leading Quick Service Restaurant’s (QSR), Casual Dining Restaurants’ (CDR) and other Hotel-Restaurant-Catering (HoReCa) segment players. It manufacture and sell plant-based products such as plant-based sausages, salami, pepperoni; Indian snacks like kebabs, tikkas & samosas; plant-based nuggets & burger patties, grilled burger patties to certain QSRs, CDRs and other HoReCa segment players. Additionally, it supplies its products to larger conglomerates and other companies under their own brand names, including Blue tribe (Alkem Group), Shaka Harry (Liberate Foods), Green Bird (Continental Coffee), Plantaway (Graviss Group), and many others.

Proceed is being used for:

  • Setting up the proposed manufacturing unit 
  • General corporate purposes

Industry overview

The Quick Service Restaurant (QSR) industry in India is classified into two segments, organized and unorganized, based on the following three key parameters: (i) accounting transparency, (ii) organized operations with quality control and sourcing norms, and (iii) outlet penetration. The organized standalone market share in the total QSR market has increased to 29% in 2022 from 24% in 2017, as increasing disposable incomes have encouraged owners and entrepreneurs to open such organized outlets. The current decade is overseeing a shift to a larger organized sector. Customer retention and a higher range and depth of offerings are new goals among organized market players of QSR.

The global QSR market was valued at Rs 25.05 trillion in FY 2022. It is expected to reach Rs 54.53 trillion by FY 2027, expanding at a CAGR of around 17.41% during the FY 2023 - FY 2027 forecast period. The requirement for a wide variety of fast-food items and the growth of the market both contribute to the quick-service restaurants market’s expansion globally. The QSR market in India was valued at Rs 171.90 billion in FY 2022. It is expected to reach Rs 431.27 billion in FY 2027, expanding at a CAGR of around 20.47% during the FY 2022 - FY 2027 forecast period. The current decade is overseeing a shift to a larger organized sector. Customer retention and a higher range and depth of offerings are new goals among the organized market players of QSR.

QSR is more of a macro story play with India’s fast changing ecosystem (internet, mobile, young population, large population, rising hygiene preferences, etc.) driving penetration. India’s food consumption landscape is moving on to the next stage of evolution, driven by rapid urbanization, a rise in disposable incomes, changing consumption habits, a large millennial population (aged 15-34 years), less time to make food, preference for branded players, etc. The millennial population of India (~34% of the total population), being a key driver of the food services industry’s growth, has become more discerning in its consumption habits, both in terms of the frequency at which they eat or order from outside as well as the variety they seek.

Pros and strengths

Strong supply chain and input sourcing for QSR, CDR and other outdoor dining options in India:  Its customer/distributor base is the HoReCa segment players in India mainly the QSR and CDR segments. Given that a customer’s trust, loyalty and affiliation for QSRs, CDRs and other HoReCa segment is a key driver for their brand value and perception, they are very selective and cautious about the vendors they engage with. Its existing relationships help the company to get repeat business from its customers. This has helped the company to maintain a long term working relationship with its customers and improve its customer retention strategy.

High quality manufacturing facility: It has incurred substantial capital expenditure in establishing and operating a modern Manufacturing Facility equipped with high-quality equipment sourced from Germany and Italy. Its comprehensive range of machinery includes mincers, bowl choppers, brine injectors and tumblers for marination. It also have high-capacity cooking combi ovens, forming, coating, and frying lines for customized products, a retort sterilizer for shelf-stable items, dicer and slicer machines, thermoforming machines for vacuum/MAP packaging, as well as metal detectors and precision weighing equipment from Ishida, complying with international standards.

Timely supply of quality products: Timeliness of supplies is a key factor for QSRs, CDRs and other HoReCa segment players and it has over the years established a strong supply chain to ensure that it helps its customers deliver their brand promise to their consumers. Moreover, establishing an efficient supply chain capable of timely delivery also requires immense operational and category expertise and understanding which is developed over time. Not only is it difficult for new entrants to be able to develop this skill but also QSRs, CDRs and other HoReCa segment players are unlikely to entrust new entrants with such aspects which are critical for their continued strong brand perception

Risks and concerns

Maximum revenue from sale of products in non-vegetarian segment: It introduced plant based mock meat products in 2021 and vegetarian products in 2022 with a separate unit having a capacity of 2,278 MT per annum. While it is in the process of continually developing its vegetarian and plant based segment, presently it is dependent on its non-vegetarian segment and derive a substantial portion of its revenue from the non-vegetarian segment which contributes Rs 6,405.89 lakh, Rs 11,220.95 lakh, Rs 8,575.46 lakh and Rs 6,118.06 lakh constituting 89.43%, 96%, 98% and 100% of its total revenue from operations for the six months ended September 30, 2023 and the Fiscals 2023, 2022 and 2021, respectively. Any loss of business from, or any significant reduction in the volume of business with existing customers, if not replaced, could materially and adversely affect its business, financial condition and results of operations. 

Do not have long term agreements with suppliers: Production quantity and cost of its products are dependent on its ability to source raw materials and packaging materials at acceptable prices and maintain a stable and sufficient supply of its major raw materials. Meat is the key raw material used to manufacture most of its products. It has long standing relations with its suppliers and purchase raw materials from them on an on-going basis. It has annual purchase contracts with them which save it from fluctuations in the market rates.

Operate in a highly competitive industry: Its industry is highly competitive and is expects that competition will continue to increase. It faces competition from both domestic and multinational corporations and it expects competition to continue to intensify. If it is unable to change its offerings in ways that reflect the changing demands of taste and end consumer preferences or compete effectively with and adapt to such changes, its business, financial condition, cash flows and results of operations would be adversely affected.

Outlook

The company is engaged in the business of food processing in India. It is engaged in frozen and ready to eat meat and vegan foods manufacturer and retails an array of ready to eat and frozen meat and vegan products under the brand ‘Swiss Naturen’ and ‘The Field Grill’. It seeks to differentiate ourselves from its competitors through introduction of new products, including launching innovative flavours targeted at addressing diversified consumer tastes, market trends and providing products which are value for money to the consumers. On the concern side, its industry is highly competitive and is expects that competition will continue to increase. It faces competition from both domestic and multinational corporations and it expects competition to continue to intensify. 

The company is coming out with an IPO of 59,62,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 53-56 per equity share. The aggregate size of the offer is around Rs 31.60 crore to Rs 33.39 crore based on lower and upper price band respectively. On performance front, revenue from operations had increased by 34.23% from Rs 8,733.41 lakh in Fiscal 2022 to Rs 11,722.77 lakh in Fiscal 2023. Its strong sales growth is attributed to several pivotal drivers, including its expanded customer base and continued growth in the QSR industry. The Company reported a net profit of Rs 245.20 lakh in Fiscal 2023 as compared to a net profit of Rs 67.24 lakh in Fiscal 2022. Meanwhile, it will continues to strive to convert this ability to not only help realize higher and more predictable revenues but also higher margins from its customers. It plans to continue to increase offerings in its current business segments as well as diversify into new products by tapping into segments which in the view of its management have attractive growth prospects.

Enfuse Solutions coming with IPO to raise upto Rs 22.44 crore
Mar-14-2024   14:33 Hrs IST

Enfuse Solutions 

  • Enfuse Solutions is coming out with initial public offering (IPO) of 23,37,600 shares of Rs 10 each in a price band Rs 91-96 per equity share. 
  • The issue will open for subscription on March 15, 2024 and will close on March 19, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 9.10 times of its face value on the lower side and 9.60 times on the higher side.
  • Book running lead manager to the issue is Hem Securities.
  • Compliance Officer for the issue is Shubhra Maheshwari.

Profile of the company

The  company is engaged in business of providing integrated Digital solutions across various domains including (i) In Data Management & Analytics (ii) E-commerce & Digital Services (iii) Machine Learning & Artificial intelligence (iv) Edtech & Technology Solutions. It provides these service solutions by combining custom-designed data processes, delivery teams that include both generalists and domain specialists, and its in-house software to streamline and automate various processes. 

Its business operations encompass various domains (i) In Data Management & Analytics, it organizes and analyzes data, providing tailored insights for informed decision-making such as Master data Management, Product information Management etc. (ii) Ecommerce & Digital Services form a core area where it develops and optimize digital platforms for seamless online experiences such as E-commerce platform management, content management, Digital marketing etc. (iii) Machine Learning & AI represent its capabilities in advanced technologies, offering innovative solutions such as tagging/labelling, Transcription , Annotation etc. (iv) Edtech & Technology Solutions focus on leveraging technology to enhance educational experiences and overall technological solutions such as live Proctoring, Record and review, Student Counselling etc. 

It works as consultants for its clients as per the terms of sub-contracting agreements entered with them. For e.g., if its client is desirous of providing digitization services to one of its customers, then, it as consultants will work on behalf of its client to provide said services to their customers. It execute a Statement of Work with its clients which specify the scope of its services to be provided to their customers which includes the term of the project, background and objective of the project and description of services to be provided. Its diverse suite of offerings, spanning Data as a Service (DAAS) and software solutions, encompasses an AI platform for tagging audio, video, image, and documents, Edtech AI solutions, data annotation and curation platforms, data engineering, data science, cloud computing, and digital marketing. 

Proceed is being used for:

  • Repayment of certain borrowings availed by the company. 
  • Meeting working capital requirements. 
  • General corporate purpose. 

Industry overview

The IT & BPM sector has become one of the most significant growth catalysts for the Indian economy, contributing significantly to the country’s GDP and public welfare. The IT industry accounted for 7.4% of India’s GDP in FY22, and it is expected to contribute 10% to India’s GDP by 2025. As innovative digital applications permeate sector after sector, India is now prepared for the next phase of growth in its IT revolution. India is viewed by the rest of the world as having one of the largest Internet user bases and the cheapest Internet rates, with 76 crore citizens now having access to the internet.

The current emphasis is on the production of significant economic value and citizen empowerment, thanks to a solid foundation of digital infrastructure and enhanced digital access provided by the Digital India Programme. India is one of the countries with the quickest pace of digital adoption. This was accomplished through a mix of government action, commercial innovation and investment, and new digital applications that are already improving and permeating a variety of activities and different forms of work, thus having a positive impact on the daily lives of citizens. India’s rankings improved six places to the 40th position in the 2022 edition of the Global Innovation Index (GII).

The Indian IT & business services industry is expected to grow to $19.93 billion by 2025. Spending on information technology in India is expected to reach $144 billion in 2023. By 2026, widespread cloud utilisation can provide employment opportunities to 14 million people and add $380 billion to India's GDP. As per a survey by Amazon Web Services (2021), India is expected to have nine times more digitally skilled workers by 2025. IT spending in India is expected to increase to $110.3 billion in 2023 from an estimated $81.89 billion in 2021. In November 2021, Mr. Piyush Goyal, Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, lauded the Indian IT sector for excelling its competitive strength with zero government interference. He further added that a service export from India has the potential to reach $1 trillion by 2030.

Pros and strengths

Diversified revenue from multiple geographies: The Company has diversified revenue from multiple geographical locations and most of its revenue is derived from exports sales. As an IT solution provider, it presence in multiple geographies as a service provider not only helps it in expanding its client base but also helps it by keeping ourselves in tune with the latest technological advancements world-wide. It is constantly adopting new technologies to further augment its business expansion and client acquisition. 

Diversified client base and revenue sources: It serves a diverse mix of end markets across several industry sectors. In its business, it serves a number of customers in different industries with variety of services, through its clients with whom it has entered into sub-contracting agreements. It has served entrepreneurs ranging from start-up enterprises to established companies, operating in sectors such as Technology, BFSI (Banking, Financial Services, and Insurance), Retail, Financial Services (FinTech), Media and Entertainment, Health, Education and various other industries.

Wide range of professional and technical services: It provides a wide range of services that cater to diverse business needs. It offerings encompass Data Management & Analytics, E-commerce & Digital Services, Tagging Services, Proctoring Services, Machine Learning & AI, Edtech & Technology Solutions, and more. In the data realm, it organizes and analyzes information, aiding clients in making well-informed decisions. Its capabilities extend to developing and optimizing digital platforms for smooth online experiences, ensuring precise data categorization, facilitating secure online assessments, and harnessing advanced technologies like Machine Learning & AI. Additionally, it contributes to the educational sector by using technology to enhance learning experiences. This comprehensive and integrated approach reflects its commitment to being a flexible and reliable partner for businesses with varied requirements.

Risks and concerns

Dependent on few customers: The substantial portion of its revenue is significantly dependent on certain key customers. For instance, its top three customers for the nine months’ period ended December 2023, F.Y. ended March 31, 2023 and March 31, 2022 accounted for 65.17%, 78.60% and 99.93% of its revenue from operations in such periods. Its reliance on a limited number of customers for its business exposes it to risks, that may include, but are not limited to, reductions, delays or cancellation of orders from its key customers, a failure to negotiate favourable terms with its key customers or the loss of these customers, all of which would have a material adverse effect on the business, financial condition, results of operations, cash flows and future prospects of the Company. It presently do not have any long-term or exclusive arrangements with any of its customers, hence, there can be no assurance that its customers will place their orders with it on current or similar terms, or at all.

Cyber risk: Cyber threats are evolving and are becoming increasingly sophisticated. The Company may experience cyber threats from time to time, which pose a risk to the security of its systems and networks and the confidentiality, availability and integrity of its data. There have been no instances of the loss/ leakage of confidential information or protected non-public personal information from the Company’s IT systems or due to cyber-attacks on the company in past. Any disruptions or failures in the physical infrastructure or operating systems that support its businesses and customers, or cyber-attacks or security breaches of its networks or systems in the future, could result in the loss of customers and business opportunities legal liability, regulatory fines, penalties or intervention, other litigation, regulatory and legal risks and the costs associated therewith, reputational damage, reimbursement or other compensatory costs, remediation costs, increased cybersecurity protection costs, additional compliance costs, increased insurance premiums and lost revenues, damage to the company's competitiveness and any of which could materially adversely affect its business, results of operations, financial condition and cash flows.

Rely on third-party data centres and cloud computing providers: It currently serves its clients from third-party data centres and cloud computing providers located around the world. Some of these facilities may be located in areas prone to natural disasters and may experience events such as earthquakes, floods, fires, severe weather events, power loss, computer or telecommunication failures, service outages or losses, and similar events. They may also be subject to break-ins, sabotage, intentional acts of vandalism and similar misconduct or cybersecurity issues, human error, terrorism, improper operation, unauthorized entry and data loss. In the event of significant physical damage to one of these data centres, it may take a significant period of time to achieve full resumption of its services, and its disaster recovery planning may not account for all eventualities. It may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the data centres that it uses. Although it carries business interruption insurance, it may not be sufficient to compensate it for the potentially significant losses, including the potential harm to the future growth of its business that may result from interruptions in its services or products.

Outlook

The  company is engaged in business of providing integrated Digital solutions across various domains including (i) In Data Management & Analytics (ii) E-commerce & Digital Services (iii) Machine Learning & Artificial intelligence (iv) Edtech & Technology Solutions. It provides these service solutions by combining custom-designed data processes, delivery teams that include both generalists and domain specialists, and its in-house software to streamline and automate various processes.  On the concern side, Its reliance on a limited number of customers for its business exposes it to risks, that may include, but are not limited to, reductions, delays or cancellation of orders from its key customers, a failure to negotiate favourable terms with its key customers or the loss of these customers, all of which would have a material adverse effect on the business. 

The company is coming out with an IPO of 23,37,600 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 91-96 per equity share. The aggregate size of the offer is around Rs 21.27 crore to Rs 22.44 crore based on lower and upper price band respectively. On performance front, during the financial year 2022-23, the net revenue from operation of the company increased to Rs 2609.85 lakh as against Rs 2554.12 lakh in the Financial Year 2021-22 representing an increase of 2.18%. The main reason for increase in revenue from operation was due to increase in the sale of export services primarily due to increase in E-Commerce & Digital Services. The company experienced growth in Profit After Tax (PAT) of Rs 292.73 lakh for the financial year 2022-23, marking a significant increase of 47.76% from the previous financial year's PAT of Rs 198.11 lakh. Meanwhile, its goal is to build long-term sustainable business relationships with its clients to generate increasing revenues. It plans to continue to expand the scope and range of current services provided to its existing and new clients by continuing to build its expertise and extending its capabilities.

Enser Communications coming with IPO to raise Rs 16.17 crore
Mar-13-2024   15:36 Hrs IST

Enser Communications 

  • Enser Communications is coming out with an initial public offering (IPO) of 23,10,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 70 per equity share. 
  • The issue will open for subscription on March 15, 2024 and will close on March 19, 2024.
  • The shares will be listed on NSE SME Platform.
  • The share is priced at 7.00 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Fast Track Finsec.
  • Compliance Officer for the issue is Ms. Muskan.

Profile of the company

The company was incorporated with the main objects to carry on activities in the communications field with regards to call centers, outsourcing, database management, web services, information systems, software and hardware selling and maintenance & knowledge based projects in the communications field; and to carry on the activities in the field of trading, exporting, importing, processing, buying, selling, marketing of various types communication equipment’s or instruments or products or to provide facilitate of networking, mobiles services, computer programming, data processing, business outsourcing, e-commerce facilities, web site, portal, internet service units, systems analyzing and to provide services of establishing Management Information Systems, maintenance and applications, customer contract development resources, training and certification of any products and design and to provide training and education facilities for employees or to customers and others.

Enser Communications was established and commenced its business in May 2008, Enser is in the business of the ‘Business Process Management Platform’. Enser’s BPM technology enabled platform that integrates with voice, chat, email, IVRS, and other social media engagements for customer acquisition as well as customer service strategies, specializing in Client Interaction Management. Enser provides and facilitates to its clients, thereby fostering mutual growth. Enser’s comprehensive service offerings span across Business Analytics, Customer Relationship Management (CRM), Interactive Voice Response Systems (IVRS), and Customer Interaction Management solutions. Enser helps its clients manage their Customer Life cycle using its Business Process Management Platform. Enser facilitate rich consumer engagement and understanding by crafting end-to-end consumer interaction solutions that are flexible and customized to deliver for its client’s business objectives. The company take keen interest in its client's business context and conceptualize and implement a customer interaction program that will fit in with their objectives.

Proceed is being used for:

  • Setting up of new service unit.
  • Meeting out the Working Capital requirements of the Company.
  • Meeting out the General Corporate Purposes.
  • Meeting out the Issue Expenses.

Industry overview

The Indian Information Technology/ Software industry is a global powerhouse today, and its impact on India has been incomparable. It has contributed immensely in positioning the country as a preferred investment destination amongst global investors and creating hug job opportunities in India, as well as in the USA, Europe and other parts of the world. In the last decade, the industry has grown many folds in revenue terms, and relative share to India’s GDP is around 7.5 percent in FY2022-23. India is the topmost off-shoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. Indian IT/Software industry offers cost-effectiveness, great quality, high reliability, speedy deliveries and, above all, the use of state-of-the-art technologies globally. The Indian IT/ ITeS industry has a leading position globally and has been progressively contributing to the growth of exports and creation of employment opportunities. India’s IT-BPM industry (excluding e-commerce) is expected to grew by 7.9% to reach at $245 billion, including exports of $194 Billion in FY2022-23 (E). The IT/ITeS has also created large employment opportunities and is estimated to employ 5.4 million professionals, an addition of 2,90,000 people over FY 2021-2022 (E). Women employees account for 36% share in total industry employee base.

The IT staffing industry is a crucial part of the IT sector in India. It provides a platform for skilled professionals to find job opportunities in the field of technology. With the rise of new technologies such as artificial intelligence, machine learning, and blockchain, the demand for skilled IT professionals is expected to grow in the coming years. This demand will create significant opportunities for the IT staffing industry in India. In the next five years, the IT staffing industry in India is expected to witness significant growth. The industry is expected to grow at a CAGR of 10% during this period, driven by factors such as the rise of new technologies, increased demand for skilled IT professionals, and the growing reliance on data driven work. One of the significant drivers of growth in the IT staffing industry is the rise of new technologies. As organizations continue to adopt new technologies, they will require skilled professionals to implement and manage these technologies. 

Pros and strengths

Blue chip companies and Innovative customers: The company, dedicated to offering solutions for Customer Acquisition and Interaction Management, has forged strategic partnerships with an array of distinguished brands. These valued partnerships underscore its commitment to delivering excellence in customer acquisition and interaction management solutions. They enable it to leverage the expertise and reputation of renowned brands to enhance its services and provide even greater value to its clients. Its strategic alliances are a testament to its dedication to continually expand its reach and capabilities in the industry.

Customized IT Infrastructure and State of the art Management Information Systems: The company’s system is tailor-made to suit its specific needs, granting it a distinct advantage in the market. It boasts scalability, enabling it to efficiently manage high transaction volumes encompassing orders, customers, and products. Furthermore, it possesses the flexibility to adapt seamlessly to evolving business demands and furnishes real-time data to empower operational managers in making timely and precise decisions. This customized system not only enhances its competitive position but also ensures agility and informed decision-making within its organization.

Diverse Service Portfolio: The company has meticulously crafted an extensive array of services that adeptly cater to the evolving needs of its esteemed clients. Its service portfolio encompasses a wide spectrum, including Integrated Telephony Management, Customer Relationship Management, Sales Management, Order Booking Management, and IVR Solution Management and dynamic Client interaction Management solutions. Its all-encompassing suite of services empowers its clients to realize their business objectives efficiently. Furthermore, it positions it to not only expand its scope of work with existing clients but also to engage with a broader prospective client base. Its commitment to providing these comprehensive solutions underscores its dedication to client success and its eagerness to explore new avenues for growth in the ever-evolving landscape of business services. 

Risks and concerns

Depend on third parties for certain services: The company has majorly depended on the third-party suppliers for the services like the Power Backup, Internet and the telecommunication services which forms the major part of its business. Although, it has maintained stable relationships with these suppliers, it cannot assure that it would be able to source these services from alternative sources, at acceptable prices or at all. It expects it will continue to rely on such third-party providers as it expands its business. However, these third parties may undergo insolvency, file for bankruptcy, experience disruptions, provide lower quality service or increase the prices of their products or services for a number of reasons that are beyond its control. As a result, it cannot be certain that it will continue to receive satisfactory services or products on acceptable terms or at all.

Face substantial competition in BPM services business: The company faces significant competition from existing players and potential entrants in the BPM services business. It will face competition mainly from large vertically integrated and diversified companies as well as new companies. It competes with its competitor, in a variety of ways, including on cost, quality and speed of service, functionality, ease of use and performance of systems, the range of services offered to clients and technological innovation and reputation. Increased competition and fail to compete successfully, its business, financial condition and operations could result in price reductions, decreased sales, lower profit margins or losses in market share, any of which could have an adverse effect on its business, results of operations and financial condition.

Rely on third-party data centres and cloud computing providers: As the company grow and continue to add new third-party data centres and cloud computing providers and expand operations through its own and third-party data centres and cloud computing providers, it may move or transfer its data and its customers’ data. Despite precautions taken during this process, any unsuccessful data transfers may impair the delivery of its platform and products. Any damage to, or failure of, its systems, or those of its third-party data centres or cloud computing providers, could result in interruptions on its products platform or damage to, or loss or compromise of, its data and its customers’ data.

Outlook

Incorporated in 2008, Enser Communications offers Business Process Management (BPM) services to companies in the insurance, e-commerce, education and travel sectors. The company has 4 main business verticals: Customer Acquisition Services, Customer services, IT infrastructure management services and Data management services. The company’s primary focus encompasses industries such as Insurance, E- commerce, Edtech, Hospitality and Travel and among others, where it delivers tailor-made solutions to meet the unique requirements of its valued clients. It boasts of a specialized team of seasoned experts with extensive backgrounds in both management and telecommunications, affording it the capacity to operate proficiently across a spectrum of major regional languages.  On the concern side, the services the company provides to its clients require significant investment of resources and time by both its clients and the company. Its potential clients may require it to provide pilot studies to assess the feasibility of integrating with its systems. Besides, it requires a number of approvals, licenses, registrations and permits in ordinary course of its business. 

The company is coming out with an IPO of 23,10,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 70 per equity share to mobilize Rs 16.17 crore. On performance front, total income for the Financial Year 2022-23 stood at Rs 2590.97 lakh, whereas in Financial Year 2021- 22 it stood at Rs 1686.47 lakh representing an increase of 53.63%. The restated profit after tax for the Financial Year 2022-23 stood at Rs 160.06 lakh, whereas for the Financial Year 2021-22, it stood at 77.92 lakh, in line with the increase in scale of operations, increase in revenue. Meanwhile, the company plans to use its industry expertise, deep understanding of its target sectors, and strong client relationships to expand its current services and venture into new areas and industries. To achieve this, it will further develop its management teams embedded within client organizations, fostering closer ties and identifying fresh business prospects. It is looking to go behind new opportunities in technology that will help it increase not only the top line but double its bottom line numbers. 


KP Green Engineering coming with IPO to raise upto Rs 189.50 crore
Mar-13-2024   15:23 Hrs IST

KP Green Engineering

  • KP Green Engineering is coming out with initial public offering (IPO) of 1,31,60,000 shares of Rs 5 each in a price band Rs 137-144 per equity share. 
  • The issue will open for subscription on March 15, 2024 and will close on March 19, 2024.
  • The shares will be listed on BSE SME Platform.
  • The face value of the share is Rs 5 and is priced 27.40 times of its face value on the lower side and 28.80 times on the higher side.
  • Book running lead manager to the issue is Beeline Capital Advisors.
  • Compliance Officer for the issue is Saurabh Sharma.

Profile of the company

The company manufactures fabricated and hot-dip galvanized steel products. Its diverse range of products includes Lattice Towers Structures, Substation Structures, Solar Module Mounting Structures, Cable trays, Earthing strips, Beam Crash Barriers and other infrastructure solution products aligning with its motto ‘A Company to Solve the Difficulties’. It provides in-house fabrication and Hot Dip Galvanizing facilities enabling tailormade solutions to its clients and end-to-end solutions by carrying out engineering, designing, fabrication, galvanization, and deployment. 

The company is an accredited vendor with GETCO (Gujarat Energy Transmission Corporation) and MSETCL (Maharashtra State Electricity Transmission Company) for upto 400 Kw and 220 Kw, respectively. The company operates through its manufacturing facility located at Dabhasa, Vadodara, Gujarat, fully equipped with CNC machinery and equipment. It is ISO 9001:2015 certified company, demonstrating its capabilities to delivers quality products and services to its end users, having direct relationship with reputation, customer satisfaction and long-term success. It has in-house, well equipped quality control laboratory (for pre and post-production quality checks) to meet the demanding needs of its diversified customers. It has achieved a strong and stable market position through a continued focus on evolving technologies, quality control and customer service.

The company is further planning to expand into its existing line of business along with addition of new products to its portfolio at its new manufacturing plant proposed to be set up at Matar, Bharuch. The new facility will have a capacity of more than 2,90,000 MT, a substantial increase from its current capacity of 53,000 MT at its existing plant. In addition to its product offerings, the company is planning to introduce new line of products including High Masts, Floor Gratings, Pre-Engineered Buildings and Heavy Fabrications to meet evolving market demands.

Proceed is being used for:

  • Part finance the capital expenditure towards setting up of a new manufacturing unit to expand its current production capabilities as well as expanding its current product portfolio. 
  • 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. Consequently, the steel sector has been a major contributor to India's manufacturing output. The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels. 

Production Linked Incentive (PLI) Scheme for domestic production of specialty steel has been approved with an outlay of Rs 6322 crore by the Cabinet. The scheme is set to commence from FY: 2023-24 (PLI to be released in FY: 2024-25). 57 MoUs have been finalized out of 67 applications from 30 companies which were selected under the Production Linked Incentive (PLI) Scheme for Specialty Steel. This will attract committed investment of Rs 29530 crore with a downstream capacity addition of 25 Million Tonne and employment generation potential of 70000. PM Gati Shakti Masterplan: In order to address the concerns in logistics in the Steel Sector, Ministry of Steel has onboarded itself as user of infrastructure on PM GatiShakti Masterplan by uploading the Geo locations of more than 2100 steel units functioning in the country.

Pros and strengths

Founder led company supported by a highly experienced and professional leadership team: Its Founder and Chairman, Dr. Farukbhai Gulambhai Patel founded the Company, in addition to KPI Green Energy, K.P. Energy and many other recognised KP Group companies. KP Group companies are extensively engaged in the business of renewable energy including Solar and wind renewable energy. Dr. Farukbhai Gulambhai Patel is having over fifteen years of experience in the renewable energy sector. It is also led by a Board of Directors with diverse expertise that will contribute to and participate in the organic growth of its business. In addition, many of its senior management have experience across a broad range of industries, enabling them to effectively operate the business.

Execution capabilities: Its execution capabilities are a skill set that gives the company competitive advantage over other industry players. It operates from its manufacturing facility located at Dabhasa, Vadodara having installed capacity of more than 53,000 MT per annum. As evident from ‘Capacity and Capacity Utilization’ it has increased its installed capacity in each of the last three financial years as well as current financial year to cater the need of its customers in timely manner along with growth of the company.

Consistent financial performance: It has demonstrated strong financial performance, and its total income as per Restated Standalone Financial Information has grown at a CAGR of 71.98% from Rs 3,861.32 lakh in Financial Year 2020-21 to Rs 11,420.89 lakh in Financial Year 2022-23. Driven by its strong operational capabilities, it has been able to minimize costs and achieve healthy profit margins. Its profit for the year as per Restated Standalone Financial Information has grown at a CAGR of 179.70% from Rs 158.45 Lakh in Financial Year 2020-21 to Rs 1,239.59 lakh in Financial Year 2022-23.

Risks and concerns

Dependent on few numbers of customers: Its top ten customers contribute 71.10%, 70.02%, 70.14% and 65.33% of its total revenue from operations on standalone basis for the period ended on September 30, 2023 and for financial year ended on March 31, 2023, 2022 and 2021, respectively. The company is engaged in the business of Manufacturing of fabricated and hot-dip galvanized steel products. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations.

Dependent on few suppliers: Its top ten suppliers contribute 77.75%, 69.61%, 58.78% and 65.19% of its total purchase from operations for the period ended September 30, 2023 and for the financial year ended on March 31, 2023, 2022 and 2021, respectively. It will be able to get the same quantum and quality of supplies, or any supplies at all, and the loss of supplies from one or more of them may adversely affect its purchases of stock and ultimately its revenue and results of operations.

Face competition: Competition in its business is based on pricing, relationships with customers, product quality, customisation and innovation. It faces pricing pressures from its customers who aim to produce their products at competitive costs and competitors who are able to source their raw materials at cheaper prices or are able to offer more favourable pricing terms to customers. It shall be able to meet the pricing pressures imposed by such customers which would adversely affect its profitability.

Outlook

KP Green Engineering is primarily engaged in Fabrication, Galvanizing, Fault Rectification Team, Patrolling of Optical Fiber Cables, Site Clearance Work, Solar Roof-top installation, Sale of solar electricity, EPC, Mobile tower Manufacturing and Turnkey Service Provider to Mobile and Renewable Energy Industry. On the concern side, the company is engaged in the business of Manufacturing of fabricated and hot-dip galvanized steel products. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations.

The company is coming out with an IPO of 1,31,60,000 equity shares of face value of Rs 5 each. The issue has been offered in a price band of Rs 137-144 per equity share. The aggregate size of the offer is around Rs 180.29 crore to Rs 189.50 crore based on lower and upper price band respectively. On performance front, revenue from operation increased by Rs 3,650.73 lakh being 46.98% to Rs 11,420.89 lakh for the FY 2022-2023 from Rs 7,770.16 lakh for the FY 2021-2022. Profit after tax increased significantly by 172.76% from Rs 454.46 lakh in FY ended March 31, 2022 to Rs 1239.60 lakh for the FY ended March 31, 2023. Going forward, it continues to focus on enhancing operational controls and cost efficiencies through optimal service quality & cost management. Its ability to provide timely completion of service and quality service is key to its reputation and further expansion of its business. It also continues to implement various measures aimed at incremental improvement in operational efficiencies, such as deploying more professional for providing services.

Krystal Integrated Services coming with IPO to raise upto Rs 309.13 crore
Mar-12-2024   16:18 Hrs IST

Krystal Integrated Services 

  • Krystal Integrated Services is coming out with a 100% book building; initial public offering (IPO) of 43,23,529 shares of Rs 10 each in a price band Rs 680-715 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 March 14, 2024 and will close on March 18, 2024.
  • The shares will be listed on BSE as well as NSE.
  • The face value of the share is Rs 10 and is priced 68 times of its face value on the lower side and 71.50 times on the higher side.
  • Book running lead manager to the issue is Inga Ventures.
  • Compliance Officer for the issue is Stuti Maru. 

Profile of the company

The company is one of India’s leading integrated facilities management services companies, with a focus on healthcare, education, public administration (state government entities, municipal bodies and other government offices), airports, railways and metro infrastructure, and retail sectors. It provides a comprehensive range of integrated facility management service offerings across multiple sectors, and consequently are among select companies in India that have a wide geographic presence and customer base, catering to almost all end-user segments, as on March 31, 2023. Its range of service offerings include soft services such as housekeeping, sanitation, landscaping and gardening, hard services such as mechanical, electrical and plumbing services, solid, liquid and biomedical waste management, pest control and façade cleaning and other services such as production support, warehouse management and airport management services (including multi-level parking and airport traffic management). It also provides staffing solutions and payroll management to its customers, as well as private security and manned guarding services and catering services.

The company’s strengths in the market include its ability to provide bespoke solutions for integrated facility management requirements, sourcing from OEMs at competitive prices due to excellent long-term relations, best-in-class products, and adoption of smart technology. It provides services to key government customers in the healthcare, education, airport, railways and metro infrastructure sectors, including to Maha Mumbai Metro Operation Corporation and Education Department, Brihanmumbai Municipal Corporation. It has also built expertise in catering to the healthcare, education, airport, railways and metro infrastructure sectors, due to its extensive experience, understanding the unique requirements and challenges in such sectors.

Proceed is being used for:

  • Repayment/prepayment, in full or part, of certain borrowings availed of by the company.
  • Funding working capital requirements of the company;
  • Funding capital expenditure for purchase of new machinery.
  • General corporate purposes.

Industry overview

Strong macroeconomic growth fundamentals are contributing to a steady growth in the Integrated Facility Management Market in India. In the past decade the market has witnessed solid growth except for the COVID-19 pandemic; increasing investments in Services and Manufacturing sector is expected to drive the growth momentum over the next five years. Higher FDI over the past decade, driven by liberal economic policies in India has created opportunities for private sector. Since then, the business prospects have bourgeoned in industries ranging from banking and aviation to pharmaceuticals and IT, and India has attracted large multinational companies with its business-friendly climate. The IT and ITeS sector have experienced a boom in business opportunities, which has prompted the sector to invest in construction activities to grow the stock of buildings. Additionally, the rise of organised retail developments in India have also contributed to the built environment, thereby driving the demand for Facility Management services. Real estate in India is one of the fastest growing industries with a record 68.0% year-on-year growth in CY2022 after the COVID-19 impacted market growth in CY2020 and CY2021. Renewed investment interest among non-resident Indian (NRIs) and millennials in Indian real estate is a driving factor for the future growth. Private equity investments in real estate sector from January to July 2022 stood at USD3.3 billion. Demand for office and commercial space in Tier 1 and Tier 2 cities are the future growth hot spots and this is expected to drive the demand for Facility Management services in Tier 2 cities in the long-term.

Outsourcing of Facility Management Services is becoming a well-accepted concept in both the Commercial and the Residential segment. Within the Residential segment, high-rise residential complexes and premium villas/ homes in urban areas are more inclined to outsourcing. Recently, the market has witnessed increase in outsourcing of Facility Management from the government segment. The government sector has grown at a CAGR of 10.4% during FY2018 – FY2023, higher than the 6.0% recorded by the private sector during the same period. With the increasing choice of outsourcing for safe, clean, secure, and sustainable built environment, the demand for Facility Management Services have been increasing. The market in FY2023 recorded a growth rate of 26.6% from FY2022. The market witnessed a degrowth of 26.4% in FY2021 due to the global pandemic and recovered in the second half of FY2022. Integrated services models, which combine many or all of the office/building's Facility Management Services under one contract and management team, are replacing single service contract models in the market. This shift is driven by improved building performance while streamlining communication and making day-to-day operations simpler to manage.

Pros and strengths

Comprehensive range of service offerings providing one-stop solution to customers: The company provides a comprehensive range of integrated facility management service offerings across multiple sectors, and consequently are among select companies in India that have a wide geographic presence and customer base, catering to almost all end-user segments, as on March 31, 2023. The company’s wide portfolio of services enables it to deliver a mix of its service offerings and design a range of customized solutions suited to the specific needs of its customers, which bolsters its customer acquisition and retention capabilities. Additionally, as its customers’ requirements grow or change, it is able to provide additional services to cater to their needs. Under its integrated facilities management offerings, it provide soft services such as housekeeping, sanitation, landscaping and gardening, hard services such as mechanical, electrical and plumbing services, solid, liquid and biomedical waste management, pest control, façade cleaning and other services such as production support, warehouse management and airport management services (including multi-level parking and airport traffic management). It also provides private security and manned guarding services to its customers, as well as staffing solutions and payroll management and catering services.

Focused business model which is well-positioned to capture favourable industry dynamics: The company has a track record of executing large contracts and are among select companies in India to qualify for and service large, multi-location government projects. Recently, the integrated facility management services market in India has witnessed increase in outsourcing of facility management from government segment. The government sector is prioritizing quality and service delivery for their clients and in order to achieve higher customer satisfaction, the sector is seeking out professional companies for Facilities Management. It has also built expertise in catering to the healthcare, education, airport, railways and metro infrastructure sectors. As on September 30, 2023, it provided its services to 135 hospitals and medical colleges, 228 schools and colleges (other than medical colleges), one airport, four railway stations and 30 metro stations, along with catering services on certain trains/ train routes. 

Longstanding relationship with customers across diverse sectors, with recurring business: The company’s ability to maintain quality standards while consistently expanding its service offerings to meet evolving industry requirements has resulted in longstanding relationships with its key customers. Four of its top 10 customers, based on revenue generated in Fiscal 2023, have been associated with it for longer than 10 years. During Fiscals 2021, 2022 and 2023 and six months ended September 30, 2023, other than government contracts which are awarded through competitive bidding process, all relevant customers whose contracts were expiring during the respective financial year, either renewed or extended their contracts with it. The company’s effort to develop a consultative, long-term partnership model of service delivery has enabled it to not only effectively capitalize on such customers’ increasing service requirements, but also increase its market share and reduce the revenue and earnings uncertainty associated with the short-term nature of most of its contracts with nongovernment customers. 

Wide geographic presence with large and efficient workforce: The company’s wide geographic presence enables it to recruit, train and deploy resources at various customer locations within a short span of time and enables it to respond to changing customer requirements, efficiently and effectively. This presence also allows it to monitor the work of its employees at various customer locations and to administer to the needs of its employees quickly and in a manner relevant to them, keeping local requirements in mind. Its personnel recruitment and training initiatives drive quality assurance, and ensure that it deliver uniform satisfactory services to its customers across locations. It has a strong track record of high employee satisfaction and improving retention rates.

Risks and concerns

Highly dependent upon limited number of customers: The company is significantly dependent on certain key customers for a significant portion of its revenue. The loss of any one of its key customers, including its top customer, for any reason (including, due to loss of contracts, unsuccessful tender bid for government contracts, or failure to negotiate acceptable terms in contract renewal negotiations, disputes with customers, adverse change in the financial condition of such customers, including due to possible bankruptcy or other financial hardship, merger or decline in their operations, reduced or delayed customer requirements, shutdowns, labour strikes or other work stoppages), could have an adverse effect on its business, results of operations and financial condition. While, the company is in the process of bidding for the tender for the subsequent period, there can be no assurance that it will be successful in its bid or be able to further extend the contract. While it strives to maintain good relations with its key customers, there is no assurance that its key customers will continue to avail its services in the future. There can be no assurance that it will not lose all or a portion of its business generated by these key customers, or that it will be able to offset any reduction of prices to these customers with reductions in its costs or by obtaining new customers.

Significant part of revenue generated from government contracts: A significant portion of the company’s business is dependent on government contracts. These contracts are typically awarded through a competitive bidding process and are typically valid for a term of three years, renewable for an additional year by mutual consent and terminable, with written consent, by either party. Its ability to bid for these contracts depends on it meeting the prescribed prequalification criteria or eligibility criteria which may vary depending on the nature of size of the contract. If the company is able to qualify for the bid on the specified parameters, it then competes with other interested bidders on, among other things, pricing, track record and experience. There can be no assurance that it would be able to successfully bid for such contracts, or at all. In addition, the bidding and selection process for any government contract is affected by a number of factors, including factors which may be beyond its control, such as market conditions or government budget allocations.

Dependent on vendors for supply of equipment and products: The company does not have any manufacturing facilities and procure its products and equipment, such as safety equipment, chemicals and consumables, from various vendors for the various services and solutions that it offers. It is therefore dependant on third parties for the manufacture of such products and equipment, and maintenance of adequate inventory to ensure that it is able to procure such products and equipment based on supply necessities. While it has not faced any instances of failures by vendors to meet their obligations in Fiscals 2021, 2022 and 2023 and the six months ended September 30, 2023, the operations of its vendors remain subject to various operating risks, including some which are beyond their control, which may include breakdowns and failure of equipment, industrial accidents, employee unrest, import duties, the outbreak of infectious diseases such as COVID-19, natural disasters, among others. It may face delays in procurement and added costs as a result of the time required to on-board new vendors to undertake manufacturing in accordance with its standard processes and quality control standards. 

Requires significant amounts of working capital: The company is required to incur certain upfront costs to be able to provide services to its customers from the beginning of the contracted period. These include costs towards manpower, materials, and machine required from the first day of commencement of such contract. The salary and employee-related statutory payments which are due on the day of completion of the deployed month, are also required to be paid. As it typically invoices its customers on a monthly basis, such cash outflows are borne upfront by it, prior to any receipt of payment from its customers. The invoices become due and payable only after accounting for the agreed credit period from the date of the invoice, as per the terms of the respective contracts, which is typically received within 100 days. Its business requires significant amount of working capital, primarily due to the time period that typically elapses between it incurring such upfront costs and receipt of payments from its customers. 

Outlook

Krystal Integrated Services is one of India’s leading integrated facilities management services companies. It offers a wide range of services such as housekeeping, sanitation, landscaping, gardening, mechanical, electrical and plumbing services, waste management, pest control, façade cleaning, and other services such as production support, warehouse management, and airport management. The wide range of its integrated facility management services segment allows it to provide a bundled solution of services to each customer, tailored to its specific needs and requirements, making it a one-stop integrated solution for customers. As on September 30, 2023, the company serviced customer locations in 16 states and two union territories in India. It has also set up 21 branch offices across India, as on September 30, 2023, to expand its geographical reach. Its wide geographic presence enables it to offer services to customers who prefer a single service provider for their operations at multiple locations. On the concern side, a significant portion of the company’s revenue from operations are derived from its services offered to customer locations in Maharashtra and Tamil Nadu. Any decrease in revenue from Tamil Nadu and Maharashtra, including due to increased competition or supply, or reduction in demand, or its inability to extend or renew subsisting contracts at commercially viable terms, may have an adverse effect on its business, cash flows, results of operation and financial condition. 

The company is coming out with an IPO of 43,23,529 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 680-715 per equity share. The aggregate size of the offer is around Rs 294.00 crore to Rs 309.13 crore based on lower and upper price band respectively. On performance front, the company’s total income increased by Rs 1,561.08 million, or by 28.13%, from Rs 5,548.57 million in Financial Year ended March 31, 2022 to Rs 7,109.65 million in Financial Year ended March 31, 2023. Its restated profit from continued operations after taxes for the year increased by Rs 129.36 million, or by 62.09%, from Rs 208.35 million in Financial Year ended March 31, 2022 to Rs 337.71 million in Financial Year ended March 31, 2023. Meanwhile, the company intends to capitalize on the expected growth in the relevant markets owing to its track record and its ability to effectively undertake its services, by targeting not only its existing customers, but also new customers. It also aims to leverage its wide range of offerings and presence to offer bundled services to each customer across regions, thereby acting as a one-stop integrated solution for customers who consequently would not need to engage with multiple vendors or service providers, leading to increased wallet share from its customers.

AVP Infracon coming with IPO to raise upto Rs 52.34 crore
Mar-11-2024   19:20 Hrs IST

AVP Infracon

  • AVP Infracon is coming out with initial public offering (IPO) of 69,79,200 shares of Rs 10 each in a price band Rs 71-75 per equity share. 
  • The issue will open for subscription on March 13, 2024 and will close on March 15, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 7.10 times of its face value on the lower side and 7.50 times on the higher side.
  • Book running lead manager to the issue is Share India Capital Services.
  • Compliance Officer for the issue is Priyanka Singh.

Profile of the company

The company is a dynamic private sector firm involved in the construction of road projects based on Bill of Quantities (BOQ) and Engineering, Procurement, and Construction (EPC) methods. The company is engaged in the business of construction and transacts the business to construct, build, alter, acquire, convert, improve, design, erect, establish, equip, develop, dismantle, pull down, level, decorate, fabricate, reconstruct, renovate, remodel, rebuild all types of infrastructure developmental works, constructions works such as technically complex and high value projects like Express ways, National Highways, Flyovers, Bridges and Viaducts, Irrigation Projects, Urban Development - Civic amenities, Hospitals, warehouses, hotels and other Commercial and Residential Projects. It has in-house capabilities to deliver a project from conceptualization to completion with fast turnaround time from acquisition to launch to completion, which focuses on de-risking and improving return on investment. 

AVP Infracon was incorporated in 2009 with a vision to become a leading infrastructure development company in India. In the last decade, it has excelled in diverse projects, including government contracts and national initiatives, earning its reputation as a trusted construction firm in the nation. The Company has 14 years of experience in the business and have more than 100 experienced employees (including contractual) working towards achieving the goal the company. 

It bids for construction of Roads, Bridges, Irrigation and Canal Projects, Flyovers, Industrial Areas, majorly based in the state of Tamil Nadu. It has in-house capabilities to deliver a project from conceptualization to completion with fast turnaround time from acquisition to launch to completion, which focuses on de-risking and improving return on investment. Since incorporation, it has constructed well known roads and national highways such as construction of road over bridge, construction and widening of culvert, construction of drains, improvements and rebuilding of highways, construction of retaining walls on government roads and flyovers.

Proceed is being used for:

  • Purchasing capital equipment 
  • Meeting working capital requirements 
  • General corporate purposes
  • Meeting public issue expenses

Industry overview

India's trajectory towards robust growth in 2023 and beyond hinges significantly on substantial advancements in crucial sectors, with a pivotal role played by the development of infrastructure. Infrastructure serves as a key facilitator in propelling India toward achieving a formidable $26 trillion economy. The Indian economy’s main growth engine is the infrastructure sector. The Government of India (GoI) gives highest priority on its development to guarantee the country’s overall development. Investments directed towards constructing and enhancing physical infrastructure, particularly in harmony with initiatives promoting the ease of conducting business, stand as a critical factor for boosting efficiency and cost-effectiveness. Prime Minister Narendra Modi has recently underscored the indispensable nature of infrastructure as a pillar for ensuring effective governance across sectors. 

In the fiscal year 2023-24 budget, there's a substantial 33% increase in the capital investment outlay for infrastructure, reaching Rs 10 lakh crore, equivalent to 3.3% of the GDP. Notably, the Railways receive a record capital outlay of Rs 2.40 lakh crore, about nine times the outlay in 2013-14. The National Infrastructure Pipeline (NIP) began with 6,835 projects and now encompasses 9,142 projects across 34 sub-sectors. In this initiative, 2,476 projects are in the development phase with an estimated investment of $1.9 trillion. Almost half of these projects are in the transportation sector, with 3,906 focusing on roads and bridges. The Indian Railways anticipates total revenue from traffic to reach Rs 2,64,600 crore  for FY24.

India is on a trajectory to achieve its ambitious economic growth target of reaching $5 trillion by 2025, but this goal necessitates a substantial improvement in the country's infrastructure. To accommodate the growth in population and economic activities, there is a crucial need for enhanced transportation infrastructure, including investments in roads, railways, aviation, shipping, and inland waterways. The government is actively advocating for a $750 billion investment to fortify railway infrastructure and has introduced the Maritime India Vision 2030, envisioning substantial investments in world-class infrastructure at Indian ports.

Pros and strengths

Strong order book of roads, bridge and flyovers from state government: Its primary focus on roads, bridges, flyovers and irrigation projects has helped it in gaining technical expertise for undertaking such projects of different sizes involving varying degree of complexities establishing modern fleet of construction machinery, equipment and skilled manpower. The company has total 14 projects worth around Rs 23,543.83 lakh including 12 on-going projects worth around Rs 20,188.91 lakh, and 2 additional projects worth around Rs 3,421.34 lakh wherein AVP Infracon becomes L1, suggesting its strong order book.

Quality assurance: The company is dedicated towards quality of its products, processes and input raw material. It adheres to quality standards as prescribed by its customers to meet the desired result; hence it gets repetitive orders from its buyers. Delivering Quality products on time is one of its prime objectives. It dedicates resources for quality assurance to ensure that quality norms are continually met. It also has quality control checks before any consignment of Raw material is accepted since it has a direct impact on the quality of Finished Product. After manufacturing, the products are also carefully inspected and evaluated on various parameters.

Experienced management team: Its management team is well qualified and experienced in the Roads, Bridge and Irrigation projects construction and has been responsible for the growth of its business and operations. Its Promoter has cumulative experience of more than 55 years in the infrastructure development sector and has been instrumental in driving its growth since inception of its business. Its dynamic management team, along with key personnel, is highly motivated and works synergistically with its internal systems and processes.

Risks and concerns

Huge labor workforce required: Its projects rely on having a workforce, and its ability to keep workers. If it can't find or retain enough workers, it could negatively impact its business. It can't guarantee that it will be able to continue with the same workforce or on favorable terms. Any such failure could affect its operations, business processes and profits. Additionally, recent changes in labor laws in India might increase its costs related to compliance, wages, social security and workplace safety. It can't guarantee that it will always comply with these laws, and as its business grows, its labor and employee costs, along with operational expenses, might significantly increase. While its employees are currently not part of a union, there's no assurance they won't seek unionization in the future. If they do, it could make it challenging for it to maintain flexible labor policies, potentially increasing costs and negatively affecting its business.

Operations rely on third-party transportation providers: It operates in the construction sector, specializing in design and execution of residential and commercial projects. The success of its endeavors is contingent upon the seamless procurement and transportation of raw materials essential for commercial project processes, originating from manufacturers and reaching its project sites. This supply chain is inherently exposed to diverse uncertainties and risks. Furthermore, the transit of raw materials is susceptible to potential losses or damages arising from accidents or natural disasters. Delays in the delivery of raw materials also pose a risk, potentially impacting its business and operational outcomes negatively. The inability to sustain uninterrupted and efficient supply of raw materials may exert a material and adverse influence on its business, financial condition, and operational results.

Working capital requirement: Its operational model relies significantly on ample working capital base, contingent upon specific assumptions. Any alterations to these assumptions would consequently impact its working capital requirements. A substantial portion of its working capital is earmarked for procuring or manufacturing materials, resource mobilization, and other project-related activities before realizing payments from clients. Due to the extended and intricate bidding and selection process inherent in the contracts it pursue, influenced by numerous factors, predicting the award and subsequent mobilization timeline for a specific bid is inherently challenging. This uncertainty may necessitate incurring additional indebtedness in the future to fulfill its working capital needs. Additionally, its ability to raise funds, either through equity or debt, is constrained by certain legal restrictions under Indian law. If the demand for, or supply of, infrastructure financing at attractive rates or terms diminishes or ceases to exist, its business, prospects, financial condition, and operational results could be adversely affected.

Outlook

AVP Infracon is a dynamic private sector firm involved in the construction of road projects based on BOQ and EPC methods. The company is engaged in the business of construction and transacts the business to construct, build, alter, acquire, convert, improve, design, erect, establish, equip, develop, dismantle, pull down, level, decorate, fabricate, reconstruct, renovate, remodel, rebuild all types of infrastructure developmental works, constructions works such as technically complex and high value projects like Express ways, National Highways, Flyovers, Bridges and Viaducts, Irrigation Projects, Urban Development - Civic amenities, Hospitals, warehouses, hotels and other Commercial and Residential Projects. On the concern side, it encounters intense competition in the competitive bidding landscape, both from domestic and international companies, particularly in the infrastructure projects sector in India. Foreign companies often collaborate with domestic counterparts to participate in these projects, creating a competitive environment.

The company is coming out with an IPO of 69,79,200 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 71-75 per equity share. The aggregate size of the offer is around Rs 49.55 crore to Rs 52.34 crore based on lower and upper price band respectively. On performance front, revenue from operations for the period ended March 31, 2023, stood at Rs 10,633.56 lakh whereas in Financial Year 2021-22 it stood at Rs 6,388.85 lakh representing an increase of 66.44%. Revenue from operation increased primarily because of increase in sales as compared to previous financial year. Restated profit after tax increased significantly by Rs 753.20 lakh from Rs 399.43 lakh in FY ended March 31, 2022 to Rs 1,152.63 lakh for the FY ended March 31, 2023. Going forward, it intends to bid and execute projects larger than what it is doing currently with various authorities individually and as well as by entering into Joint venture agreements with Other major Players in the Roads, Bridges Water supply Board Segment of the infrastructure industry in the future. Besides it seeks to focus on enhancing its in-house competencies by expanding into various functional aspects of projects thereby eliminating dependency on third parties.

Royal Sense coming with IPO to raise upto Rs 9.86 crore
Mar-11-2024   16:31 Hrs IST

Royal Sense

  • Royal Sense is coming out with an initial public offering (IPO) of 14,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 68 per equity share. 
  • The issue will open for subscription on March 12, 2024 and will close on March 14, 2024.
  • The shares will be listed on BSE SME Platform.
  • The share is priced at 6.80 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Expert Global Consultants.
  • Compliance Officer for the issue is Priyanka Bhutani.

Profile of the company

Royal Sense is suppliers of high quality goods that meet international standards required for hospitals, laboratories, institutions and clinics to provide health services. It trades and offers a wide range of surgical accessories, tools, equipment and other things. The supplied assortment can be modified according to the requirements of the clients and is offered in a wide range of parameters. It works relentlessly with the right strategy, forward thinking and progressive ethos to position ourselves as the one-stop solution for customers looking to meet their complete needs for medical equipment, surgical instruments, surgical consumables, laboratory equipment, laboratory reagents, medical consumables, diagnostic equipment, sanitary napkins, pharmaceuticals, medicine and cosmetics.

Its promoter was appointed as the managing director of the company and has been taking care of the overall operation and key business decisions of the company since then. With its absolute commitment to quality, careful attention and level of services. Currently In addition, it works tirelessly, which positions it as a one-stop solution for customers to meet their complete requirements for medical equipment, surgical instruments, surgical consumables, laboratory equipment, laboratory reagents, disposable medical supplies and diagnostic kits. It has extended its supply chain to government e-procurement systems, i.e. tender systems, GEM Portal etc. It supplies its products to the Ministry of Health of Various states like Uttar Pradesh, Himachal Pradesh, Rajasthan, Jammu & Kashmir and in domestic by its self or through distributors/ sub-distributors. It also supply to both to Govt. Institutions and private hospitals in all over India.

Proceed is being used for:

  • Working capital requirement 
  • General corporate purposes
  • Issue expenses

Industry overview

Healthcare has become one of India’s largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services, and increasing expenditure by public as well as private players. India's competitive advantage lies in its large pool of well-trained medical professionals. India is also cost-competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe. The low cost of medical services has resulted in a rise in the country’s medical tourism, attracting patients from across the world. Moreover, India has emerged as a hub for R&D activities for international players due to its relatively low cost of clinical research.

The Indian market for medical equipment is predicted to increase to $50 billion by 2025. As of 2020, the medical devices market is estimated to be at $12 billion in India. India is the 4th largest Asian medical devices market after Japan, China, and South Korea, and among the top 20 medical devices markets globally. India has an overall 75-80% import dependency on medical devices. Export of medical devices from India stood at $2.90 billion in FY22. The US, Germany, China, Brazil, Iran, etc. are a few key countries that import Indian medical devices. Gujarat, Maharashtra, Karnataka, Haryana, Andhra Pradesh, Telangana and Tamil Nadu are the manufacturing hubs for medical devices in India. In Bio Asia 2021, key stakeholders in the panel discussion on medical technologies stated that India would become self-sufficient in domestic medical devices manufacturing by 2025-26. 

The Government has allowed 100% FDI under the automatic route for both Brownfield and Greenfield setups in the sector is expected to boost the industry. Strong FDI inflows also reflect confidence among global players on the Indian medical devices market. Over the last five years (2015-20), India received $600 million, with key investments from countries such as Singapore, the US, Europe and Japan. Categories such as equipment and instruments, consumables and implants have attracted the most FDIs. From April 2000-September 2022, FDI inflow in the medical and surgical appliances sector stood at $2.74 billion.

Pros and strengths

Existing well established reputation and customer relationships: It focuses on maintaining long term cordial business relationship with most of its customers. Its key customers majorly include (i) hospitals and diagnostic centers; (ii) Distributors and dealers and (iii) independent doctors. It sells some of its products under registered brand name ‘STERGIC’ having exclusive Distributors right. 

Offers a diversified range of products: It has a diversified product portfolio of medical equipment’s and disposables catering to renal care solution, cardiovascular disease, respiratory disease, Critical Care and Radiology and surgical disposables. It deals in a wide range of products, which enables it to cater to a widespread customer base across India. The collaboration, agreements or authorizations awarded to the company for equipment’s or disposables has endowed with greater exposure and opportunity to benefit from large consumer market in India.

Quality assurance and safety of products: The quality is a pre-requisite for a positive consumer experience and long-term brand loyalty. This philosophy has formed the foundation of the expansion and diversification of its product portfolio since its inception. It has been in the business of supplying medical equipment’s and disposables since 2015 and has successfully ventured and supplied quality products to its customers. For products which are sourced by company from third party suppliers, it has a dedicated sourcing team and quality assurance team, which closely monitor the quality of such products.

Risks and concerns

Rely on suppliers for medical devices and equipment manufacturers: It relies on suppliers for traded goods like Medical Equipments, Surgical Instruments Surgical Consumables, Laboratory Equipment, Laboratory Reagents, Medical Disposables, Diagnostic equipment etc., with whom it generally do not enter into any long-term supply contact or agreements. The order for the goods placed on requirement basis. In the event that, there are any delays or disruptions in the supply of these goods from its suppliers, its ability to deliver the products may be affected. Any of its supplier’s failure to adhere to agreed timelines, whether due to their inability to comply with, or obtain, regulatory approvals, or otherwise, may result in delays and disruptions to its sales, increased costs, delayed payments for its products and damage to its reputation leading to an adverse effect on its results of operations.

Dependent on few numbers of customers and suppliers: Its top 10 customers contribute to 95.40% of its revenue from operations for the period ended June 30, 2023 and its top 10 suppliers contribute to 97.12% of its purchases for the period ended June 30, 2023. The loss of a significant client or supplier would have a material adverse effect on its financial results. Furthermore, major events affecting its clients, such as bankruptcy, change of management, mergers and acquisitions could adversely impact its business. If any of its major clients becomes bankrupt or insolvent, it may lose some or all of its business from that client and its receivable from that client would increase and may have to be written off, adversely impacting its income and financial condition.

Geographical constrain: Its business operated in one area i.e. Delhi NCR. As a result, any localized social unrest, natural calamities, distress or breakdown of services and utilities in and around this region, could have material adverse effect on its business, financial position and results of operations. Further, any continuous addition of similar industries/competitors in and around these areas, without commensurate growth of its infrastructural facilities may put pressure on the existing infrastructure and also increase competition in the area, which may affect its business and results of operation.

Outlook

Royal Sense is suppliers of high quality goods that meet international standards required for hospitals, laboratories, institutions and clinics to provide health services. It trades and offers a wide range of surgical accessories, tools, equipment and other things. The supplied assortment can be modified according to the requirements of the clients and is offered in a wide range of parameters. On the concern side, it operates in a competitive atmosphere with multiple few organized competitors and multiple unorganized customers. In organized peers Orion Sutures India. Some of its competitors may have greater resources than those available to the company. It faces fair competition from both organized and unorganized players in the market.

The company is coming out with an IPO of 14,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 68 per equity share to mobilize Rs 9.86 crore. On performance front, revenue from operations has increased by 71.36% to Rs 1,156.46 lakh for financial year 2022-23 from Rs 674.86 lakh for the financial year 2021-22. Profit after tax of the company jumped by 503.39% at Rs 131.78 lakh for financial year 2022-23 as compared Rs 21.84 lakh for the financial year 2021-22. Going forward, the company intends to focus on adhering to the quality standards of the products. Quality of the product is very important for the company from both customer point of view and regulatory point of view. Continuous quality review of products and timely corrective measures in case of quality diversion are keys for maintaining quality standards of the products. Providing the desired and good quality products help it in enhancing customer trust and maintaining long term relationships with customers. But the focus to meet quality standard is essential to obtain repeat orders.


Popular Vehicles and Services coming with IPO to raise upto Rs 615.06 crore
Mar-08-2024   15:19 Hrs IST

Popular Vehicles and Services 

  • Popular Vehicles and Services is coming out with a 100% book building; initial public offering (IPO) of 2,08,49,614 shares of Rs 2 each in a price band Rs 280-295 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 March 12, 2024 and will close on March 14, 2024.
  • The shares will be listed on BSE as well as NSE.
  • The face value of the share is Rs 2 and is priced 140 times of its face value on the lower side and 147.50 times on the higher side.
  • Book running lead managers to the issue are ICICI Securities, Nuvama Wealth Management and Centrum Capital.
  • Compliance Officer for the issue is Varun T.V. 

Profile of the company

The company is a diversified automobile dealership in India in terms of revenue as of Fiscal 2023, having a fully integrated business model. The company caters to the complete life cycle of vehicle ownership, right from the sale of new vehicles, servicing and repairing vehicles, distributing spare parts and accessories, to facilitating sale and exchange of pre-owned vehicles, operating driving schools and facilitating the sale of third-party financial and insurance products. It categorises its automobile dealership business into three key segments, namely, (a) passenger vehicles including luxury vehicles, (b) commercial vehicles and (c) electric two-wheeler and three-wheeler vehicles.

The company operate (a) passenger vehicle dealerships covering economy, premium and luxury vehicles across its dealerships for the following OEMs: (i) Maruti Suzuki India (Maruti Suzuki) for both Arena and Nexa, through the Company, (ii) Honda Cars India (Honda) through its Subsidiary, VMPL, and (iii) Jaguar Land Rover India (JLR) through its Subsidiary, PAWL; (b) commercial vehicle dealerships of (i) Tata Motors (Tata Motors (Commercial)), through its Subsidiary, PMMIL and (ii) Daimler India Commercial Vehicles (BharatBenz), through its Subsidiary, PMPL; and (c) electric three-wheeler vehicle dealership of Piaggio Vehicles, including commercial and cargo vehicles (Piaggio), through its Subsidiary, KGPL and electric two-wheeler vehicle dealership of Ather Energy (Ather), through its Subsidiary, KCPL.

Proceed is being used for:

  • Repayment and/or pre-payment, in full or part, of certain borrowings, availed by the company and certain of its Subsidiaries, namely, PAWL, PMMIL, KGPL, KCPL and PMPL.
  • General corporate purposes.

Industry overview

The auto industry, a key contributor to the Indian economy, has grown by leaps and bounds over the years. In fact, its contribution to India’s GDP increased from 2.8% in fiscal 1993 to ~7.1% currently. The industry employs over 19 million people directly and indirectly, according to the Ministry of Information and Broadcasting report, 2023. India is one of the largest auto markets in the world, with annual domestic sales of over 20 million vehicles. Domestic sales reached a high of 27 million in fiscal 2019, backed by favourable macroeconomic growth, rising consumption, favourable rural demand, as well as healthy demand from end-use sectors. However, domestic sales fell 17.7% in fiscal 2020 amid slowdown in GDP growth as well as inventory correction for Bharat Stage-VI (BS-VI) upgradation. The Covid-19 pandemic also hit the automotive industry hard, and sales dropped 12% on an already low base of fiscal 2020 to 19.5 million in fiscal 2021. Resurgence of Covid cases in a much severe form hit the domestic market in fiscal 2022, exerting pressure on auto sales. Fiscal 2023 witnessed normalisation in market operations, reopening of schools/colleges/offices, improvement in macroeconomic scenario, easing out of supply issues, which helped the industry clock 20% growth on a low base of 3 years of consecutive contractions.

The domestic auto industry is dominated by the two-wheeler segment (more than 70% of the industry). Two-wheeler sales were on a growth trajectory until fiscal 2019, led by a robust rural economy supported by a good monsoon. Demand started slowing after fiscal 2019, because of falling private consumption along with a hike in prices. It slowed in fiscal 2020, due to tapering in economic growth as well as inventory adjustment owing to the BS-VI migration. The pandemic and the attendant nationwide and local lockdowns to contain it led to a steeper fall in domestic sales in fiscals 2021 and 2022 and, thus, contracting the share of two-wheelers in the overall auto sales. From this low base, the industry clocked healthy growth in fiscal 2023, led by pentup demand, improved macroeconomic scenario, revival of scooter demand with reopening of colleges and offices, as well as improvement in vehicle supply. Other segments such as PVs, CVs, and three-wheelers recorded a much faster revival last fiscal, exerting further pressure on the share of two-wheelers. PVs, the second largest contributor to domestic sales, witnessed growth till fiscal 2019, driven by expansion in the addressable market, increase in disposable income, development of infrastructure, and stable cost of vehicle ownership even as crude oil prices remained subdued. Lower private consumption, inventory adjustment on the back of new emission norms, and the liquidity crisis caused a significant drop in sales in fiscal 2020. The fall was exacerbated by the onset of the pandemic, resulting in a steep decline in demand in fiscal 2021. 

Pros and strengths

Long standing presence in automobile industry and well-established relationships with leading OEMs: The Kuttukaran Group entered the automobile industry in 1953 with the commencement of the automobile spare parts and accessories business. The company has since forayed into the automobile dealership business by partnering with various leading OEMs. Maruti Suzuki and Honda represented approximately 41% and 2% of the passenger vehicles market share in India in Fiscal 2023, respectively. Tata Motors (Commercial) represented 40% of the commercial vehicles market share in India in Fiscal 2023. Piaggio and Ather represented 27% and 11% of electric three-wheeler and electric two-wheeler vehicles market share (retail sales) in India in Fiscal 2023, respectively. It set up the first Maruti Suzuki showroom in Trivandrum, Kerala in 1984 under the ‘Popular’ brand. It has since then strategically expanded its dealership network across the value-chain, from economy to premium to luxury vehicles, by partnering with Honda and JLR in 2008 and 2010, respectively, and subsequently partnering with Ather and Piaggio in 2021. It also entered the commercial vehicle dealership space in 1997 by partnering with Tata Motors (Commercial). It has further diversified its operations within the automobile dealership space by commencing its spare parts and accessories distribution business in 2005. Its long-term association with its OEMs and its strong business capabilities have resulted in it becoming a valued partner of these OEMs. Further, it has been able to form new dealership associations with commercial vehicle manufacturers such as BharatBenz.

Penetration in markets in which the company operates complemented by innovative marketing strategies: The company has a deep penetration in semi-urban and rural areas in the states it operates in, which is attributable to several innovative models adopted by it including the ‘hub and spoke’ model in respect of Maruti Suzuki and Tata Motors (Commercial) dealerships in Kerala, wherein its showrooms serve as a “hub” to its sales outlets and booking offices located in small towns and rural areas under the showroom. Its sales outlets and booking offices are typically operated out of smaller premises showcasing one or more vehicle models and are each managed by designated sales representatives with all other operational support being provided by its showrooms. Its showrooms, sales outlets and booking offices are present in almost all district of Kerala. It has 113 sales outlets and booking offices spread across 14 districts in Kerala, which significantly contributes towards increasing its brand recall among potential buyers across the state of Kerala. It has also introduced innovative marketing strategies to improve customer engagement and increase footfalls at each of its showrooms, sales outlets and booking offices and service stations. It has dedicated online portals through which customers can browse through its offerings, make bookings and book test drives. It organises regular customer meets, print advertisements and online contests that adds to its brand recall.

Fully integrated business model leading to business stability and higher margin: The company’s diversified automobile dealerships and a fully integrated business model contributes to its position as a leading automobile dealership player. In addition to benefiting from the inherent synergies arising out of its business verticals, its diversified income streams also contribute to higher profitability margins at its dealerships. Its PAT increased from Rs 324.55 million in Fiscal 2021 to Rs 640.74 million in Fiscal 2023. Further, it has marked an increase in its revenue from sales due to an increase in the sales of Nexa vehicles in Fiscal 2023. Increasing demand and sales of electric vehicles and a consistent growth in the sale of electric two-wheeler and three-wheeler vehicles, in India in Fiscal 2023, has also contributed significantly towards its growth. In Fiscal 2023, it has also entered into an arrangement with Kochi Metro Rail, a joint venture of the Government of India and the Government of Kerala, for the sale of electric three-wheeler vehicles for convenient transportation of their employees within the state. It offers fully integrated services through its authorised service centres that contribute to higher-margin revenues at each of its dealerships and helps mitigate the cyclicality that has historically impacted some elements of the automobile sector.

Proven ability to identify and capture inorganic as well as organic growth opportunities: As part of the company’s strategic plan to expand its business into other territories and states, it acquired the entire operations of a sizeable spare parts distributor in Karnataka, in Fiscal 2019, which helped it gain established business channels and a steady foothold in Karnataka. The business division acquired by it contributed to a total turnover of Rs 174.60 million and contributed to 12.02% of its total turnover and 7.26% of the total EBITDA of the Company during the six months period ended September 30, 2023. It took over eleven service centres and two showrooms from a dealer for Maruti Suzuki in Kerala in 2021. Further, as of July 31, 2023, it acquired 8 showrooms, 17 service centres and 3 sales outlets and booking offices for BharatBenz in Tamil Nadu and Maharashtra. Such strategic acquisitions were made considering the consequent geographic and dealership addition to its business operations. Post such acquisitions, it carries on the business under its own brand name. It has successfully been able to integrate the businesses acquired through such strategic acquisitions. It has also achieved organic growth by identifying underserved locations, including through consultation with OEMs, and by setting up new outlets in such areas. It has added 22 showrooms, 23 sales outlets and booking offices and 47 service stations across all its dealerships from Fiscal 2021 to Fiscal 2023.

Risks and concerns

Subject to significant influence of OEMs: The company operates the passenger vehicle dealerships of Maruti Suzuki, Honda and JLR, commercial vehicle dealership of Tata Motors (Commercial) and BharatBenz and electric two-wheeler and three-wheeler vehicle dealership of Ather and Piaggio, respectively. It has entered into dealership agreements with various OEMs in order to operate its dealerships and spare parts and accessories distributions business. Pursuant to the terms of the dealership agreements, the OEMs are able to exert influence over the day-to-day operations of its dealerships. For instance, the OEMs may unilaterally discontinue associations with vendors where it might have entered into long term contracts and made advance payments to such vendors for services. The OEMs are also entitled from time to time to prescribe the minimum requirements and specifications that each of its showrooms and service centres are required to adhere to which may require significant capital expenditure from time to time. For instance, it is subject to numerous operational requirements and restrictions relating to inventory levels, working capital levels, the sales process, marketing and branding, showroom and service facilities, signage, personnel, changes in management, technology implemented and monthly financial reporting, obtaining accreditation from the respective OEMs for the operation of service centres in the names of the OEMs, among other things. 

Increasing competition among automotive dealerships: Automobile selling is a highly competitive business. The company’s competitors include private and public companies, some of whom may be larger with access to greater financial and marketing resources than it. Its competitors sell the same or similar makes of new and pre-owned vehicles that it offers in its markets at competitive prices. Further, it operates in the automobile dealership industry which has witnessed low PAT margins in the past. Its competitors may align themselves with services offered on the internet or invest in the development of their own internet capabilities. The company only sources customer queries online and it does not operate separately in the online market. In addition, its dealership agreements do not grant it the exclusive right to sell vehicles manufactured by the OEMs within a given geographic area. Its revenues or profitability could be materially adversely affected if any of the OEMs award dealerships to others in the same markets where it operates or if existing dealerships increase their market share in its markets. Its OEMs could in certain cases set up their own dealerships in the markets in which it operates. Further, its revenues may also be impacted on account of expansion of dealerships of competing brands of vehicles in the markets in which it operates.

Rely on independent contractors and third party customer service providers: The company utilizes independent contractors to execute certain ancillary services such as security services and housekeeping. Further, it also outsources some of its services to third party customer service providers. The timely execution of these services depends on the availability and skill of these contractors, as well as contingencies affecting them, including labour shortages due to various reasons including the COVID-19 pandemic and industrial action such as strikes and lockouts. If a contractor fails to perform its obligations satisfactorily or within the prescribed time periods with regard to payment to its labour, it shall be liable to perform their obligations and restore the due amount to labour which could result in reduced profits or, in some cases, significant penalties and losses which it may not be able to recover from the relevant independent contractor. Since it utilize third-party service providers, it cannot control all of the factors that might affect the quality and fulfilment of these services and products.  

The company’s vehicle sales impacted by incentive, marketing, and other programs of the OEMs: The company’s OEMs establish various marketing and sales incentive programs from time to time, designed to increase consumer demand for their vehicles, particularly during Indian festivals or periods of excess supply and/or in a flat or declining new or pre-owned vehicle market. These programs impact its operations, particularly its sales margins of new vehicles. Since these programs are often not announced in advance, they can be difficult to plan for when budgeting for inventory. Furthermore, OEMs may modify or discontinue these marketing and incentive programs from time to time depending on various factors which could have a material adverse effect on its results of operations and cash flows. Its business is also dependent on customers’ perception of its OEM’s brands and marketing campaigns. Any negative public sentiment towards a particular OEM or its marketing campaigns could also have a bearing on its financial condition and results of operations.

Outlook

Incorporated in 1983, Popular Vehicles and Services is engaged in the business of automobile dealerships in India. The company provides complete services throughout the life cycle of vehicle ownership, including sales of new and preowned vehicles, servicing, spare parts distribution, driving schools, and third-party financial and insurance product sales.  The company’s presence across vehicle categories, including passenger vehicles, commercial vehicles, and electric two-wheeler and three-wheeler vehicles, further diversifies its revenue streams. The experience, and diversity of its management team and its Promoters and the long-standing presence of the Kuttukaran Group in the automobile industry have enabled it to become valued partners of each of its OEMs giving it a distinct competitive advantage in the industry in which it operate. On the concern side, the company’s customers expect a high standard of customer service and product knowledge from its technicians and its store representatives. Further, modern vehicles are increasingly complex and require sophisticated equipment and specially trained technicians to perform certain services. Its ability to maintain low labour costs is subject to numerous external factors, including prevailing wage rates, as well as the impact of legislation or regulations governing labour relations and minimum wages.

The company is coming out with an IPO of 2,08,49,614 equity shares of face value of Rs 2 each. The issue has been offered in a price band of Rs 280-295 per equity share. The aggregate size of the offer is around Rs 583.78 crore to Rs 615.06 crore based on lower and upper price band respectively. On performance front, the company’s total income for FY 2023 was Rs 48,926.28 million, as compared to Rs 34,841.99 million for FY 2022, reflecting an increase of 40.42%, mainly owing to an increase in the volume of sale of new passenger vehicles and commercial vehicles and enhancement of revenue from sale of services. The company’s profit after tax increased by 90.31% to Rs 640.74 million for FY 2023 from Rs 336.69 million for FY 2022, reflecting enhanced revenues, cost efficiencies, improved productivity and increase in overall PBT. Meanwhile, the company intends to sustain and increase the growth of its services and repair vertical through a combination of measures including increasing the number of authorised service centres, focussing on customer retention, raising awareness about preventive maintenance amongst customers, selling vehicle service contracts in conjunction with vehicle sales and efficient management of parts inventory. It also intends to continue to strategically diversify its portfolio, and will thus, continue to evaluate prospects of introducing additional brands to its existing portfolio to meet changing customer preferences. 

Signoria Creation coming with IPO to raise upto Rs 9.28 crore
Mar-08-2024   12:20 Hrs IST

Signoria Creation

  • Signoria Creation is coming out with initial public offering (IPO) of 14,28,000 shares of Rs 10 each in a price band Rs 61-65 per equity share. 
  • The issue will open for subscription on March 12, 2024 and will close on March 14, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 6.10 times of its face value on the lower side and 6.50 times on the higher side.
  • Book running lead manager to the issue is Holani Consultants.
  • Compliance Officer for the issue is Swati Jain.

Profile of the company

Signoria Creation is engaged in manufacturing and marketing of women apparels like Kurtis, pants, tops, Co-ord Sets, dupattas and Gowns. It is popularly known and identified in apparel market by its brand name ‘Signoria’. Its brand is known for its Kurtis with traditional designs having wide range of colour, patterns and sizes. The company caters to those who are looking for clothing that is comfortable, stylish, and trendy. Its clothes are perfect for women who want to make a statement and stand out from the crowd.

The company's primary goal is to manufacture women's branded clothes under the Signoria brand. The company has placed a strong emphasis on using high-quality materials and adhering to strict quality control guidelines, which guarantees that the clothing is produced to the highest standards of consistency and quality, winning its clients' faith and confidence. Signoria is committed to creating only the best designs going forward. It places a strong emphasis on involving its clients in the manufacturing process, and it goes above and beyond to create samples and patterns to guarantee that its clients' ideas are accurately reflected in the final goods.

The company is managed by its promoters and directors, Vasudev Agarwal, Babita Agarwal, Mohit Agarwal having experience in the Textile and apparel industry and its President, Kritika Chachan having an experience in the cloth industry. With the passion of its promoters, dedication of its team, development of its brand, customer loyalty, growing trend in e-commerce and continued government support it aims to expand its operations on PAN India basis and become a popular brand among the masses.

Proceed is being used for:

  • Funding working capital requirements of the company
  • General corporate purposes

Industry overview

Women Indian wear accounted for around 71% of the total Women Apparel Market, implying women Indian wear is the mainstay for women apparel market in India. The balance 29% was accounted for by western wear. In this context, the Indian women apparel industry’s categorization into Indian wear and western wear is significant given the Indian wear category’s size and its unique existence compared to other major markets. The broad categorization of Indian and western comprise many subcategories. The women Indian wear category can broadly be classified into Saree & others (includes Indian dresses, Lehenga etc.) and SKD (including Sets, Mix & Match, Dupattas. Stoles). It also comprises of fusion wear, which is an amalgamation of other cultural influences on Indian wear.

Women apparel market in India is estimated at around 36% of the total apparel market of Rs 4,47,666 crore. The women apparel market is expected to grow from Rs 1,63,291 Cr in FY 2020 to Rs 2,53,733 crore by the end of FY 2025. It is expected to be the fastest growing segment in the apparel market in India, with a forecasted growth rate of 9.2% between FY 2020 and FY 2025. This market is projected to grow owing to factors like sustained growth of Indian daily wear; casualization of fashion leading to growth of new categories like fusion wear, denims, loungewear; rising share of organized retail; design innovations and changing consumer demographics.

Indian wear category offers a unique blend of comfort and fashion to the consumer making it the preferred apparel for most occasions. The category association revolves around comfort, ‘contemporisation’ as well as relevance of the occasion. Whilst the consumers in Tier I cities, compared to the metro-centric consumers, tended to be strongly governed by traditional usage of the saree, the Indian wear category is increasingly becoming the category sought for as it offers both conformity and style. Indian women wear in the form of Kurtis, Mix & Match, Saree, Indian dresses etc has found a universal appeal across states as these categories are being worn by women across the country.

Pros and strengths

Established Manufacturing facility: Its Registered office and the manufacturing facility are located at Jaipur in Rajasthan. It has in the process of setting up a new manufacturing unit in RIICO Industrial Area, Mansarovar, Jaipur. Its manufacturing units are equipped and capable to carry out end to end manufacturing activities starting from designing of products to production and testing of finished goods and packaging thereafter. Its dynamic setup not only gives it better control over quality but also benefits it with cost advantages compared to its competitors who resort to job work for various activities in the complete manufacturing process.

Cost leadership and time bound execution: The company promotes cost leadership and timely execution of client’s orders. The timely fulfilment of the orders is a prerequisite in its industry and the cost leadership entails cost efficient manufacturing processes. Its management has carried out various steps for the purpose which involves identification of quality raw materials, harmonious relations with workforce, aligning the manufacturing process i.e., the supply of products with the demand and the use of latest and highly efficient manufacturing facilities which enhanced its ability to meet large and varied orders on a timely basis.

Existing relationship with the clients: It focuses on building sustained and long-term client relationship with its clients and constantly tries to cater customer needs with products in demand. Since it is only engaged in B2B business model, its existing clients provide it mandate for continuous services. It trusts that its existing relationship and goodwill serves as a competitive advantage in gaining new clients and increasing its business with existing clients.

Risks and concerns

Dependent on top 10 customers:  It significantly depend on its selective customers for major portion of its sales and any loss of any of the customers for any reason (namely, failure to negotiate on acceptable terms, dispute with customers, adverse change in financial condition of such customers like bankruptcy or liquidation or other financial hardship, merger or decline in their sales, reduced or delayed customer requirements, plant shutdown, labour strikes or other work stoppages), could have an adverse effect on Its business, results of operation and financial condition.

Do not have long term agreements with suppliers: It do not enter into any long-term supply contract with any of its raw material suppliers and typically source raw materials from third party suppliers under contracts of shorter period or from the open market. The absence of long-term contract with other parties except as herein before mentioned at fixed prices exposes to volatility in the prices of raw material, which may reduce its profit margins. It may face a risk that one or more of its suppliers may discontinue their supplies to it, and any inability on its part to procure raw material from alternate suppliers in a timely manner, or on commercially acceptable terms, may adversely affect its business, financial condition and result of operations.

Working capital requirements: Its business is working capital intensive and requires a significant amount of working capital for smooth functioning. A significant portion of its working capital is utilized towards trade receivables and inventories. It intends to continue growing by expanding its business operations. This may result in increase in the quantum of current assets particularly trade receivables and inventories. The results of operations of its business are dependent on its ability to effectively manage its inventory and stocks. To effectively manage its inventory, it must be able to accurately estimate customer demand and supply requirements and manufacture and trade inventory accordingly. Any mismatch between its planning and actual consumer consumption could lead to potential excess inventory or out-of-stock situations, either of which could have an adverse effect on its business, financial condition and results of operation.

Outlook

Signoria Creation is engaged in manufacturing and marketing of women apparels like kurtis, tops, gowns, dupattas etc. It is popularly known and identified in the apparel market by its brand name ‘Signoria’. Its brand is known for its Kurtis with traditional designs having wide range of colour, patterns and sizes. On the concern side, the apparel manufacturing industry is highly competitive and fragmented. Its competitors include numerous apparel designers, manufacturers, and other established companies. Some of its competitors are larger and therefore better placed to take advantage of efficiencies created by size, and have better financial resources or greater access to capital at lower costs, and may be better known nationally.

The company is coming out with an IPO of 14,28,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 61-65 per equity share. The aggregate size of the offer is around Rs 8.71 crore to Rs 9.28 crore based on lower and upper price band respectively. On performance front, revenue from operations has increased by 62.06% to Rs 1914.92 lakh for financial year 2022-23 from Rs 1181.60 lakh for the financial year 2021-22. This is driven by increase due to pent- up demand after opening of economy on lifting of COVID restrictions and also due to participating in PAN India exhibition by spending Rs 31.65 lakh on Business promotion and Rs 3.62 lakh on Advertisement during 2022-23. Profit after tax of the company jumped by 242.14% at Rs 231.05 lakh for financial year 2022-23 as compared Rs 67.53 lakh for the financial year 2021-22. Going forward, the company intends to improve operating efficiencies to achieve cost reductions to have a competitive edge over the peers. This can be done through continuous process improvement and technology development. It continues to invest in operational excellence throughout the organization. It ensures a strong quality commitment by its employees.

Pratham EPC Projects coming with IPO to raise upto Rs 36 crore
Mar-07-2024   16:08 Hrs IST

Pratham EPC Projects

  • Pratham EPC Projects is coming out with initial public offering (IPO) of 48,00,000 shares of Rs 10 each in a price band Rs 71-75 per equity share. 
  • The issue will open for subscription on March 11, 2024 and will close on March 13, 2024.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 7.10 times of its face value on the lower side and 7.50 times on the higher side.
  • Book running lead manager to the issue is Beeline Capital Advisor.
  • Compliance Officer for the issue is Bhavasthi Rahul Mehta.

Profile of the company

Pratham EPC Projects is an integrated engineering, procurement, construction and commissioning company being in business of end-to end service providers to Oil & Gas distribution companies in India. It is an Oil & Gas pipeline infrastructure service provider in India, focused on laying pipeline networks along with construction of associated facilities; and providing Operations & Maintenance services to the City Gas Distribution (CGD) Companies in India. It is an integrated EPC company offering a diversified range of pipeline and allied services for oil & gas industry. 

It provide its services for cross country pipeline projects for different applications viz. Oil, gas & water etc. and also undertake Pipeline laying work on Turnkey basis including engineering, procurement, pipeline construction for city gas distribution, horizontal direction drilling, stations including civil, electromechanical and instrumentation for its clients. The company is ISO 10002:2018 certified for customer satisfaction and complaint management system by International Standards Registrations, ISO 14001:2015 certified for environment management system by International Standards Registrations, ISO 18001:2007 certified for Occupational Health and Safety management system by International Standards Registrations and ISO 9001:2015 certified for quality management system by ROHS Certification.

Founded by visionary Promoters Pratikkumar Maganlal Vekariya and Nayankumar Manubhai Pansuriya having combined experience of many years in engineering industry. Both its promoters are Mechanical Engineers. Pratikkumar Maganlal Vekariya, in past, has worked in reputed construction companies namely Jai-Hind Projects, Punj Lloyd and NCC. Nayankumar Manubhai Pansuriya, in past, has worked with NCC. The company has been executing various gas pipeline project handling all pipeline activities like, mainline welding, tie-in, coating, hydro testing, pipeline commissioning etc. Pratham specialize in oil & gas pipelines for cross country distribution and city gas distribution. It also undertakes offshore projects for water distribution specifically project bidding & project management.

Proceed is being used for:

  • Purchase of machinery.
  • Meeting working capital requirements.
  • General corporate purpose.

Industry overview

India’s oil refining capacity stood at 251.21 million metric tonnes per annum (MMTPA) in April 2022, making it the second-largest refiner in Asia and the fourth-largest in the world. Private companies owned about 35% of the total refining capacity. India is planning to double its refining capacity to 450-500 million tonnes by 2030. According to IEA (India Energy Outlook 2021), primary energy demand is expected to nearly double to 1,123 million tonnes of oil equivalent, as the country's gross domestic product (GDP) is expected to increase to $8.6 trillion by 2040. India’s oil consumption stood at almost 4.9 million barrels per day (BPD) in 2021, up from 4.65 million BPD in 2020. India retains its spot as the third-largest consumer of oil in the world, as of 2022. In FY23, India consumed 222.3 MMT of petroleum products, up 10.2% from the previous year. This is the highest ever in the history of the world’s third largest oil consumer.

High-Speed Diesel was the most consumed oil product in India and accounted for 38.6% of petroleum product consumption in FY23. It is used primarily for commercial transportation and further, in the industrial and agricultural sectors. India’s consumption of petroleum products stood at 4.44 MBPD in FY23, up from 4.05 MBPD in FY22.  India’s oil consumption is forecast to rise from 4.8 MBPD in 2019 to 7.2 MBPD in 2030 and 9.2 MBPD in 2050. According to the International Energy Agency (IEA), India’s medium-term outlook for natural gas consumption remains solid due to rising infrastructure and supportive environment policies. Industrial consumers are expected to account for 40% of India’s net demand growth. The demand is also expected to be driven by sectors such as residential, transport and energy.

In Union Budget 2022-23, the government has given a massive push to the infrastructure sector by allocating Rs 10 lakh crore to enhance the infrastructure sector. The government expanded the ‘National Infrastructure Pipeline (NIP)’ to 9,335 projects. 217 projects worth Rs 1.10 lakh crore (were completed as of 2020. Private sector is emerging as a key player across various infrastructure segments, ranging from roads and communications to power and airports. Private investment into physical and social infrastructure is key to putting India in a high growth trajectory, which will make it a $5 trillion economy by 2024-25.

Pros and strengths

Optimal utilization of resources: The Company constantly endeavours to improve its execution process, capabilities, skill up gradation of employees, modernization of plant and machineries to optimize the utilization of resources. It regularly analyses its material procurement policy and project execution process to de-bottle neck the grey areas and take corrective measures for smooth and efficient working thereby putting resources to optimal use.  

Visible growth through robust order book: An order book is considered one of the key indicators of future performance as it represents a portion of anticipated future revenue. Its strategy is not focused solely on order book addition but, rather, on adding quality projects with potentially higher margins and/or prestigious projects that help enhance its growing reputation. By diversifying its skill set and order book across different sectors, it is able to pursue a broader range of project tenders and consequently, optimize its business volume and profit margins.

End-to-end execution capabilities: Its execution capabilities, comprising strong in-house operations consisting of design, engineering, procurement, construction and quality assurance teams, is a critical factor that has contributed to growth story of the company. Its track record in construction of pipeline projects has been instrumental in its consistent sales and performance. Its management team ensures efficient and rapid construction and completion of its pipeline projects, its quality assurance team ensures the quality construction of its pipeline projects, and its procurement team works with vendors who have the scale to deliver and meet it requirements to procure pipeline construction materials and equipment.

Risks and concerns

Dependent on few numbers of customers for sales: The Company is an integrated solution provider, offering a full range of Engineering, Procurement, Construction/ Commissioning (EPC) services in India. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows.

Dependent on few suppliers: Its top ten suppliers contribute 75.15%, 64.34%, 50.76% and 63.20% of its total purchase for the financial year / period ended on September 30, 2023, March 31, 2023, 2022 and 2021, respectively based on consolidated restated financial statement. It cannot assure that it will be able to get the same quantum and quality of supplies, or any supplies at all, and the loss of supplies from one or more of them may adversely affect its purchases of stock and ultimately its revenue and results of operations. However, the composition and amount of purchase from these suppliers might change as it continues seeking new suppliers for its product for better quality and price in the normal course of business.

Huge labour workforce required: Its project operations require deployment and its ability to retain labour. In case such labour workforce is unavailable, or it is unable to identify and retain such labour its business could be adversely affected. It cannot guarantee that it may be able to continue with the same on favourable terms or at all. Any such failure may impact the operations, business process and profitability. Additionally, there have been amendments in the labour and Employment related laws, which may have a direct impact on its employee costs and consequently, on its margins. 

Outlook

Pratham EPC Projects is an integrated engineering, procurement, construction and commissioning company being in business of end-to end service providers to Oil & Gas distribution companies in India. The company is engaged in the business of Pipeline Construction of Oil & Gas and Water Engineering Procurement Construction. On the concern side, the Company is an integrated solution provider, offering a full range of EPC services in India. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations

The company is coming out with an IPO of 48,00,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 71-75 per equity share. The aggregate size of the offer is around Rs 34.08 crore to Rs 36.00 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 50.20 crore as compared to Rs 50.47 crore during the FY 2021-22. Revenue from Operations mainly includes revenue from Gas pipeline contract services through direct contract and through sub-contracting. Revenue from operations decreased by 0.52% from previous year i.e. FY 2021-22. Profit after Tax (PAT) increased to Rs 7.64 crore in FY 2022-23 from Rs 4.41 crore in the FY 2021- 22. PAT was 14.79% and 8.72% of total income of the company for the year ended on March 31, 2023 and March 31, 2022 respectively. Going forward, it intends to continue its focus in enhancing project execution capabilities so as to derive twin benefits of client satisfaction and improvements in operating margins. It will constantly endeavour to leverage its operating skills through its equipment and project management tools to increase productivity and maximize asset utilization in its ongoing projects.

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