IPO Analysis Research

EVOQ Remedies coming with an IPO to raise upto Rs 9.72 crore
Mar-16-2022   13:09 Hrs IST

EVOQ Remedies

  • EVOQ Remedies is coming out with an initial public offering (IPO) of 3600000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 27 per equity share.
  • The issue will open for subscription on March 17, 2022 and will close on March 22, 2022.
  • The shares will be listed on SME Platform of BSE.
  • The share is priced 2.70 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Swastika Investmart.
  • Compliance Officer for the issue is Tej Bharatkumar Hanj.

Profile of the company

The company is one of the recognized trading house of Pharmaceuticals Raw Materials, Excipients, Bulk Drugs at affordable price catering to the customers located in Ahmedabad. It procures the pharmaceuticals Raw Materials products and chemicals from the suppliers which are having WHO-GMP approved production facilities in India and by focusing on its first-class distribution expertise.

In the area of Pharmaceuticals Raw Materials, Excipients, Bulk Drugs etc., the company is specializes in offering quality products and affordable trading in Gujarat. The company has a team of focused industry experts, who have in-depth knowledge of the industry and have with them expertise in offering best solutions for meeting their specific needs. It procure all the products from certified & reliable Manufacturers & Importers, who follow procedures as per the stringent national and international quality and safety standards. In order to achieve the task, it keep its regular visit to ensure quality and reliability of the products. Keeping its basic objective in mind, it strive hard to exceed all the expectations of its clients by supplying best quality products at the most reasonable prices. EVOQ is having its registered office, corporate office and storage location facilities located in Ahmedabad. In the healthcare segment, EVOQ being into trading business offers a wide basket of products.

Proceed is being used for:

  • Meeting incremental working capital requirements.
  • General corporate purpose.
  • Meeting public issue expenses.

Industry overview

Growth of Indian pharma industry in 2021-22 (FY22) is estimated at 9-11 per cent, driven by a push from domestic and emerging markets in the next few quarters. The revenue growth for ICRA's sample of 21 Indian pharmaceutical companies was moderate at 6.4 per cent in Q2 FY22, down from 16 per cent in Q1 FY22. Normalisation of the base and pricing pressures in the US market were the major reasons for slowing growth momentum in Q2 FY22, even as growth under domestic and emerging markets remained healthy, the credit rating agency said in a statement. The sample set reported a 15.3 per cent year-on-year (Y-o-Y) growth in domestic revenues, against a 14.6 per cent Y-o-Y growth for the Indian pharmaceutical markets (IPM). A combination of steady normalization in hospital footfalls and field force operations (given the relatively lower restrictions on account of Covid-19), continued traction in acute therapies and better pricing supported healthy revenue growth across companies.

Going forward, sustenance of trend in doctor visits and elective surgeries given the news around the Omicron variant, and performance of new launches in addition to revenue growth momentum in the acute segment will remain key monitorables. As for the US market, the revenue growth for the sample set remained muted at 1.9 per cent during the second quarter owing to high single digit to low teens price erosion and past inventory liquidation given the Covid-related uncertainties. Companies are focusing on specialty products, injectables, complex generics including firstto-file opportunities to improve margins for the US business, which has been impacted by the pricing pressure.

Pros and strengths

Experienced management team: The company benefit from the leadership of its management team, which has extensive experience in pharma industry. Its Chairman cum Managing Director Bhumishth Patel has experience of more than 11 years in pharma industry. It has successfully grown under his efficient leadership. He is actively involved in its operations and guide the company with his vision and experience has been instrumental in sustaining its business operations.

Continue to develop client relationships and Trust: The company plans to grow its business primarily by growing its client relationships and trust. Increased client relationships and trust will add stability to its business. It seeks to build on existing relationships and also focus on building new relationships.

Risks and concerns

Geographical concentration: Although almost entire sales of the company is in the state of Gujarat especially in Ahmedabad region. Such geographical concentration of the company’s business in this region heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in this region which may adversely affect its business prospects, financial conditions and results of operations. It may not be able to leverage its experience in these regions to expand its operations in other parts of India, should it decide to further expand its operations. Further, factors such as competition, culture, regulatory regimes, business practices and customs, customer tastes, behaviour and preferences in the cities where the company may plan to expand its operations may differ from Gujarat, and its experience in the Gujarat may not be applicable to these states.

Require high working capital: The company’s business demands substantial funds towards working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favorable terms, at a future date, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.

Outlook

EVOQ Remedies specializes in offering quality Pharmaceuticals Raw Material products, Excipients, and Bulk Drugs at an affordable prices. The company procures all the products from WHO-GMP certified & reliable Manufacturers & Importers, who follow procedures as per the stringent national and international quality and safety standards. The company has a team of focused industry experts, who have in-depth knowledge of the industry and have with them expertise in offering best solutions for meeting their specific needs. It procure all the products from certified & reliable Manufacturers & Importers, who follow procedures as per the stringent national and international quality and safety standards. In order to achieve the task, it keep its regular visit to ensure quality and reliability of the products. On the concern side, the company has not taken any insurance policy for its goods and offices to mitigate risk, lossess or liabilities. Any such uninsured losses or liabilities could result in an adverse effect on its business operations, financial conditions and results of operations. Besides, the company’s business operations require it to obtain and renew from time to time, certain approvals, licenses, registration and permits, some of which may expire and for which it may have to make an application for obtaining the approval or its renewal.

The company is coming out with a maiden IPO of 3600000 equity shares of Rs 10 each at a fixed price of Rs 27 per equity share to mobilize Rs 9.72 crore. On the performance front, the total revenue from operations for the year ended on FY 2020-21 was Rs 1002.48 lakh as compared to Rs 907.21 lakh during the FY 2019-20 showing an increase of 10.50%. Profit after Tax (PAT) increased from Rs 0.03 lakh in the FY 2019-20 to Rs 71.38 lakh in FY 2020-21 showing increase of 237833.33%. The company aims at widening its network so as to enhance its geographical presence and consequently its customer base. It also aims to take the maximum advantage of the location of the company by commencing the sale of API. Besides, the company intends to improve efficiencies to achieve cost reductions and have a competitive edge over its peers and this can be achieved through continuous process improvement, customer service and technology development. It proposes to set up the channel partners/dealers in order to broaden its reach. Greater visibility of its brand would ensure brand retention in the minds of the customers and would in effect further enhance its reach.

Achyut Healthcare coming with an IPO to raise upto Rs 3.60 crore
Mar-15-2022   15:22 Hrs IST

Achyut Healthcare

  • Achyut Healthcare is coming out with an initial public offering (IPO) of 1800000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 20 per equity share.
  • The issue will open for subscription on March 17, 2022 and will close on March 22, 2022.
  • The shares will be listed on SME Platform of BSE.
  • The share is priced 2 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is GYR Capital Advisors.
  • Compliance Officer for the issue is Paragkumar Sandipkumar Dave.

Profile of the company

The company is engaged in trading of Cenzure, Arpimune, Azathioprine IP, Everomimus, Mycophenolate Mofetil USP, Mycophenolate Sodium USP, Sirolimus, Tacrolimus USP, Infrared thermometer, Ascorbic Acid Coated Vitamin C, Calcium carbonate oyster, Cellulose acetate Phthalate, Chlorthalidone IP, Cross Carmalose Sod IP/USP, DI Basic Calcium Phosphate IP, DI Ethyl Phthlate, Diltiazem Hydrochloride IP, Easy Coat Fc Titanium Dioxide, Escitalopram IP, Escitalopram Oxalate, Favipiravir among many other products.

Since incorporation, it was the company‘s vision and mission has been to remained focused towards the pharmaceutical business of trading and supplying of superior quality products to its customers based on their customizations and requirements, which has enabled it to expand its business operations globally and dive into manufacturing business on its own plants rather than outsourcing and procuring from third parties.

Proceed is being used for:

  • Funding purchases of machineries and equipment.
  • General corporate purposes.

Industry overview

India is the largest provider of generic drugs globally. Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value. The domestic pharmaceutical industry includes a network of 3,000 drug companies and 10,500 manufacturing units.India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers with a potential to steer the industry ahead to greater heights. Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.

India’s drugs and pharmaceuticals exports stood at $24.44 billion in FY21. India is the 12th largest exporter of medical goods in the world. The country’s pharmaceutical sector contributes 6.6% to the total merchandise exports. As of May 2021, India supplied a total of 586.4 lakh COVID-19 vaccines, comprising grants (81.3 lakh), commercial exports (339.7 lakh) and exports under the COVAX platform (165.5 lakh), to 71 countries. Indian drugs are exported to more than 200 countries in the world, with US being the key market. Generic drugs account for 20% of the global export in terms of volume, making the country the largest provider of generic medicines globally. India’s drugs and pharmaceuticals exports stood at $ 3.76 billion between April 2021 and May 2021. The foreign direct investment (FDI) inflow in the Indian drugs and pharmaceuticals sector stood at $18.12 billion between April 2000 and June 2021. The Union Cabinet has given its nod for the amendment of existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100% under the automatic route for manufacturing of medical devices subject to certain conditions. The Indian drugs and pharmaceuticals sector received cumulative FDIs worth $17.99 billion between April 2000 and March 2021.

Pros and strengths

Pan India and global market presence: With the help of the company’s long-standing market presence and the superior quality of its products it has been able to create a pan-India India and International market presence in trading of pharmaceuticals business with the products being traded in different countries namely UAE, Kenya and Nigeria along with all over India catering to various end users, merchants, distributors and exporters. It has been able to cater to the changing and specific need-based requirement of its customers. It has a dedicated team of professionals for managing and overseeing the procurement, marketing, selling and delivering of its products.

Long standing relationship with customers: The company has developed long-term relationships with its customers in pharmaceutical sector. Its business with some of its more recent customers has increased reflecting its ability to develop and strengthen relationships with customers. It attribute the strength of its customer relationships to its ability to supply customised products based on Customer specifications and requirements from qualified and experienced manufacturers, as well as its track record of consistent delivery of quality and cost-effective products and solutions through its strategic alignment with its key customers‘ goals and specifications over the years.

Experienced management team: The company is led by a group of individuals, having a strong background and extensive experience in the excipient and pharmaceutical industry. Its promoter and director are the founding members and are actively involved in the strategic decision making for the Company, pertaining to corporate and administrative affairs, financial operations, expansion activities, business development and management of overall business. It has an experienced and professional management team with strong management and execution capabilities and considerable experience in the pharmaceutical trading industry.

Risks and concerns

Highly dependent on sales and marketing team: The company is highly dependent on its sales and marketing team for its business operations. It intends to continue to enhance the outreach of its integrated business model and the quality of the products it source through the use of targeted marketing and public relations initiatives. In order to maintain and enhance such recognition and reputation, it may be required to invest significant resources towards marketing and brand building exercises, specifically with respect to new products or applications it launch or for geographic markets where it intends to expand its operations. It incurs advertising and marketing expenses to increase brand recall and capture additional demand, and in the event they do not yield their intended results, or it is required to incur additional expenditures than anticipated, its business and results of operations might be adversely affected.

Requires significant amount of working capital: The company’s business requires a significant amount of working capital. In its business, working capital is often required to finance the purchase of pharmaceutical products. Further, it is also required to maintain adequate stocks which requires sufficient working capital. In the event, it is unable to source the required amount of working capital for addressing such demand of the pharmaceutical products or stock adequate quantities of the same, it might not be able to efficiently satisfy the demand of its customers. Even if the company is able to source the required amount of funds, it cannot assure that such funds would be sufficient to meet its cost estimates and that any increase in the expenses will not affect the price of its products.

Operate in competitive business environment: The pharmaceutical industry in India is competitive with both organized and unorganized markets. However, the company is required to compete both in the domestic and international markets. It may be unable to compete with the prices and products offered by its competitors (local as well as international). It may have to compete with new players in India and abroad who enter the market and are able to offer competing products. Its competitors may have access to greater financial, manufacturing, research and development, design, marketing, distribution and other resources and more experience in obtaining the relevant regulatory approvals. Increasing competition may result in pricing pressures and decreasing profit margins or loss of market share or failure to improve its market position, any of which could substantially harm its business and results of operations.

Outlook

Incorporated in 1996, Achyut Healthcare is engaged in the trading of Pharmaceutical Products. The company has business operations in both domestic and international markets in the countries namely UAE, Kenya, and Nigeria. The company is located in Ahmedabad, Gujarat. The company involves in the trading of Cenzure, Arpimune, Azathioprine IP, Everomimus, Mycophenolate Mofetil USP, Mycophenolate Sodium USP, Sirolimus, Tacrolimus USP, Infrared thermometer, Ascorbic Acid Coated Vitamin C, Calcium carbonate oyster, Cellulose acetate Phthalate, Chlorthalidone IP, Cross Carmalose Sod IP/USP, DI Basic Calcium Phosphate IP, DI Ethyl Phthlate, Diltiazem Hydrochloride IP, Easy Coat Fc Titanium Dioxide, Escitalopram IP, Escitalopram Oxalate, Favipiravir among many other products. The company has developed long-term relationships with its customers in pharmaceutical sector. Its business with some of its more recent customers has increased reflecting its ability to develop and strengthen relationships with customers. On the concern side, the company’s pharmaceutical products may suffer from certain quality issues due to inadvertent lapses in procurement leading to purchase of low-quality pharmaceutical products. Further the pharmaceutical products may also deteriorate in quality or become decay during transit. Besides, it requires certain statutory and regulatory approvals, licenses, registrations and permissions to operate its manufacturing units, some of which have been granted for a fixed period of time and need to be renewed from time to time.

The company is coming out with a maiden IPO of 1800000 equity shares of Rs 10 each at a fixed price of Rs 20 per equity share to mobilize Rs 3.60 crore. On the performance front, the total income of the company for fiscal year 2021 was Rs 27.43 lakh against Rs 34.56 lakh total income for Fiscal year 2020. A decrease of 20.63% in total income. The sales in fiscal 2020 is from export only while in 2021 it is from domestic sales only. Profit after tax for the Fiscal 2021 was positive at Rs 0.74 lakh against profit after tax of Rs 1.40 lakh in fiscal 2020. There was a decline in profit after tax of Rs 0.66 lakh or 47.14% decrease. The company’s strategic objective is to improve and consolidate its position as one of the leading Pharmaceutical trader in India and abroad with a continuous growth and to enter into the manufacturing business along with the trading. The company foresees an increase in demand and to the tap the growing market, it intends to fully utilize its expertise by holding manufacturing plant at own premises to avoid procuring and outsourcing materials from third parties. It shall also continue to explore opportunities in different regions and countries abroad to enhance its geographical reach.

KN Agri Resources coming with an IPO to raise around Rs 49.38 crore
Mar-14-2022   15:52 Hrs IST

KN Agri Resources

  • KN Agri Resources is coming out with a 100% book building; initial public offering (IPO) of 65,84,000 shares of Rs 10 each in a price band Rs 71-75 per equity share.
  • The issue will open on March 15, 2022 and will close on March 17, 2022.
  • 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 HEM Securities.
  • Compliance Officer for the issue is Akshat Sharma.

Profile of the company

Incorporated in 1987, KN Agri Resources is an agro-based company, involved primarily in the business of (a) solvent extraction & oil refining and (b) trading of various agro-commodities. Its wide range of processed and manufactured products includes soya de-oiled cake (soya meal), Hipro Soya Meal, soya refined oil, soya crude oil, degummed oil, soya lecithin, acid oil, soya husk, cotton seed oil, refined rapeseed oil and rapeseed de-oiled cake. Under the agro-commodities business, it trades in various agro commodities such as maize, gram, pulses, sugar, soyabean, wheat etc.

The company has three strategically located plants in the state of Madhya Pradesh comprising of three solvent extraction plants, two oil refineries and one flour mill. The location of its plants gives it the competitive edge over other players in terms of procurement and availability of major raw material (i.e. soyabean seeds). As on the date, the company has cumulative solvent extraction capacity of around 3,75,000 TPA, edible oil refining capacity of 60,000 TPA and flour milling capacity of 24,000 TPA.

The company’s two manufacturing units, namely, Khandwa Oils - Unit I and Unit II situated in Khandwa, M.P., are spread in the wide area of around 20 acres, while its another unit located in Kheda, Itarsi, M.P. is spread around an area of 10 acres. All its units have a well-equipped laboratory, modern technology and testing equipments with supporting environment and facilities, to ensure that the products conforms with the pre-determined food standards.

Proceed is being used for:

  • Meeting working capital requirements
  • General corporate purpose
  • Meeting issue expenses.

Industry Overview

India’s food processing sector is one of the largest in the world and its output is expected to reach $535 bn by 2025-26. The Food Processing sector in India has a quintessential role in linking Indian farmers to consumers in the domestic and international markets. The Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments across the value chain. The food processing industry engages approximately 1.93 mn people in around 39,748 registered units with fixed capital of $32.75 bn and aggregate output of around $158.69 bn. Major sectors constituting the food processing industry in India are grains, sugar, edible oils, beverages, and dairy products. The Indian food processing industry is primarily export orient. India's geographical situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea. One such example indicating India's location advantage is the value of trade in agriculture and processed food between India and Gulf region.

India’s vegetable oil economy is the 4th-largest after the US, China and Brazil. India consumes 25.9 MMT of Oil, of which 60% comes from imports. Vegetable Oil is the top agricultural import item for India accounting for $10 bn. Of this basket, 55% is accounted for by Palm Oil. With increasing population and per capita consumption of vegetable oils in the country, the import bill is expected to reach $22 bn by 2030 if it continues to grow at the current rate of 7-8%. Meanwhile, Soybean is the largest oilseed in India by Area under cultivation and production, and 5th most in the world. India’s soybean cultivation is concentrated in 3 states - namely MP, MH & RJ covering 92% of the total soy bean area. The area under soybean cultivation is on a decreasing trend (from 147 lakh MT to 86 lakh MT) between 2012-16 - owing to erratic rainfall, higher biotic stresses, lower price realization and shift to competing crops. Indian Soy bean productivity is decreasing over the years and comparatively lower wrt world average. India is the largest importer for Soybean oil and the imports increased during 2013-16 to compensate for lower production. Indian De-oiled Soy cake has very high demand abroad, and fetches better value realization.

Meanwhile, India is fortunate in having a wide range of oilseeds crops grown in its different agro climatic zones. Groundnut, mustard and rapeseed, sesame, safflower, linseed, nigerseed, castor are the major traditionally cultivated oilseeds. Soyabean and sunflower have also assumed importance in recent years. Coconut is most important amongst the plantation crops. Efforts are being made to grow oil palm in Andhra Pradesh, Karnataka, Tamil Nadu and North- Eastern parts of the country in addition to Kerala and Andaman & Nicobar Islands. Among the non-conventional oils, rice bran oil and cottonseed oil are the most important. In addition, oilseeds of tree and forest origin, which grow mostly in tribal inhabited areas, are also a significant source of oils.   

Pros and strengths

Wide range of products: The company offers a wide range of soyabean products that includes soya de-oiled cake (soya meal), Hipro Soya Meal, soya refined oil, soya crude oil, degummed oil, soya lecithin, acid oil and soya husk. The company’s product portfolio allows its customers to source all soyabean related products under one roof, which helps it to expand its business to existing customers as well as to potential new customers. Further, it has necessary resources, experience, and network that can be customized and leveraged to produce even wider range of products at a later stage. With an operating history of more than three decades, the company is primarily known for its wide range of quality products at a competitive price.

In-house manufacturing capabilities: As on the date, the company has cumulative solvent extraction capacity of 3,75,000 TPA, edible oil refining capacity of 60,000 TPA and flour milling capacity of 24,000 TPA, which enables it to stream line inventory management and production process resulting into maintenance of high quality production standards, minimizing production time and bringing cost effectiveness. The company’s well established in-house integrated manufacturing unit would help it in achieving a high sales growth and an improvement in operating margins.

Strategic location of manufacturing units: The strategic location of the company’s manufacturing units allows it to cater to a larger consumer base, reduce logistic costs and achieve economies of scale. Its manufacturing facility at Itarsi (District Hoshangabad) and two manufacturing facilities at Khandwa lies in the state of Madhya Pradesh, which is a top-producer of Soyabean in India. This allows it to greatly reduce procurement costs and ensures perennial supply of raw material (Soyabean seeds). Further, both Itarsi and Khandwa are well connected by railways and roadways, which reduce transportation cost, save spillages and facilitate distribution of its products to the high consumption regions.

Risks and concerns 

Seasonal business: As an agro-based company, the company’s businesses are sensitive to weather conditions, including extremes such as drought and natural disasters. There is growing concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency and severity of extreme weather and natural disasters. Adverse weather conditions may also cause volatility in the prices of commodities, which may affect growers’ decisions about the types and quantum of crops to plant and may consequently affect the sales of its products. Consequently, the occurrence of any such unfavorable weather patterns may adversely affect its business, results of operations and financial condition.

Geographical constrain: The manufacturing operations of the company are carried in the state of Madhya Pradesh through two units in Khandwa and one unit in Itarsi. Due to the geographical concentration of its manufacturing operations primarily in Madhya Pradesh, the company’s operations are susceptible to local, regional and environmental factors, such as social and civil unrest, regional conflicts, civil disturbances, economic and weather conditions, natural disasters, demographic and population changes, and other unforeseen events and circumstances. Such disruptions could result in the damage or destruction of a significant portion of its manufacturing abilities, significant delays in the transport of its products and raw materials, loss of key managerial personnel, and/or otherwise adversely affect its business, financial condition and results of operations.

Major revenue comes from limited customers: The substantial portion of the company’s revenues has been dependent upon few customers. For instance, the company’s top ten customers accounted for around 38% of its revenue from operations for FY21. The company has not entered into long term agreements with its customers and the success of its business is accordingly significantly dependent on it maintaining good relationships with them. The loss of one or more of these significant 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. The company cannot gives assurance that it will be able to maintain historic levels of business and/or negotiate and execute long term contracts on terms that are commercially viable with its significant customers or that it will be able to significantly reduce customer concentration in the future.

Outlook

KN Agri Resources is an agro-based company, involved in the business of solvent extraction & oil refining and trading of various agro-commodities. The company offers a wide range of processed and manufactured products including soya de-oiled cake (soya meal), Hipro Soya Meal, soya refined oil, soya crude oil, degummed oil, soya lecithin, acid oil, soya husk, cottonseed oil, refined rapeseed oil, and rapeseed de-oiled cake. The company trade in various agro commodities such as maize, gram, pulses, sugar, soybean, wheat, etc. On the concern side, the company’s business is primarily dependent on the availability/supply and cost of major raw material, which it sources from domestic suppliers. Any significant increase in the prices of these raw materials or decrease in the availability of the raw materials, could adversely affect its results of operations. Moreover, the company derives a significant portion of its revenue from soya products, particularly Soya De-oiled Cake and Soya refined oil, any reduction in demand or in the production of such products could have an adverse effect on the business, results of operations and financial condition.

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 46.75 crore to Rs 49.38 crore based on lower and upper price band respectively. On performance front, total income for the financial year 2019-20 stood at Rs 85,319.67 lakh whereas in Financial Year 2018-19 the same stood at Rs 129,246.84 lakh representing a decrease of 33.99%. Moreover, restated profit before tax for the financial year 2019-20 was Rs 1779.91 lakh as compared to restated Profit before Tax of Rs 3128.54 lakh during the financial year 2018-19. The company is planning to expand its domestic and international geographical reach through marketing network. Moreover, the company is aiming to expand its product portfolio and strive to provide differentiated offerings to its consumers. The company seeks to leverage its extensive experience to strengthen its market position, by offering new products, so as to capitalise on emerging trends. Going forward, the company intends to expand the existing product line of soya products such as soya grits, flour and toasted/untoasted flakes.

Swaraj Suiting coming with an IPO to raise around Rs 10.68 crore
Mar-14-2022   12:27 Hrs IST

Swaraj Suiting

  • Swaraj Suiting is coming out with an initial public offering (IPO) of 19,08,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 56 per equity share.
  • The issue will open on March 15, 2022 and will close on March 17, 2022.
  • The shares will be listed on NSE Emerge Platform.
  • The share is priced 5.60 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Finshore Management Services.
  • Compliance Officer for the issue is Rahul Kumar Verma.

Profile of the company

Swaraj Suiting was set up in the year 2003 and was initially engaged in the manufacture of cotton/synthetic fabrics but later shifted to trading in synthetic fabrics in 2009 by selling off its Sulzer weaving looms to an associate concern, Swaraj Sulz Private Limited. The company re-entered into manufacturing of Cotton and Synthetic fabrics in 2011 and commenced commercial operations in January 2013. The company’s Promoters Mohammed Sabir Khan, Samar Khan and Nasir Khan have a combined experience of more than 25 years in Textile Industry and have sound knowledge of production process, marketing, finance and all kind of other commercial activities related to the textile industry. The company is presently, primarily engaged in the Manufacturing of Grey Fabric involving Cotton and Synthetic, Trading of Yarn, Grey fabric and Finished fabric and Weaving on Job work basis.

The company’s existing manufacturing unit is located at F-483 to F-487, G1-475 to 476, RIICO Growth Centre, Hamirgarh, Bhilwara, Rajasthan - 311025 which is also its Registered Office. In this unit, it has installed 123 Airjet looms which translates into 1.50 million meters of cotton & synthetic fabric per month translating into 225 Lakh Meters Per Annum (LMPA). The company has strategically planned the vertical integration of its operations to the next level of supply chain, aiming to lower production costs and increase the efficiency of the company.

In view of this, the company is in advanced stages of setting up a project in the district of Neemuch, Madhya Pradesh (MP), which is both the backward and forward integration of its existing activity. The commencement of commercial production shall be between March - April, 2022. This unit will manufacture premium quality denim fabric and tap new markets. The new manufacturing unit in MP is a denim processing plant with annual capacity of converting approximately 21.75 million metric meters of denim fabric.

Proceed is being used for:

  • Meeting the working capital requirements for its new expansion of production capacity at Neemuch, Madhya Pradesh.
  • Meeting the issue expenses.
  • General corporate purposes.

Industry Overview

India’s textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital-intensive sophisticated mills sector on the other end. The decentralised power looms/ hosiery and knitting sector forms the largest component in the textiles sector. The close linkage of textiles industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. India’s textiles industry has a capacity to produce wide variety of products suitable for different market segments, both within India and across the world.

India’s Textiles industry has around 4.5 crore employed workers including 35.22 lakh handloom workers across the country. The industry contributed 7% to the industry output (by value) in 2018-19. The Indian textiles and apparel industry contributed 2% to the GDP, 12% to export earnings and held 5% of the global trade in textiles and apparel in 2018-19. Exports of textiles (RMG of all textiles, cotton yarns/ fabs./ made-ups/ handloom products, man-made yarns/ fabs./ made-ups, handicrafts excl. handmade carpets, carpets and jute mfg. including floor coverings) stood at $22.89 billion between April 2021 and October 2021. The Indian textiles market is expected to be worth more than $209 billion by 2029. Cotton production is expected to reach 37.10 million bales and consumption is expected to reach 114 million bales in FY21, 13% growth over the previous year. The production of raw cotton in India is estimated to have reached 35.4 million bales in FY20.

India is working on major initiatives, to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on rise. Government is supporting the sector through funding and machinery sponsoring. Top players in the sector are attaining sustainability in their products by manufacturing textiles that use natural recyclable materials. The future for the Indian textiles industry looks promising, buoyed by strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. High economic growth has resulted in higher disposable income. This has led to rise in demand for products creating a huge domestic market. 

Pros and strengths

Locational advantage: The company’s Registered Office and factory is situated at well-developed industrial area, with all the infrastructure facilities and both skilled and unskilled manpower are available at competitive cost. Moreover, its factory location is well connected to Bus Station, State and National Highways. All infrastructure facilities like availability of skilled labour, raw material, technology; Communication, electricity, transportation etc. are easily available due to extensive industrialization in the area. The production facility of the company is located in the close vicinity of the textile hub i.e., the Industrial town of Bhilwara, which is a famous hub for textiles in India. Hence, the company is having easy access to National and state highway, resulting in easy transportation of goods, so production and procurement, becomes hassle free.

Strong supplier base for sourcing of raw materials: The company has developed a robust supply chain for the sourcing of a wide variety of products that it offers to its customers. While, it does not have any long-term contracts with any of its raw material suppliers / products, however, it has maintained good relationships with its major suppliers. The company’s good relationships with its suppliers enable it to obtain good quality products within the prescribed timelines. It continually strive to maintain strong relationships with its suppliers in order to derive better insight into the markets for its raw materials, which helps it to manage its raw material supply chain, resulting in greater predictability of supply and, consequently, a greater ability to meet production schedules and achieve on-time delivery for its customers. The company has successfully leveraged the past experience of its management in maintaining effective supplier relationship ensuring uninterrupted supply chain management.

Customer centric business model: The company focus on attaining highest level of customer satisfaction. Understanding the consumer is one of the most important skills required to be successful in this business. The progress to be achieved by the company will be largely due to its ability to address and exceed customer satisfaction.

Risks and concerns 

Significant portion of revenue depends on limited customers: While the company is constantly striving to increase its customer base and reduce dependence on any particular customer, there is no assurance that it will be able to broaden its customer base in any future periods or that its business or results of operations will not be adversely affected by a reduction in demand or cessation of its relationship with any of its major customers. In 2021, top 5 customers contributed around 50% of the total revenue, while it was around 45% and 44% in 2020 and 2021 respectively. The loss of any significant customer may have a material adverse effect on the company’s business and results of operations.

Highly dependent on Top 10 suppliers: The company is highly dependent on Cotton Yarn and Synthetic Yarn, which are the prime raw material for Grey/Denim Textile. It procures its supply of raw materials from various suppliers depending upon the price and quality of raw materials. However, its Top 10 supplier contributes significantly to supply of raw materials. Any disruption of supply of raw materials from these suppliers will adversely affect its operations.

High working capital requirements: The company’s business requires a significant amount of working capital which depends upon timely realization of its debtors and availability of cash. Any delays and/or defaults in customer payments could result in increase of working capital requirement for which it may have to make additional funding at high cost resulting into reduction of company’s profit. The company’s inability to meet its working capital requirements can adversely impact its business.

Outlook

Swaraj Suiting Limited manufactures, produces, and supplies textile products. The firm mainly operates in three key business verticals; Manufacturing of Grey Fabric, Weaving on Job Work basis, and Trading of Finished Fabric, Grey Fabric, and Yarn. Initially, the company was engaged in the manufacturing of cotton/synthetic fabrics but later shifted to trading in the synthetic fabric in 2009 by selling off its Sulzer weaving looms to an associate concern, Swaraj Sulz Private Limited. The business re-entered into manufacturing Cotton and Synthetic fabric in 2011 and started commercial operations in January 2013. On the concern side, the company’s business is substantially dependent on certain key customers from whom it derives a significant portion of its revenues. The loss of any significant customer may have a material adverse effect on its business and results of operations. Moreover, the company is highly dependent on its Top 10 suppliers for uninterrupted supply of Raw-Materials. Any disruption in supply of raw materials from these suppliers will adversely affect its operations.

The company is coming out with a maiden IPO of 19,08,000 equity shares of Rs 10 each at a fixed price of Rs 56 per share to mobilize around Rs 10.68 crore. On performance front, during the FY 2020-21 the revenue from operation and other income of the company decreased to Rs 6021.56 lakh as against Rs 8065.53 lakh in the FY 2019-20. The said decrease in turnover is due to the fact that the turnover of FY 2019-20 is based on consolidated financials with its subsidiary Modway Suiting Private Limited (formerly Cyan Textile Private Limited). Meanwhile, the restated Profit after Tax for FY 2020-21 has decreased to Rs 267.47 lakh (4.44% of total revenue) as against Rs 354.32 lakh (4.39% of total revenue) in the FY 2019-20. Currently, the company is manufacturing various types of Fabric ranging from 9 to 14 Oz/sqyd. with Open End/ Ring Spun Yarns, Slub Yarns, Multi Count, Cottons and Polyester Spandex, moving forward, the company intends to manufacture high value Denim textile which are below 9 Oz/sqyd. which will enable the company to have higher margins. Moreover, the company is operating in 4 states viz. Rajasthan, Gujarat, Madhya Pradesh & Maharashtra through its Dealer Network. In future, the company intends to enter and capture new market in Bangalore, Chennai, Ludhiana & Exports Markets which will increase its geographical presence thereby increasing its customer base.

Bhatia Colour Chem coming with an IPO to raise upto Rs 40 crore
Mar-11-2022   15:01 Hrs IST

Bhatia Colour Chem

  • Bhatia Colour Chem is coming out with an initial public offering (IPO) of 5000000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 80 per equity share.
  • The issue will open for subscription on March 14, 2022 and will close on March 16, 2022.
  • The shares will be listed on SME Platform of BSE.
  • The share is priced 8.00 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Interactive Financial Services.
  • Compliance Officer for the issue is Hiral Shah. 

Profile of the company

The company is in trading & manufacturing of Chemicals, Dyes and Auxiliaries products. It produces finished Textile Auxiliaries & Chemicals by mixing basic Textile Auxiliaries & Chemicals with its standardised formulation of chemicals with the help of stirrers. It produces Foil Binders, Printing Inks and Zari Binders in company with the variety of ranges and specialisation as per the demand of the client. Its main strength of the products are formulation of chemicals and quality maintenance. The company being trader of Dyes and Auxiliaries products, supply‘s its products to mainly the processing house of the textile industries for the printing of the textile. Its products are mainly useful for the printing on Textile materials like Polyester & Cotton which includes, ambos on T shirts, Zari Prints and shading.

The company is manufacturing the Foil Binders of different specifications as per the requirements of the processing houses. The product manufactured by it is innovative and compete with the market on the price range. The quality of the company’s product is accepted by the processing houses and they got desired results by using its product satisfactorily, on account of that, it has developed cordial relation with the customers and got repetitive orders.

Proceed is being used for:

  • Acquiring partnership firm Polychem Exports.
  • Working Capital
  • General Corporate Purposes

Industry overview

India‘s chemicals industry is de-licensed, except for few hazardous chemicals. In the Indian chemical industry, alkali chemicals have the largest share with 69% in the total production; production of polymers accounts for 59% of the total production of basic key petrochemicals in 2019. The chemical industry is expected to contribute $ 300 billion to India‘s GDP by 2025. A revival in domestic demand and robust exports will spur a 50% YoY increase in the capex of specialty chemicals manufacturers in FY22 to Rs 6,000-6,200 crore ($ 815-842 million). Revenue growth is likely to be 19-20% YoY in FY22, up from 9-10% in FY21, driven by recovery in domestic demand and higher realizations owing to rising crude oil prices and better exports. Chemicals industry in India covers >80,000 commercial products. India‘s chemicals industry is de-licensed, except for a few hazardous chemicals. Specialty chemicals constitute for 22% of the total chemicals and petrochemicals market in India. Demand for specialty chemicals is expected to register 12% CAGR in 2019-22. Specialty chemical companies are seeking at import substitutions while exploring export opportunities to accelerate their business. The Indian dyes and pigments market is projected to reach $ 63 billion by 2022, accounting for about 16% of the global dye production.

India holds a strong position in exports and imports of chemicals at a global level and ranks 14th in exports and 8th in imports at global level (excluding pharmaceuticals). The chemicals industry in India covers more than 80,000 commercial products with overall market size standing at $ 178 billion in 2018-19. The industry is expected to grow at 9.3% to reach $ 304 billion by 2025 on the back of rising demands in the end-user segments for specialty chemicals and petrochemicals. In July 2021, production volumes of key chemicals stood at 909,310 MT and petrochemicals at 1,867,351 MT. The specialty chemicals sector is expected to reach $ 40 billion by 2025. In July 2021, exports of organic and inorganic chemicals increased 28.46% YoY to reach $ 2.42 billion. In July 2021, imports of organic and inorganic chemicals increased 42.95% YoY to reach $ 3.36 billion. For petrochemicals, imports of petroleum and crude products decreased 10.6% YoY to reach $ 9,581.85 million in December 2020.

Pros and strengths

Specialized in developing and marketing of value added printing products: The company has developed the value added printing products for getting better value realization. The new shades are developed after doing research and development work and also provide glitter powder to be with the textile revolution. The glitter powder is mainly useful for the fancy T-Shirt work. The promoters are associated with other partnership firms and they have in-house Laboratory for research and development work. The company will get the benefit of research work and develop value added product.

Research and Development: The company has R&D team and they, with their knowledge, develop various dyes and auxiliaries and also guide the customers on the products. Its promoters are providing special facilities to clients by fulfilling their requirements with colours, embosses and glitter shades which are not easily available in the market. The Promoter arranges the Master batch (Colour Chips) for unique colours to their customers.

Cordial relations with Customers: The promoters are surat based and mainly supply the material to the process house in and around Surat. The easy access to the promoters by the client and immediate solution of their problems by the company develop cordial relations with customers. The customer centric approach of the promoters is one of the key factor for the development of the business of the Company.

Risks and concerns

High working capital requirements: The company’s working capital requirement is high due to supplying goods to the textile industry and the credit period given to the customers is high. Inability of the company to raise corresponding working capital in line with the growth of its operations may result in adversely affecting its operations and financial performance.

Operations are in Surat city only: Currently, the company’s office and Factory are situated in Surat and it is carrying its business mainly with market players from Surat itself. Hence, its revenues are generated from operations in this region only. In the event that demand for its products in general reduces or stops by any reason including political discord or instability or change in policies of State, then its financial condition and operating results may be materially and adversely affected.

Various regulations and policies: The company is subject to various regulations and policies. Its business and prospects could be materially adversely affected by changes in any of these regulations and policies, including the introduction of new laws, policies or regulations or changes in the interpretation or application of existing laws, policies and regulations. There can be no assurance that the company will succeed in obtaining all requisite regulatory approvals in the future for its operations or that compliance issues will not be raised in respect of its operations, either of which could have a material adverse affect on its business, financial condition and results of operations.

Outlook

Bhatia Colour Chem specializes in trading & manufacturing Chemicals, Dyes, and Auxiliaries products. The company produces Value Added Printing Products, Textile Auxiliaries & Chemicals, Foil Binders, Glitter Powder, Printing Inks, and Zari Binders with a variety of ranges and specialization as per the demand of the client. The products are mainly useful for the printing on Textile materials like Polyester & Cotton which includes, ambos on T-shirts, Zari Prints, and shading. The company has R&D team and they, with their knowledge, develop various dyes and auxiliaries and also guide the customers on the products. The company has always focused on meeting the requirement of clients and providing them maximum support in terms of timely delivery. Its success lies in the strength of its relationship with customers and suppliers who have been associated with its promoters for a long period. On the concern side, the company has not identified any alternate source of funding and hence any failure or delay on its part to raise money from this Issue which may delay in the implementation schedule and could adversely affect its growth plans. Besides, the company’s future ability to pay dividends will depend on its earnings, financial condition and capital requirements. There can be no assurance that it will generate sufficient income to cover the operating expenses and pay dividends to the shareholders.

The company is coming out with a maiden IPO of 5000000 equity shares of Rs 10 each at a fixed price of Rs 80 per equity share to mobilize Rs 40 crore. On the performance front, the total income from the operation for the stub period ended on February 18, 2022 was Rs 531.96 lakh consist of 100% of Sale of Product income only. The profit after Tax (PAT) for the stub period was Rs 35.30 lakh representing to 6.64% of the total revenue. The company at present is doing business in and around Surat only, so it is planning to expand its business activities in not only Gujarat but also in other states of India. It intends on implementing various measures to improve its operational efficiencies, including undertaking measures to reduce its consumption of disposable items and avoid wastage. It intends to maximize its operational efficiency by achieving greater integration and by implementing a stronger supply chain management.  

Cool Caps Industries coming with an IPO to raise upto Rs 11.63 crore
Mar-09-2022   15:43 Hrs IST

Cool Caps Industries

  • Cool Caps Industries is coming out with a 100% book building; initial public offering (IPO) of 30,60,000 shares of Rs 10 each in a price band Rs 36-38 per equity share.
  • The issue will open for subscription on March 10, 2022 and will close on March 15, 2022.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 3.60 times of its face value on the lower side and 3.80 times on the higher side. 
  • Book running lead manager to the issue is Holani Consultants.
  • Compliance Officer for the issue is Arijit Ghosh. 

Profile of the company

The company is mainly engaged in the business of manufacturing of a wide range of Plastic Bottle Caps and closures which includes plastic soda bottle caps, plastic soft drink bottle caps, plastic mineral water bottle caps and plastic juice bottle caps from units situated in Howrah, West Bengal and Kotdwar, Uttarakhand. Apart from plain closures, it also manufactures embossed, debossed and printed closures as per client specifications. The company is also in the business of manufacturing face masks and the products include Mask on Plus N95 FFP2 Mask, Mask on N95 FFP2 Mask and N95 FFP2 Mask from unit situated in Howrah, West Bengal.

Over the past couple of years, the company has outgrown itself into a distinguished large-scale organization specializing in pet bottle caps of various shapes, sizes and colours along with cap handles having plentiful applications. The company manufactures caps and closures in Continuous Compression Molding Machine imported from Sacmi Inc, Italy with Cool + Technology using 100% virgin food grade quality material. Production takes place in an enclosed dust proof environment with quality testing at regular intervals. The products are packed in corrugated boxes with proper bursting strength inside plastic liners. Overall color migration test, heavy metal testing and analysis is done to ensure quality product.

In addition to the supply of pet bottle caps, the company also trades in Shrink film as an additional service to its existing customers. This product has a demand within its existing customer base and therefore, to provide one-stop solution to their needs, it had started selling this product. Shrink films are manufactured by its associate concern, Airborne Technologies. Furthermore, the company is also involved in trading of plastic granules besides using it as a raw material for its own consumption. Plastic granules are made up of particles that are formed as a result of the progressive enlargement of primary particles that change their original identity. These granules can be utilized in the production of a vast range of plastic products, such as chairs, mugs, bottles, tanks, to name a few and are known for their fine finishing and easy malleability. The company provides a wide range of granules such as Polypropylene Granule, High Density Polyethylene (HDPE) Granules, Low Density Polyethylene (LDPE), Linear Low-Density Polyethylene (LLDPE) Granules and many more. The plastic granules are procured domestically and also imported from foreign countries.

Proceed is being used for:

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

Industry overview

In India polyethylene terephthalate (PET) has become the primarily preference in the packaging sector owing to the rigidity it offers, its eco-friendly attribute and recyclable nature. The demand for PET in the packaging of food and beverages witnessed a steep inclination after the sudden outbreak of Coronavirus in the final quarter of FY 20. This astonishing increase in demand is a ripple effect of the increasing awareness of hygiene, prompting an enhanced procurement of disposable and packaged items to reduce the chances of infection by any means. Moreover, the increasing preference for PET bottles over aluminum and glass packaging, in rapidly expanding Indian pharmaceutical sector owing to its quality standard and safety is anticipated to further propel the demand for PET in the forecast period. As the healthcare and pharmaceutical sectors are likely to witness a robust expansion due to increasing requirement for equipment and medications after the Pandemic, the need for PET bottles for medical packaging is perceived to witness an incredible surge in the coming years.

Growing at 18 per cent per annum, country's plastic packaging industry is expected to reach $73 billion in the next four years. The size of the industry in India is about $32 billion, which constitutes only 4 per cent of the global packaging industry. The per capita packaging consumption in India is quite low at 4.3 kg, compared to countries like Germany and Taiwan where it is 42 kg and 19 kg, respectively. In the coming years it is expected to grow at 18 per cent per annum. The overall packaging industry in India has a huge growth potential and is expected to reach $73 billion in the year 2020. The industry is driven by key factors like rising population, increase in income levels and changing lifestyles. Demand from rural sector for packaged products is being fueled by increasing media penetration through the means of internet and television. Organized retail and boom in e-commerce will fuel growth of plastic packaging and per capita consumption to be doubled in five years. India is a growing market for plastics and consumes about 12.8 million tonnes of plastics annually against the global consumption of 285 million tonnes per year. The plastics and polymer consumption are growing at an average rate of 10 per cent. About 30,000 processing units with 1,13,000 processing machines have created manufacturing capacity of 30 million tonnes per annum in India.

Pros and strengths

Established manufacturing facility: The company’s registered office and the manufacturing facility are located at Howrah in West Bengal. It has set up a new manufacturing unit in Kotdwar, Uttarakhand which has been made operational from August 13, 2020 onwards. Its both 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. The entire process is carried out under one roof. 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.

Focus on quality and safety: The company manufactures products in Continuous Compression Molding Machine that was imported from Sacmi Inc, Italy which with Cool+ Technology using 100% virgin food grade produce quality material. Production takes place in an enclosed dust proof environment with testing at regular time periods for conforming to the quality. The final products are packed in corrugated boxes with proper bursting strength inside plastic liners. Its products undergo quality check at various levels of production to ensure that any quality defects or product errors are rectified on real time basis. It also has an in-house laboratory for conducting various tests. Overall color migration test, heavy metal test and analysis is done to ensure quality product and its in-house testing laboratory regulates and monitors the same to ensure the requisite quality and strength of boxes so that they can safely carry products for its end use.

Cost leadership and time bound execution: The company promotes cost leadership and timely execution of client’s orders. The timely fulfillment 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. The company has also sustained good relations with its vendors and consequently, it enjoy the benefit of timely supply of the raw materials which has been one of the major reasons why it has been able to achieve timely fulfillment of client’s orders. The company constantly endeavors to implement an efficient procurement policy for inputs required for manufacturing so as to ensure cost efficiency in procurement which in turn results in cost effective manufacturing.

Risks and concerns

Requires significant amounts of working capital: The company’s business requires a significant amount of working capital for smooth functioning. 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. It estimate its sales based on the forecast, demand and requirements and also on the customer specifications.

Face competition: The market for company’s products is competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes such as technical competence, quality of products, distribution network, pricing and timely delivery. Some of its competitors may have longer industry experience and greater financial, technical and other resources, which may enable them to react faster in changing market scenario and remain competitive. Moreover, the unorganized sector offers their products at highly competitive prices which may not be matched by it and consequently affect its volume of sales and growth prospects. Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition.

Business is subject to season volatility: The company’s major sales of its products are made to packaged mineral water supplier companies and soft drinks providers. The sales of these items are at peak in summer seasons and lower in winter seasons as per industry practices. As the company products are supplied to these vendors, its major sales are done in summer seasons and lesser sales in winter seasons. In case of any variation is sales its number for any quarter or half year may not reflect true affairs of the company and any reliance placed on it might affect investors and other stake holders in general.

Outlook

Cool Caps Industries is engaged in the business of manufacturing a range of plastic bottle caps and closures such as plastic soda bottle caps, plastic soft drink bottle caps, plastic mineral water bottle caps, and plastic juice bottle caps. It further manufactures embossed, debossed, and printed closures as per customers' specifications. The firm also manufactures face masks i.e., Mask on Plus N95 FFP 2 Mask, Mask on N95 FFP2 Mask, and N95 FFP2 Mask. The firm also engages in the trading of plastic granules such as Polypropylene Granule, High-Density Polyethylene (HDPE) Granules, Low-Density Polyethylene (LDPE), Linear Low-Density Polyethylene (LLDPE) Granules, etc. On the concern side, the company may require additional capital from time to time depending on its business needs. Any issue of shares or convertible securities would dilute the shareholding of the existing shareholders and such issuance may be done on terms and conditions, which may not be favorable to the then existing shareholders. The company has not obtained insurance coverage in respect of all risks. In absence of any coverage of insurance the company faces the risks of loss of profit due to product defect / liability risk, loss of profits, losses due to terrorism, etc.

The issue has been offered in a price band of Rs 36-38 per equity share. The aggregate size of the offer is around Rs 11.02 crore to Rs 11.63 crore based on lower and upper price band respectively. On the performance front, the company’s total revenue has increased by 21.53% to Rs. 3,129.84 lakh for financial year 2020-21 from Rs 2,575.33 lakh for financial year 2019-20 bifurcated into revenue from operations and other income. The company’s profit after tax decreased by Rs 28.93 lakh, showing a percentage decrease of (9.02%). The company intends to improve operating efficiencies to achieve cost reductions to have a competitive edge over the peers. It intends to have close interaction with its customers to strengthen its relationships with them and enabling it to understand the market perception and demand for its products. It seeks to continue to work towards the up gradation and modernization of its infrastructure and technology in future as well for sustaining its growth in the subsequent periods.

SP Refractories coming with an IPO to raise upto Rs 4.92 crore
Mar-08-2022   15:30 Hrs IST

SP Refractories

  • SP Refractories has come out with an initial public offering (IPO) of 5,47,200 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 90 per equity share.
  • The issue will open for subscription on March 9, 2022 and will close on March 11, 2022.
  • The shares will be listed on NSE Emerge Platform.
  • The share is priced 9 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Aryaman Financial Services.
  • Compliance Officer for the issue is Shreyaa Jajoo.   

Profile of the company

SP Refractories is engaged in manufacturing and supplying Refractory Material made using hydrated lime, Calcined Alumina and other raw materials. Its core focus is on refractory cement which is a niche and high margin cement widely used in iron & steel and construction industries because of its thermal conductivity, Maximum strength and Heat resistance. The company has one Manufacturing facility at M- 10, MIDC, Hingna, Nagpur and the adjoining premise M- 11-1 & M-11-2, MIDC, Hingna, Nagpur is being used as Godown and storage facility. The manufacturing facility is located in MIDC which is well-developed industrial area of Nagpur.

The company has a healthy client base due to its quality product, customized solutions and large product line. It has clinkers manufacturing capacity of 4000 MT per year and Clinkers crushing capacity of 6000 MT per year. It get clinkers manufactured from outsider on job work basis and thereafter process of crushing the clinkers, blending and packing of refectory cement in powder form carries out in its manufacturing facility for excess capacity of crushing. Further, as and when required it purchase clinkers from third party and carry out process of crushing the clinkers, blending and packing of refectory cement in powder form to utilize its excess capacity of crushing.

The company has dedicated semi-automatic machines and skilled operators for manual checking of raw materials as well as Finished Goods. Its Testing and QC Technical team combined with its testing equipments ensures the quality of raw material dispensed in the production process and also the finished goods delivered to its customers. This helps in improving its procurement process thus reducing wastages, returns and other related costs. 

Proceed is being used for

  • Funding working capital requirements.
  • General corporate purposes.

Industry overview

The Indian refractory industry is an Rs 9,000 crore market, with major players such as TRL Krosaki, Dalmia OCL, RHI Magnesita India. About 75% of the refractories manufactured using magnesia; alumina or silica is used with the rest being consumed by cement and glass, ceramics, petrochemicals and boiler industries. They are the necessary materials for various high-temperature equipment like in the internal linings of blast furnaces and converters used for steel making and in furnaces for heating materials before further processing etc. Data sourced from the ministry of commerce shows that India imported refractory bricks, blocks, tiles and similar refractory ceramic constructional goods worth Rs 855 crore in 2019 and 2020 which is 4% higher than the previous year of Rs 816 crore. India also imported high alumina refractory cement used in steel and cement companies worth Rs 25.3 crore in 2019-2020 as against, Rs 12 crore in 2018-2019.

The Indian refractory industry started its journey with first line of production in Kolkata in 1874. Today, the industry comprises over 100 established units, with 11 large plants, 24 medium-scale units and the rest in the small-scale sector. However, while the refractory industry in India took off in the late 19th century, the real growth came in the late 1950s when the public sector steel plants were set up and Tata Steel embarked upon its expansion plans. Currently, the Indian refractory industry has an aggregate production capacity of 20 lakh tones per annum. The capacity utilization, however, currently stands at around 60 percent or 11.5-12 lakh tones per annum. About 75 per cent of the refractories that are manufactured find application in the steel industry, 12 percent in the cement industry, 5-6 per cent in non-ferrous industries, three per cent in the glass industry and the balance in other industries.

Pros and strengths

Long standing relationship with key customers and suppliers:  The company enjoys long standing relationship with key Customers & suppliers. These long standing relationships are result of its commitment to quality, timely delivery, promptness in payments and adaptability etc. It benefits immensely from this. Its business and growth are significantly depending on its ability to maintain the client relationship. These long standing relationship with customers and suppliers have helped in establishing its reputation as a trusted business player in Refractory Industry.

Strong balance sheet and financial condition: The company performed reasonably well with strong revenue and balance sheet position. As on September 30, 2021, the owned net worth of the company (i.e. equity plus free reserves) was Rs 547.80 lakhs. The company is a low debt well capitalized company. Hence, it can procure the goods by making upfront payments and take benefit of cash discount or can buy in bulk and hold inventory for longer periods thereby improving its profitability. It has the ability to leverage its balance sheet to take advantage of a favorable business cycle or market opportunity.

Quality assurance: The company’s products and processes undergo regular quality checks to ensure zero defects. The quality assurance efforts include thorough checking of all raw materials, other inputs and finished goods to ensure quality. All the divisions are well equipped with quality checking and testing equipments for quality assurance. It has in-house testing laboratory to test its raw materials and finished products to match the quality standards.

Risks and concerns

Dependent on third party service providers: The company is heavily dependent on third party service provider who provides clinkers to it on job work basis. Its business from its crushing capacity is dependent on its continuing relationship with such service providers, and there can be no assurance that such service providers will continue to do business with it in the future on commercially acceptable terms or at all. However, in case of any change in the delivering pattern of its services providers or disassociation with them can adversely affect its business or if its service providers do not continue to manufacture clinkers for it, or reduce the volume of clinkers manufactured for it, its business prospects, results of operations and financial condition may be adversely affected. Further, loss of or interruption of work by, service provider or a supplier of clinkers or the inability to procure clinkers on a regular basis or at all may have an adverse effect on its revenues, cash flows and operations.

Business is working capital intensive: The company’s business is working capital intensive including fund requirement for payment for bulk purchases of various raw materials. Hence, major portion of its working capital is utilized towards debtors and inventory. The results of operations of its business are dependent on its ability to effectively manage its inventory and trade receivables. To effectively manage its inventory, it must be able to accurately estimate customer demand and supply requirements and manufacture new inventory accordingly. However, if its management misjudges expected customer demand, it could cause either a shortage of products or an accumulation of excess inventory. Further, if it fail to sell the inventory it manufacture, it may be required to write-down its inventory or pay its suppliers without new purchases, or create additional vendor financing, all of which could have an adverse impact on its income and cash flows.

Face competition: The Refractory Industry is highly competitive, having presence of large number of small players. With the high level of competition, the company’s results of operations are sensitive to, and may be materially and adversely affected by, competitive pricing, services offered, brand recognition and other factors. Competition may result in pricing pressure, reduced profit margin or a failure to increase its market share, any of which could substantially harm its business and results of its operations. Many of its competitors have significant competitive advantages, including longer operating histories, larger and broader customer base, greater financial, research and development, marketing, distribution budgets and other resources than it does. The number of its direct competitors and the intensity of competition may increase as it expands into other product lines or as other smaller players expand into other product lines. Its competitors may enter into business combinations or alliances.

Outlook

SP Refractories manufactures and supplies refractory material made using hydrated lime, Calcined Alumina, and other raw materials. Refractory cement is its core focus that is widely used in steel & construction industries because of high thermal conductivity, maximum strength, and heat resistance. The company purchases clinkers from outsiders and thereafter crushes, blend, and pack refractory cement in powder form in its manufacturing facility. It has a healthy client base due to its quality product, customized solutions and large product line. It has clinkers manufacturing capacity of 4000 MT per year and Clinkers crushing capacity of 6000 MT per year. It has dedicated semi-automatic machines and skilled operators for manual checking of raw materials as well as Finished Goods. On the concern side, the company’s business and assets could suffer damage from fire, natural calamities and the goods transported to its customers by its supplier could suffer from damage, misappropriation or other causes, resulting in losses, which may not be covered / fully compensated by insurance. It face an inherent business risk of exposure to product liability or recall claims, in the event that its products fail to perform as expected or such failure results, it may be subject to claims resulting from its manufacturing defects or failure to satisfy the requirements of its customers.

The company is coming out with an IPO of 5,47,200 equity shares of Rs 10 each at a fixed price of Rs 90 per equity share to mobilize Rs 4.92 crore. On the performance front, in fiscal 2021, the company’s total income increased by Rs 472.98 lakh or 22.56 %, from Rs 2,096.56 lakh in fiscal 2020 to Rs 2,569.54 lakh in fiscal 2021. The increase in the year 2021 was due to increase in its capacity utilization since its products were identified as essential goods and its operations were shut down only for initial period of covid-19 pandemic and thereafter it was able to operate. Profit after Tax increased by Rs 35.41 lakh or 88.67%, from Rs 39.93 lakh in fiscal 2020 to Rs 75.34 lakh in fiscal 2021. The company expects to increase its volumes, revenues and scale of operations and it will require substantial working capital for the same. It is hence its strategy to raise funds from this Issue and augment its fund based working capital capabilities. The company may also explore possibilities for utilising the available capital to increase die making capabilities so as to increase its product line in the future.

Shigan Quantum Technologies coming with an IPO to raise upto Rs 22.69 crore
Feb-26-2022   10:51 Hrs IST

Shigan Quantum Technologies

  • Shigan Quantum Technologies has come out with an initial public offering (IPO) of 45,39,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 50 per equity share.
  • The issue will open on February 28, 2022 and will close on March 03, 2022.
  • The shares will be listed on NSE Emerge Platform.
  • The share is priced 5 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Finshore Management Services.
  • Compliance Officer for the issue is Gunjan Gupta.

Profile of the company

The company is engaged in the business of designing, developing and manufacturing of varieties of Alternate Fuel Systems including CNG, LNG and Hydrogen Fuel Kit systems for OEMS and others. It manufactures Alternate Fuel Systems for heavy duty vehicles, light duty vehicles and off- highway applications.The company was incorporated in the year 2008 with an object to manufacture alternate fuel systems in India. Subsequently, it has gained expertise in various products in the alternate fuel systems, especially in CNG and LNG fuel kits within automotive industry through its in-house expertise and technical assistance. Since April 2020, the company has also ventured into manufacturing of Fire Detection & Alarm System and Fire Detection & Suppression System (FDAS &FDSS). The turnover from this newly ventured business activity as on August 31, 2021 is Rs 85.21 lakh and March 31, 2021 is Rs 139.61 lakh. The installed capacity of manufacturing of FDAS & FDSS is 36,000 nos. per annum, however the company has manufactured 671 nos. of FDAS & FDSS as on March 31, 2021.

The company source its critical technologies from MNC companies with whom it has long term technology user agreement or manufacturing license. It has entered into technology agreements with companies for developing exclusive products customised to its requirements. It has got exclusive manufacturing rights in India for these products after their development. With change in technologies, it has plan to acquire the Foreign Suppliers’ expertise through Joint Venture or by outright purchase of their technologies and localise production of Gaseous Fuel Injection Technology systems. Such Gaseous Fuel Injection Technology systems will enable the Company to manufacture products that will meet the upcoming Emission norms thereby enhancing the performance of the vehicle. It is engaged in designing, optimizing, manufacturing, assembling, testing and kit integration of alternate fuel systems/kits for heavy/light duty commercial vehicles and buses, power generation equipment and industrial equipment viz. forklifts etc.

The company imports its raw materials from countries like Singapore, USA, Chicago, Mexico, Switzerland, China, Hong Kong, UAE, Italy, France, etc. It also procure its raw materials from domestic suppliers located in Pune, Gurugram, Ghaziabad, Bangalore and other domestic market in India. It export certain components of CNG Fuel Systems to countries like New Jersey, Australia, Italy, Sweden, Canada.

Proceed is being used for:

  • Meeting Working Capital requirements.
  • Finance the purchase of machinery.
  • General corporate purpose.
  • Meet offer related expenses.

Industry overview

The automobile industry in India is the world’s fifth largest. India was the world's fifth largest manufacturer of cars and seventh largest manufacturer of commercial vehicles in 2019. Indian automotive industry (including component manufacturing) is expected to reach Rs 16.16-18.18 trillion ($251.4-282.8 billion) by 2026. The industry attracted Foreign Direct Investment (FDI) worth $25.85 billion between April 2000 and March 2021 accounting for 5% of the total FDI during the period according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

The Indian automotive industry is expected to reach $300 billion by 2026. Domestic automobile production increased at 2.36% CAGR between FY16-FY20 with 26.36 million vehicles being manufactured in the country in FY20. Overall, domestic automobiles sales increased at 1.29% CAGR between FY16-FY20 with 21.55 million vehicles being sold in FY20. Overall, automobile export reached 4.77 million vehicles in FY20, growing at a CAGR of 6.94% during FY16-FY20. Two wheelers made up 73.9% of the vehicles exported, followed by passenger vehicles at 14.2%, three wheelers at 10.5% and commercial vehicles at 1.3%. Indian automobile exports stood at 1,419,430 units from April 2021 to June 2021 as compared to 436,500 units in April 2020 to June 2020.

Increased concern on the environmental pollution caused by conventional auto fuels such as diesel/petrol, Compressed Natural Gas (CNG), an environmentally friendly and clean fuel is opted as an alternate fuel. Auto fuel Policy introduced during 2003 by MoPNG aims at to address the issues of vehicle emission, vehicle technology and auto fuel quality. And also, it aims at optimal utilization of oil & gas infrastructure. The use of CNG and LPG would be increased in pollution effected cities. CNG Vehicles are in use in major states in Maharashtra, Gujarat, Delhi, Andhra Pradesh, Bengal, UP, MP etc. In recent future, it is likely that most Southern cities will also go on CNG. CNG is dispensed using specialized dispensing equipment to the vehicle. In the Automobile sector, there is a continuous growth of CNG stations.

Pros and strengths

Quality assurance and standards: The company is committed to deliver the good quality product in proper manner at all steps from manufacturing to dispatch. Its dedicated internal quality control team ensures the compliance with good standard practices. It give prime focus to providing quality material to its customers and follows high quality standards.

Cordial relationships with its suppliers: The company has cordial relationship with its suppliers for supply of materials, which provides it with the competitive advantage of effective and timely sourcing of raw materials. The company's effective sourcing of materials ensures timely delivery of its products to its customers, thereby enhancing the value provided to its customers.

Experienced management team: The company’s management team includes professionals with experience in the Automotive industry as well as finance and marketing functions. Its Promoters Shishir Agrawal and Gagan Agrawal brings their entrepreneurial vision and leadership which has been instrumental in growing and sustaining its business operations. Its management team is growth oriented and has ability to manage growth in rapidly changing business environment and delivery of high-quality materials at sustainable cost. 

Risks and concerns

Operations have significant raw material requirement: The success of the company’s operations depends on its ability to source raw materials at competitive prices. Principal raw materials that it use in its production are aluminium components, brass components, steel components, plastic granules & plastic components, bare PCB, semi-conductor components & pressure die casting components etc. among others. It also purchase products which it use directly as input materials, including materials which do not require any processing. It procure these raw materials from various suppliers in the industry. Its ability to identify and build relationships with reliable vendors contributes to its growth and its successful management of its inventory as well as other aspects of its operations. Its raw material and component suppliers may fail to consistently deliver products of acceptable quality and within stipulated schedules, which may adversely affect its operations.

Dependent on certain suppliers: The company is dependent on its top 10 suppliers for its raw materials and certain components used in the manufacture of its products. It selects suppliers based on total value (including total landed price, quality, delivery, and technology), taking into consideration their production capacities and financial condition and expect that they will deliver in accordance with its quality standards and comply with their contractual obligations with it. However, there can be no assurance that capacity limitations, industry shortages, labour or social unrest, weather emergencies, commercial disputes, government actions, riots, wars, sabotage, cyber- attacks, non-conforming parts, acts of terrorism, “Acts of God” such as fire, earthquake, floods, natural disasters and other events beyond human control, financial or operational instability of suppliers or other problems that its suppliers experience will not result in occasional shortages or delays in their supply of components to it. It is dependent upon the ability of its suppliers to meet performance and quality specifications and delivery schedules.  

Dependent on continuing operation of manufacturing facilities: Any significant interruption in manufacturing at the company’s facilities could have a material adverse effect on its business, results of operations and financial condition. The company manufactures substantially all of the products at its manufacturing facility located at Gurgaon, which are subject to the normal risks of industrial production, including equipment breakdowns, labour stoppages, natural disasters, industrial accidents, power interruptions etc. In case of any disruption at such facilities, it may adversely affect the manufacturing cycle, and may lead to time over-run in the execution of the project. The manufacturing facility requires a significant amount and continuous supply of electricity and any shortage or non-availability of electricity may adversely affect its operations.

Outlook

Shigan Quantum Technologies is engaged in the business of designing, developing, manufacturing, and assembling Alternate Fuel Systems i.e. LNG, CNG, and Hydrogen Fuel Kit Systems. Since April 2020, the business has ventured into Fire Detection & Alarm systems. It manufactures Alternate Fuel Systems for high duty & light-duty vehicles power generation equipment, industrial equipment, and off-highway applications. It exports CNG fuel systems to countries such as New Jersey, Sweden, Canada, Australia, and Italy. The company sources its critical technologies from MNC companies with whom it has long term technology user agreement or manufacturing license. It has entered into technology agreements with companies for developing exclusive products customised to its requirements. It has got exclusive manufacturing rights in India for these products after their development. On the concern side, the company’s business could suffer damage from fire, natural calamities, misappropriation or other causes, resulting in losses, which may not be fully compensated by insurance. Besides, it imports certain of its raw-materials from overseas market and also export certain of its products to overseas market as such it is exposed to fluctuations in foreign exchange rates between foreign and Indian currencies.

The company is coming out with an IPO of 45,39,000 equity shares of Rs 10 each at a fixed price of Rs 50 per equity share to mobilize Rs 22.69 crore. On the performance front, total income for the financial year 2020-21 stood at Rs 9602.26 lakh, whereas in the Financial Year 2019-2020 the same stood at Rs. 7278.79 lakh, representing an increase of 31.92%.The company reported Restated profit after tax for the financial year 2020-21 of Rs 351.34 lakh in comparison to Rs 292.07 lakh in the financial year 2019-20. The company intends to invest in developing and enhancing recognition of its brand through brand building efforts, communication and promotional initiatives such as participation in industry events, public relations and investor relations efforts. This will help it to maintain and improve its reach. The company seeks to expand and enhance its presence in its existing business segments by identifying markets where it can provide cost-effective and quality products to prospective consumers. It seeks to capitalize on its existing experience, established contacts with suppliers and entering in the new products market considering the local working conditions.

Ekennis Software Service coming with an IPO to raise upto Rs 2.88 crore
Feb-18-2022   14:51 Hrs IST

Ekennis Software Service

  • Ekennis Software Service is coming out with an initial public offering (IPO) of 400000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 72 per equity share.
  • The issue will open on February 21, 2022 and will close on February 24, 2022.
  • The shares will be listed on SME Platform of BSE.
  • The share is priced 7.20 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Shreni Shares.
  • Compliance Officer for the issue is Sonali.

Profile of the company

The company is in the business of Software IT Solution and Consulting Services, IT Product / Software Development and Software Training, Enterprise Resource Planning Solution, Learning Management Solution, 3D Printing, Digital Printing and Packaging Design Management consultancy. It has leveraged its domain expertise, processes and infrastructure to diversify its offering of services to cater to a variety of business sectors.

The company consults, develop solutions around ERP systems that optimize business processes and leverage corporate knowledge leading to competitive advantage. It also provides business process analysis and system design, technical expertise, implementation, training and support services. It has expertise in SAP ERP (Technical & Functional). Its major focus areas for implementation are discrete Manufacturing, Automotive, Food Processing, Chemicals, Telecom sectors. It has a team of SAP Professionals who have the credentials and capabilities to support service and consult its customers. Its consultants are trained and qualified on SAP, Microsoft and Oracle.

The company has been incorporated by combining the expertise & resources with 4.5 years of service experience in delivering Training, fill-stack web development, project handling, outsourcing & recruitment. It has a successful track record of outsourcing manpower with multiple clients across India, delivering ERP Support services with its clients, having built-in software application packages to support various operations.

Proceed is being used for:

  • Purchase of plant and machinery.
  • Funding working capital requirements.
  • General corporate purposes.

Industry overview

The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55% market share of the $200-250 billion global services sourcing business in 2019-20. The IT industry accounted for 8% of India’s GDP in 2020. According to STPI (Software Technology Park of India), software exports by the IT companies connected to it, stood at Rs. 1.20 lakh crore ($16.29 billion) in the first quarter of FY22. The IT & business service industry’s revenue was estimated at $6.96 billion in the first half of 2021, an increase of 6.4% YoY. The export revenue of the IT industry is estimated at $150 billion in FY21. Indian software product industry is expected to reach $100 billion by 2025. Indian IT's core competencies and strengths have attracted significant investment from major countries. The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth $74.12 billion between April 2000 and June 2021. The sector ranked 2nd in FDI inflows as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT).

Print and packaging is the first thing that attracts consumers. These two play an important role especially in the consumer goods industry. In 2009, an American multinational company producing fruit-based beverages learnt a hard lesson when its consumers discarded its products due to new packaging. The company replaced its best-selling orange juice packaging for the North American market, but the new packaging failed miserably. A few days later, sales dropped by 20 per cent as consumers started to criticise the new design on social media. Consumers mostly translate an attractive packaging for high quality, thus premium products are often seen in more consumer-friendly and attractive packaging. A study states that 60 per cent of consumers use social media sites to talk about products and recommend them, which can impact the sales drastically. The print industry constitutes around four per cent of the global market, while per capita packaging consumption in India is quite low at 8.7 kilograms as compared to countries like Germany and Taiwan where it is 42 kilograms and 19 kilograms, respectively. But the study suggests, and experts too claim that the growth in the packaging industry in India is mainly driven by the food and pharmaceutical packaging sectors. The large and growing Indian middle class along with the growth in organised retailing in the country are fuelling the growth in the packaging industry.

Pros and strengths

E-Learning & Mobile Learning Solutions: The company’s innovative, interactive, immersive learning content combined with effective pedagogy is a powerful tool for knowledge and skill enhancement. Its e-learning & mobile learning solutions are aimed at helping organizations ensure that their people deliver sustained business benefits and return on investment. Its web-based learning management system helps in making learning easier by offering a large number of collaboration features such as messaging, groups, forums, blogs, discussions, tagging, rating, comments, etc. It also enhances peer to peer learning experience along with actively engaging people on an individual level. Progress is tracked and analyzed accurately using graphs, pie charts, histograms, spider charts, etc. Its SaaS-based platform eliminates costly installations and investments in hardware as it is web based. It also provide end-to-end solutions starting from hosting, content management, updates to support.

One stop packaging provider: The company’s digital printing under ‘myperfectpack’ brand, supplies a range of innovative packaging products for the Food, Baby Care, Personal & Hygiene, Industrial & Agriculture industries. myperfectpack’s wide range of products meet international quality standards and are produced to satisfy customers’ requirements in the ever-changing food and packaging industry. The business leaders have trusted the company to solve their strategic and creative challenges: from branding, business design, UI/UX design, product design, packaging design to communication design, across industries and regions. Guided by its systematic approach and methodologies such as Design Thinking, it helps SMEs build brands that matter. Its team is committed to continuously improve and excel in its capabilities to make the world a more creative place and empower each entrepreneur. This is one kind of unique printing capability which gives customer flexibility to choose design, quantity, and quality of printing products under one roof.

Quality policy: The company is constantly focused on building quality into the culture of the organization. It continuously assess and improve its operations, methods and dealings with people, both inside and outside the organization, while deploying effective tools and techniques of quality management. It has established, documented, implemented and is maintaining a Quality Management System and continually improving the effectiveness of its services. Its QMS scope covers provision of software solutions encompassing project management, consultancy, analysis, design, development, testing and validation, installation, maintenance, technical support and re-engineering services in the areas of systems and applications software as applicable to client-server computing, internet-based applications, object-oriented technology, multimedia and embedded systems. Moreover, its products under Digital Printing Segment, are approved by GS1 India. GS1 standards facilitate unique and universal identification, capture and share of information on products and services, from point-of-origin to point-of-sale or dispensation. Most commonly, their standards are used in barcoding of consumer items and they enable important applications such as product authentication, track & trace, product recall, real-time stocks monitoring, online selling and more. When the industries use GS1 standards, consumers benefit from enhanced product availability, safety & security and making better purchasing decisions whether shopping online or offline.

Risks and concerns

Length of sales cycle may fluctuate significantly: A customer's decision to purchase its services or products often involves a comprehensive implementation process across the customer’s network(s) which includes customer education, evaluation by a number of employees in its customers’ organization and, often, a significant strategic or operational decision by its customers. Its sales efforts involve educating its customers about the use and benefits of its products and solutions, including any potential cost savings achievable by organization that partner with it. Customers typically undertake a significantly long evaluation process which also involves evaluation of its competitors’ services and can result in a lengthy sales cycle. Moreover, a purchase decision by a potential customer typically requires extended evaluation, testing and the approval of senior decision makers, including the boards of directors of its customers. It spends substantial time, effort and money on its sales efforts without any assurance that its efforts will produce any sales. Additionally, implementing its products and any related services may entail a significant commitment of resources by prospective customers, accompanied by the risks and delays frequently associated with significant technology implementation projects.

Face competition: Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition. The company operates in an industry, which faces intense competition from established as well as unorganized players. Its competition depends on several factors, which include quality, price and its pace in keeping up with the changing trends. Competition emerges from both organized as well as unorganized sector. If the company is unable to effectively compete its revenues and reputation may be adversely affected and it not be able to achieve its long-term strategies.

Require working capital: The company’s business demands working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects.

Outlook

Ekennis Software Service is engaged in the business of software IT solution and consulting services, IT product/ software development, and software training, ERP solution, Learning Management Solution, 3D printing, Digital printing and packaging design consultancy. It also provides business process analysis, system design, technical expertise, implementation, training, and support services, and has expertise in SAP ERP. Ekennis has a talented team of 100+ SAP Professionals who have the credentials and capabilities to support service and consult its customers. Its consultants are extensively trained and certified on SAP, Microsoft and Oracle, B2B has a proven Implementation methodology and track records for delivering successful technology solutions for its customers. Its ability to map its process to client’s needs ensures that it not only provide superior implementations, but also enable swift knowledge transfer to their staff. On the concern side, the competition the company face in the sales of its products and services and general economic and business conditions as well as changes in the IT industry standards and landscape, can put pressure on it to change its pricing models. The company’s industry being labour intensive is dependent on labour force for carrying out its manufacturing operations and software development and staffing services.

The company is coming out with a maiden IPO of 400000 equity shares of Rs 10 each at a fixed price of Rs 72 per equity share to mobilize Rs 2.88 crore. On the performance front, the company’s total revenue decreased by 3.52% to Rs 468.67 lakh for the FY 2021 from Rs 485.78 lakh for the FY 2020. Profit after Tax increased by 320.07% to Rs 94.92 lakh in FY 2021 from Rs 22.60 lakh in FY 2020. The company is intends to focus on use of targeted marketing initiatives such as digital and print advertisements, as well as marketing through traditional channels such as outdoor advertising. Its marketing and advertising initiatives shall be directed to increase brand awareness, acquire new customers, drive customer traffic across its retail channels and strengthen its brand recall value. The company is in the process of implementing several initiatives, including structuring its organization by way of industry verticals to accumulate relevant industry experience. It plans to increase the breadth of its software services by offering additional services through software maintenance and staffing facilities for the new product range, as this will expand its scope of its business and further enhance the reputation of its brand.

Vaidya Sane Ayurved Laboratories coming with an IPO to raise upto Rs 20 crore
Feb-09-2022   14:39 Hrs IST

Vaidya Sane Ayurved Laboratories

  • Vaidya Sane Ayurved Laboratories (Madhavbaug) has come out with an initial public offering (IPO) of 27,71,200 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 73 per equity share.
  • The issue will open for subscription on February 10, 2022 and will close on February 15, 2022.
  • The shares will be listed on NSE Emerge Platform.
  • The share is priced 7.30 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is First Overseas Capital.
  • Compliance Officer for the issue is Abhishek Ajay Deshpande.

Profile of the company

The company is a unique medical service institution that strives to treat chronic ailments like cardiac disease, diabetes, hypertension and obesity with the distinctive outlook of amalgamating technology with traditional healing of Ayurveda. The company’s approach to treatment using non-invasive, multidisciplinary and innovative therapies which has helped establish it as a dependable option for treating the chronic ailments. It is a health care provider primarily in the India’s chronic care ecosystem. It provides its healthcare services through Madhavbaug clinics. As on November 30, 2021, the company operates 274 clinics across Maharashtra, Madhya Pradesh, Gujarat, Uttar Pradesh, Goa, Karnataka, Delhi and Chhattisgarh. Out of these 52 are company owned and 222 are franchise clinics. It also operates two cardiac prevention and rehabilitation hospitals in Khopoli and Nagpur respectively. Currently, the company’s network includes 274 Clinics and 2 Fully equipped Hospital.

At the company’s clinics and hospitals, it use modern diagnostics, diet and physiotherapy and advanced Ayurveda to provide Heart disease, Diabetes, Hypertension & Obesity reversal treatments to its patients. This helps in improving the exercise tolerance of patients - improvement in grade of symptoms, improvement in maximum oxygen uptake, reduction in Hba1c, and metabolic equivalents (METs).

Proceed is being used for

  • Funding Branding and Advertising expenses.
  • General Corporate Purposes.

Industry overview

Healthcare has become one of India’s largest sector, 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 private players. Indian healthcare delivery system is categorised into two major components public and private. The Government, i.e. public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. The private sector provides majority of secondary, tertiary, and quaternary care institutions with major concentration in metros and tier I and tier II cities. 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 healthcare market can increase three-fold to Rs. 8.6 trillion ($133.44 billion) by 2022. In Budget 2021, India’s public expenditure on healthcare stood at 1.2% as a percentage of the GDP. A growing middle-class, coupled with rising burden of new diseases, are boosting the demand for health insurance coverage. With increasing demand for affordable and quality healthcare, penetration of health insurance is poised to expand in the coming years. In FY21, gross direct premium income underwritten by health insurance companies grew 13.3% YoY to Rs. 58,572.46 crore ($7.9 billion). The health segment has a 29.5% share in the total gross written premiums earned in the country.

Pros and strengths

Combination of modern healing methods and ancient natural practices: Most organizations either adopt modern healing methods or ancient natural practices, but the company has stood out by creating a successful concoction of the two. Its diagnostic methods are backed by the latest technological equipment, while its therapy methodology is deep-rooted in Ayurvedic treatment methods. The treatments offered by Madhavbaug are natural, non-invasive, affordable and suitable for almost everyone. These come as a boon for the people who are unable to undergo surgery due to health complications and/or financial constraints.

Affordable treatments: The first and foremost goal of Madhavbaug is to reduce the cardiovascular health related burden and improve the overall health of society. The affordable and non-invasive nature of its treatments makes them accessible to all sections of society, enabling even those with meager means to get help for their condition.

Technology driven: The company has an in-house IT platform which has helped the company increase its efficiency by coming up with innovations. It also has a training app which helps Core Medical Team to interact with on ground team of doctors & therapists on a daily basis.

Risks and concerns

Growth into new geographic areas exposes company to certain risks: The company intends to expand its presence both geographically and in terms of number of clinics. Metros and fast developing smaller towns are currently under-served and give a greater scope for its services. Presently its presence is largely in and around Mumbai. Its proposed business plan seeks to extend its outlets to other parts of India including non-metro cities and towns. Pursuance of such a growth strategy may expose it to risks which may arise due to lack of understanding / economic conditions and culture of these areas. If the company is not able to manage the risk of such expansion it could have a material adverse affect on its operations.

Highly dependent on doctors, nurses and other healthcare professionals: The company’s performance and the execution of its growth strategy depend substantially on its ability to attract and retain leading doctors and other healthcare professionals. It complete for these personnel with other healthcare services. The market for doctors is highly competitive and there is a general shortage of doctors in India. The factors that doctors consider important before deciding where they will work include the level of compensation, the reputation of the hospital and its owner, the quality of the facilities, research opportunities and community relations. It may not compare favorably with other healthcare services on these factors. Many of these healthcare professionals are well- known personalities in their fields and regions with large patient bases and referral networks, and it may be difficult to negotiate favourable terms and arrangements with them.

Business highly dependent on consumer spending patterns: Madhavbaug is a unique medical service institution that strives to treat cardiac disease, diabetes, hypertension and obesity with the distinctive outlook of amalgamating technology with traditional healing. The company is in the business of wellness and healthcare. The growing middle and upper class of Indian population is its main target business segment. Hence its business is highly dependent on their spending pattern which again depends on the general economic conditions in the country and the surplus available with consumers for spending on matters of wellness and healthcare, especially ayurveda. Any slow-down in the economic activity of its country will adversely affect the consumer surplus available for spending towards wellness and healthcare.

Outlook

Vaidya Sane Ayurved Laboratories is a medical service institution engaged in the treatment of chronic ailments like cardiac disease, diabetes, hypertension, and obesity by combining modern technology with the traditional Ayurveda practices. It uses non-invasive, multidisciplinary, and innovative therapies for treating chronic ailments. The company mainly offers treatment for Health disease reversal, Diabetes Reversal, BP Management, Obesity management, Knee pain relief.  The company use clinic based health care delivery model along with tele-medicine to ensure easy accessibility to patients. The clinics don’t require heavy capital expenditure thus the model can be easily scaled thereby increasing penetration. At its clinics and hospitals, it use modern diagnostics, diet and physiotherapy and advanced Ayurveda to provide Heart disease, Diabetes, Hypertension & Obesity reversal treatments to its patients. This helps in improving the exercise tolerance of patients - improvement in grade of symptoms, improvement in maximum oxygen uptake, reduction in Hba1c, and metabolic equivalents (METs). On the concern side, the company’s profitability is affected by its ability to achieve favorable pricing on its medical consumables, pharmacy items and medical equipment from its suppliers, including through negotiations for supplier rebates. Its business operations require it to obtain and renew from time to time, certain approvals, licenses, registrations and permits, some of which may expire and for which it may have to make an application for obtaining the approval or its renewal.

The company is coming out with a maiden IPO of 27,71,200 equity shares of Rs 10 each at a fixed price of Rs 73 per equity share to mobilize Rs 20.23 crore. On the performance front, total income decreased by 30.57% to Rs 5227.92 lakh for Fiscal 2021 from Rs 7529.73 lakh for Fiscal 2020, primarily due to decrease in overall business and revenue as a result of Covid 19 pandemic and resultant lockdowns.  The company’s profit for the year increased by 377.64% to Rs 154.70 lakh for the financial year 2021 from loss of Rs 55.72 lakh for the financial year 2020. As a part of the company’s future growth strategy, it proposes to expand and strengthen its existing clinic network. It will position new clinics in strategic locations in Maharashtra and expand Clinic Network in Madhya Pradesh, Uttar Pradesh and Gujarat. It further intends to Open Franchisee OPD clinics in Tier II & III cities to increase reach. It further plans to expand Khopoli and Nagpur Hospitals.

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