IPO Analysis Research

Shelter Pharma coming with an IPO to raise Rs 16.03 crore
Aug-09-2023   15:08 Hrs IST

Shelter Pharma

  • Shelter Pharma is coming out with an initial public offering (IPO) of 38,16,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 42 per equity share.
  • The issue will open for subscription on August 10, 2023 and will close on August 14, 2023.
  • The shares will be listed on BSE SME.
  • The share is priced 4.20 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Gretex Corporate Services.
  • Compliance Officer for the issue is Yashesh Vijaykumar Shah. 

Profile of the company

Shelter Pharma Limited originally named as Shelter Pharmacy, it was converted to Shelter Pharma Limited on October 12, 2007 under Part IX of The Companies Act, 1956. The company is being promoted by Mr Mustaqim Nisarahmed Sabugar and Mr Shakil Nisarahmed Sabugar. Promoters have nurtured and strengthened the business over the years. The business was slowly expanded from local presence in Himmatnagar to well spread presence in the state of Gujarat. Shelter remained a family enterprise before incorporation of the Company with a consolidated position in Gujarat. Introduction of new generation of promoters, set up of new companies around 2007 brought new ideas and aspirations to the business. Shelter has embarked on a major restructuring drive in line with redefined goals. The company has reworked its organizational structure, product portfolio, distribution network, pricing, packaging and internal processes. It has also invested substantially in strengthening infrastructure with fresh fund infusion to improve its manufacturing capacity in Himmatnagar. Shelter sources required raw material from nearby villages. Its raw material is sourced directly from farmers. Company has long established relationships with farmers, giving it an assured supply of herbs and plants. Shelter focuses on rural/semi urban market as its clientele to offer high quality price competitive remedies to villages.

The company primarily focuses in manufacturing herbal products with well-built presence in Human Pharma as well as Veterinary space. Shelter started with a few products about decades back. However, over a period of time, it has added products to its portfolio through its in-house R&D efforts backed by sound knowledge of Ayurveda. Shelter is present in most of non-critical segment of Human as well as Veterinary Pharma through its well spread portfolio. It enjoys a good product acceptance and market share in the state of Gujarat. In the Human pharma segment, Shelter has product portfolio of OTC products as well Ethical pharma products. Similarly, Shelter has OTC and Ethical presence in Veterinary segment. Shelter has a respectable track record of efficacy of its products. All the products are priced very competitively considering Shelter’s target market.

Proceed is being used for: 

  • Working capital requirements
  • General corporate purposes

Industry overview

India climbed to the 63rd rank among 190 countries in the World Bank’s ‘Ease of Doing Business’ rankings in 2020. As of 2021, the Indian healthcare sector is one of India’s largest employers as it employs a total of 4.7 million people. The sector has generated 2.7 million additional jobs in India between 2017-22 -- over 500,000 new jobs per year. The Asian Research and Training Institute for skill Transfer (ARTIST) announced plans to create round one million skilled healthcare providers 2022.

The Indian healthcare sector is expected to record a three-fold rise, growing at a CAGR of 22% between 2016-22 to reach $372 billion in 2022 from $110 billion in 2016. As of November 24, 2022, more than 219.88 crore COVID19 vaccine doses have been administered across the country. By FY22, Indian healthcare infrastructure is expected to reach $349.1 billion.  

India’s healthcare sector is extremely diversified and is full of opportunities in every segment, which includes providers, payers, and medical technology. With the increase in the competition, businesses are looking to explore the latest dynamics and trends which will have a positive impact on their business. The hospital industry in India is forecast to increase to Rs 8.6 trillion ($132.84 billion) by FY22 from Rs 4 trillion ($61.79 billion) in FY17 at a CAGR of 16-17%. India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of the population.

Pros and strengths

Scalable business model: It has a scalable business model as its business model is customer-centric and order driven, and requires optimum utilization of its existing resources, assuring quality supply and achieving consequent economies of scale. The business scale generation is basically due to the development of new markets and products in both domestic and international markets by exploring customer needs, marketing expertise and consistent product quality.

Wide and diverse range of product offerings: Shelter primarily focuses on herbal products with well-built presence in Human Pharma as well as Veterinary. The company has a very strong establishment and clientele in Gujarat market, especially in rural & semi urban areas, along with recent foray in a few other states. Shelter has vast product portfolio to cater to wide spectrum of health industry.

Marketing & branding efforts: Shelter is moving aggressively to tap these opportunities with geographical expansion backed by intense marketing & branding efforts. The expansion will be supported by sales & distribution network being set up by the company in new regions. Simultaneously, the company is making speedy growth in its stronghold of Gujarat market through brave and redefined distribution and marketing strategies. Shelter is taking other initiatives to buttress its growth. Shelter has initiated efforts to explore Export market. Shelter’s 5 products with very high potential are approved in Middle East market by MOH. This approval will open a big market of Middle East as well as Africa for the company as the associate that is working closely with Shelter since getting approvals for Middle East has also got established distribution network in Africa. 

Risks and concerns

Highly competitive business: The Indian Pharma industry has historically been dominated by major entities that had an aggregate market share of the market, as the industry presents significant entry barriers. These market entry barriers include the development of an extensive distribution network through long-term relationships with dealers, the ability to set up tinting machines with dealers, as well as significant marketing costs and the establishment of a distinct brand to gain product acceptance. It competes on the basis of the strength of its differentiated products, distribution network, brand recognition, and ability to populate tinting machines. As a result, to remain competitive in its markets, it must continuously strive to manufacture differentiated products, expand its distribution network, enhance its brand and improve its operating efficiencies. 

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

Changes in customer preferences: Any change in the customer preference can render its old stock obsolete, as changes in customer preference are generally beyond its control. Some or all of its products may become less attractive in light of changing customer preferences or better products by competitors and it may be unable to adapt to such changes in a timely manner. However, it constantly focus on research and development and to develop new products to cater the customer needs, any change in customer preferences that decreases demand could affect its business, financial condition, results of operations and prospects.

Outlook

Incorporated in 2007, Shelter Pharma primarily focuses in manufacturing herbal products with well-built presence in Human Pharma as well as Veterinary space. The business was slowly expanded from local presence in Himmatnagar to well spread presence in the state of Gujarat. On the concern side, the company uses third party transportation for delivery of its products. Though its business has not experienced any disruptions due to transportation strikes in the past, any future transportation strikes may have an adverse effect on its business. There may also be delay in delivery of products which may also affect its business and results of operation negatively.

The company is coming out with an IPO of 38,16,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 42 per equity share to mobilize Rs 16.03 crore. On performance front, the company’s total revenue increased by 20.28% to Rs 3,615.51 lakh for the financial year 2022-23 from Rs 3,005.83 Lakh for the financial year 2021-22. Profit after tax increased by 214.82% to Rs 578.33 lakh for the financial year 2022-23 from Rs 183.70 lakh for the financial year 2021-22. Going forward, it intends to increase sales volume through diversification of services offered and spread in geographical outreach. It is focused on increasing the number of clients and by leveraging its market skill to service its clients. Its strategy is to increase the number of clients by building new relationships and then leverage those client relationships into offering in a whole suite of services.

TVS Supply Chain Solutions coming up with IPO to raise upto Rs 912 crore
Aug-08-2023   14:55 Hrs IST

TVS Supply Chain Solutions

  • TVS Supply Chain Solutions is coming out with a 100% book building; initial public offering (IPO) of 4,62,98,759 shares of Rs 1 each in a price band Rs 187-197 per equity share.
  • Not less than 75% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 10% for the retail investors.
  • The issue will open for subscription on August 10, 2023 and will close on August 14, 2023.
  • The shares will be listed on BSE as well as NSE.
  • The face value of the share is Rs 1 and is priced 187 times of its face value on the lower side and 197 times on the higher side.
  • Book running lead managers to the issue are JM Financial, Axis Capital, J.P.Morgan India, BNP Paribas, Nuvama Wealth Management and Equirus Capital.
  • Compliance Officer for the issue is P D Krishna Prasad.   

Profile of the company

The company is India’s largest and among the fastest growing integrated supply chain solutions provider among Indian listed supply chain solutions companies in terms of revenues and revenue growth, respectively, in Fiscal 2023. The company is an India based multinational company, who pioneered the development of the supply chain solutions market in India. It was promoted by the erstwhile TVS Group, one of the reputed business groups in India, and is now part of the TVS Mobility Group. For more than 16 years, it has managed large and complex supply chains across multiple industries in India and selects global markets through customized tech-enabled solutions. The company is an Indian supply chain logistics solution provider that has global capabilities and network across the valuechain with cross deployment abilities. Its technology coupled with its deep domain expertise and global expertise enables it to develop and offer customized solutions to customers’ thereby empowering agile and efficient supply chains at large scale. It provides solutions and services to meet its customers’ supply chain management and logistics requirements. For instance, it provided purchase services, assembling of component and parts, kitting, and using of packing materials for a global wind turbine company.

The company’s solutions spanning the entire value chain from sourcing to consumption can be divided into two segments: (i) integrated supply chain solutions (ISCS); and (ii) network solutions (NS). Its capabilities under the ISCS segment include sourcing and procurement, integrated transportation, logistics operation centers, in-plant logistics operations, finished goods, aftermarket fulfillment and supply chain consulting. Its capabilities under the NS segment include global forwarding solutions (GFS), which involves managing end-to-end freight forwarding and distribution across ocean, air and land, warehousing and at port storage and value added services, and time critical final mile solutions (TCFMS) which involves closed loop logistics and support including spares logistics, break-fix, refurbishment and engineering support, and courier and consignment management.

Proceed is being used for:

  • Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the company and its Subsidiary, TVS LI UK.
  • General corporate purposes.

Industry overview

The Indian logistics market presents a large addressable opportunity, with direct spends on logistics of $216 billion in Fiscal 2020 and $180 billion in Fiscal 2021 due to the pandemic. The market has recovered to reach $205 billion in Fiscal 2022 and is expected to grow to approximately $385 billion by Fiscal 2027 at a CAGR of 13% from Fiscal 2022 to Fiscal 2027. Out of this market opportunity, the size of the outsourced supply chain solutions market (excluding e-commerce) in Fiscal 2022 was $7.5-7.7 billion, which is expected to grow at a CAGR of 20-22% to approximately $20-21 billion by Fiscal 2027. Increasing complexities in supply chain solutions is driving the trend to outsourcing logistics services to expert third parties. The direct logistics market is primarily comprised of transportation and warehousing, of which transportation accounted for 70%, or $151 billion in Fiscal 2020 and 65%, or $133 billion in Fiscal 2022. Organized players accounted for only 5.5-6% of the logistics market segments (which includes road transportation and warehousing and supply chain services only) in Fiscal 2022. Organized players are expected to grow at a CAGR of approximately 32% between Fiscal 2022 and Fiscal 2027, taking their share to 12%-15% by Fiscal 2027. This shift is expected to be driven by the ability of organized players to offer integrated services, network and scale-driven efficiencies and larger investments in technology and engineering, resulting in higher share of wallet with customers.

Supply chain is increasingly becoming complex as businesses are becoming digital and multi-party involvement is increasing, leading to growth of integrated service providers. Supply chain process starts with sourcing and purchase order management from the supplier. From here the order goes to the in-bound warehouse for raw materials. The material is then moved to the plant where there is value addition done on the product. At this stage, the work-in-progress goods are stored in the factory warehouse and then moved for processing and transporting out to end customers. The goods when finished are moved to the mother warehouse in the outbound logistics part of the supply chain. From here, the goods are transported to smaller secondary warehouses, which are closer to the end customer. Thereafter, last mile deliveries are performed to the retailer or directly the customer. This also involves freight forwarding for long distances. Reverse logistics is performed for product support, spare part fulfilment and return and break – fix support of the products. As supply chain demands become increasingly complex, more companies and sectors, particularly in India and in sectors such as retail, healthcare, telecom and technology, are expected to turn to specialist supply chain service providers that can curate more efficient and better tech enabled solutions to more efficiently manage these demands as well as increase cost savings.

Pros and strengths

Leader in end-to-end solutions enabled by domain expertise, global network and knowledge base: The company acts as a complete ‘one-stop’ solution for customers from sourcing to distribution through its end-to-end capabilities, which includes sourcing and procurement, integrated transportation, logistics operating centre, inplant logistics operations, finished goods and aftermarket fulfilment, import and export freight, closed loop logistics and support, and secondary transportation. It deeply integrates its supply chain solutions and logistics services, with digitalization and end-to-end coverage. It is able to significantly add value to its customers for their revenue and cost optimization by solving their complex problems and requirements with innovative and customized solutions and implementation at scale. The company use intelligence, automation and dynamic optimization capabilities that enables customers to achieve their supply chain objectives, increase supply chain visibility and lower total cost of operations. Its in-house tech and process knowledge base and deep domain expertise enable it to design customized bespoke solutions addressing customers’ complex requirements. With a multi-disciplinary and consultative approach, it evolves with customers by continuously learning and improving its solutions.

Robust in-house technology differentiation: With increasing technological advancements in the logistics and supply chain industry, the company follows a ‘technology-first’ supply chain solutions approach and aim at delivering innovative and responsive technology solutions in order to optimize its customers’ supply chains. It is strongly differentiated by its technology as an innovative provider of logistics solutions that enhance visibility, speed, accuracy and cost effectiveness for its customers, and by its ability to customize its technology-enabled services to cater to each customer’s requirements. Its solutioning tools for transport, warehouse, order and labour management enable it to develop customized solutions. It also utilise its deep knowledge of tech and data, and experience of catering to customers’ needs to construct robust and flexible technology services which cater to its customers’ needs. Its ‘plug and play modules’ can be easily integrated with the customers’ internal systems, including their existing enterprise resource planning systems. These can be replicated across geographies and industries for customers, enabling it to scale its services faster.

Long and Consistent Track-Record of Successful Integration of Acquisitions: The company has an established track record of successful inorganic growth through strategic acquisitions that supplement its operations. Over the years, it has made more than 20 acquisitions in the last 16 years for growth across Europe, the United Kingdom, the United States and Asia Pacific (including India). In line with its ‘C3 Framework’, it has followed a systematic approach towards acquisitions by focusing on each of the ‘Cs’ (i.e. Customer, Country and Capability) and has been able to increase its customer base, enhance capabilities and expand into newer countries.

Long-term customer relationship in diversified and attractive industries through encirclement: The company has developed partnerships with customers across diverse and high-growth industries which offer various outsourcing opportunities. The company provides services on a customer-goal based approach and its solutions are targeted towards consistently delivering higher efficiencies, higher accuracy meeting and achieving customers’ performance indicators. This approach has helped its customers meet their objectives, which has led to customer retention and development of customer relationships as well as enabled it to offer multiplicity of services. Its revenue is diversified across numerous industries and customers located across Asia-Pacific (including India), Europe and United States with different demand patterns. Its customers include numerous long-term relationships with ‘Fortune Global 500 2022’ companies, and it provided services to 72 ‘Fortune Global 500 2022’ companies in Fiscal 2023. Its customers operate in a variety of sectors including automotive, industrial, consumer, tech and tech infra, rail and utilities, and healthcare, where it has significant expertise and understand the unique supply chain requirements.

Risks and concerns

Requires significant amount of working capital: The company’s business requires a significant amount of working capital which is based on certain assumptions, and accordingly, any change of such assumptions would result in changes to its working capital requirements. Further, its working capital requirements have been increasing with the growth of its operation. While it has not faced any instances of material losses or adverse impacts on its business and operations due to failure to raise additional financing or resources, in Fiscals 2021, 2022 and 2023, there can be no assurance that it will always be able to raise resources to meet its working capital requirements on commercially acceptable terms and in a timely manner or at all in the future, which may adversely impact its business operations and future growth plans. Its working capital requirements may be subject to change due to factors beyond its control including force majeure conditions, an increase in defaults by its customers, or non-availability of funding from banks or financial institutions. Accordingly, such working capital requirements may not be indicative of the actual requirements of its Company in the future and investors are advised to not place undue reliance on such estimates of future working capital requirements.

Highly reliant on technology infrastructure and software: The company is highly dependent on in-house and third party technologies and software for a number of functions. Despite significant testing for risk management, its technology infrastructure and systems, and software suites, or those of third parties upon which it rely, are vulnerable to service interruptions or degradation or other performance problems attributable to a variety of factors, including defects, errors or malfunctions, system failures, unexpected high volume of transactions, distributed denial-of-service and other cyberattacks, infrastructure changes, human error, natural disasters, power losses, disruptions in telecommunications services, terrorist attacks, legal or regulatory takedowns, computer viruses, ransomware, malware, or other events. For instance, it faced two instances of ransomware attack in October 2021 and January 2022 in its operations in the United Kingdom, which had temporarily impacted its services and operations. In response to such instances, it rebuilt its servers and restored the applications from backups in a new data center built with more security layers as well as mandated multi-factor authentication for VPN access and office and business applications.

Derive significant portion of revenue from customers engaged in certain industries: The company derives a substantial portion of its customers from certain industries and its business growth depends to a certain extent on the continued demand for its services from customers in these industries. As a result, any loss of business from, or any significant reduction in the volume of business with, any of the customers from these industries, if not replaced, could materially and adversely affect it. A downturn in any of the industries in which its customers are engaged in, a slowdown or reversal of the trend to outsource logistics and supply chain solutions in any of these industries, or an increase in in-sourcing, could result in a decrease in the demand for its services and adversely affect its business, financial condition, results of operations and cash flows. For instance, as an outcome of the COVID-19 pandemic, the auto industry (the second largest for the Company in terms of revenue) faced a slowdown in Fiscal 2021 which in turn resulted in its revenues from automotive segment growing only by 2.24% in Fiscal 2021 compared to Fiscal 2020. These industries are sensitive to factors beyond its control, including general economic conditions such as consumer demand, consumer confidence, inflation, employment and disposable income levels, interest rate levels, demographic trends, technological changes, increasing environmental, health and safety regulations, government policies, political instability and fuel prices which may negatively affect the demand for its services.

Depend on senior management team: The company is dependent on its Promoters, senior management and other key personnel for formulating its business strategies, managing its business and developing and maintaining client relationships. Its success also depends, in part, on key customer relationships forged by members of its senior management. If it was to lose these members of its senior management, there is a possibility that some of its key customer relationships may be impacted, including its ability to renew longterm contracts. Moreover, the market for skilled employees in the supply chain solutions and logistics industries, particularly in areas of technology, solution design, data science, industrial design, and engineering, is extremely competitive and the process of hiring employees with the necessary skills requires the diversion of significant time and resources.

Outlook

TVS Supply Chain Solutions provides supply chain management services for international organizations, government departments, and large and medium-sized businesses. The ISCS segment includes sourcing and procurement, integrated transportation, logistics operation centers, in-plant logistics operations, finished goods, aftermarket fulfillment, and supply chain consulting. And, the NS segment includes global forwarding solutions (GFS), which involves managing end-to-end freight forwarding and distribution across ocean, air, and land, warehousing and at port storage and value-added services, and time-critical final mile solutions (TCFMS) which involves closed-loop logistics and support including spares logistics, break-fix, refurbishment and engineering support, and courier and consignment management. On the concern side, the company’s business is subject to various risks inherent in the supply chain solutions industry, including potential liability to its customers which could result from, among other circumstances, personal injuries or damage to property arising from accidents or incidents involving vehicles operated by it. In its operations, it may be exposed to claims from its customers arising from theft, damage or loss of the materials that it manage storage for or movement of.

The company is coming out with an IPO of 4,62,98,759 equity shares of face value of Rs 1 each. The issue has been offered in a price band of Rs 187-197 per equity share. The aggregate size of the offer is around Rs 865.78 crore to Rs 912.08 crore based on lower and upper price band respectively. On the financial front, the company’s total income increased by 10.87% from Rs 92,999.36 million in Fiscal 2022 to Rs 103,110.10 million in Fiscal 2023. The company’s restated profit for the year was Rs 417.61 million in Fiscal 2023 compared to a restated loss for the year of Rs 458.00 million in Fiscal 2022. Meanwhile, the company intends to enhance its scope of engagement with existing customers by way of providing value added solutions and bundled logistics services to them. It aims to continue to invest in technology designed to optimize labour and inventory management and also facilitate better visibility into fulfillment. The company plans to further develop its scale, global intellect and access to data and network partners in order to continue to enhance its customers’ supply chain efficiency and achieve higher efficiency in its operations throughout the whole supply chain.


Srivari Spices and Foods coming with an IPO to raise up to Rs 9 crore
Aug-04-2023   15:24 Hrs IST

Srivari Spices and Foods

  • Srivari Spices and Foods is coming out with a 100% book building; initial public offering (IPO) of 21,42,000 shares of Rs 10 each in a price band Rs 40-42 per equity share.
  • The issue will open for subscription on August 07, 2023 and will close on August 09, 2023.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 4.00 times of its face value on the lower side and 4.10 times on the higher side.
  • Book running lead manager to the issue is GYR Capital Advisors.
  • Compliance Officer for the issue is Aradhana Puranlal Kawde.

Profile of the company

The company is engaged in the business of manufacturing spices and flour (chakki atta) and market & sell it in and around Telangana and Andhra Pradesh. It handpick its raw materials from various parts of the country and process its products with utmost care without the use of artificial preservatives or chemicals, thereby creating a product portfolio of organic spices and flour, which carry the freshness and goodness of each ingredient. Its unique business model has helped it penetrate the niche segment of its market and establish a customer base in and around Telangana and Andhra Pradesh.

Its goal since its incorporation was to manufacture quality spices and other food products which are organic and do not contain any artificial preservatives or chemicals, and in order to achieve its goal it has created a unique business model, wherein it manufactures and package its products in quantities which can sustain a customer until the shelf life of its product, in order to avoid wastage and deliver a wide range of products which carry the freshness and goodness of each ingredient. Its business has two model first is direct to customer (D2C) in nature, wherein it delivers its products directly at the doorstep of its customers using many retail stores. Secondly it also works in business to business (B2B), wherein it delivers its products to the suppliers. Its business model has helped it create a strong customer base as the quantity of its products packed and delivered in directly proportional to the shelf life of its products, therefore, once the product is consumed by its customers they place an order for the product and this helps it maintain a cyclic and continuous relationship with its customers.

Proceed is being used for:

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

Industry overview

India is the world’s largest spice producer. It is also the largest consumer and exporter of spices. The production of different spices has been growing rapidly over the last few years. Production in 2021-22 stood at 10.88 million tonnes. During 2020- 21, the export of spices reached an all-time high both in terms of value and volume by registering a growth of 17% in US$ value terms and 30% in volume terms. During 2021-22, the single largest spice exported from India was chili followed by spice oils and oleoresins, mint products, cumin and turmeric. 

India produces about 75 of the 109 varieties listed by the International Organization for Standardization (ISO). The most produced and exported spices are pepper, cardamom, chili, ginger, turmeric, coriander, cumin, celery, fennel, fenugreek, garlic, nutmeg & mace, curry powder, spice oils, and oleoresins. Out of these spices, chili, cumin, turmeric, ginger, and coriander makeup about 76% of the total production. The largest spices-producing states in India are Madhya Pradesh, Rajasthan, Gujarat, Andhra Pradesh, Telangana, Karnataka, Maharashtra, Assam, Orissa, Uttar Pradesh, West Bengal, Tamil Nadu, and Kerala.

India is the largest exporter of spice and spice items. For the year 2021-22, the country exported spices worth $4,102.29 million. India is the largest exporter of spice and spice items. During April-Feb 2023, the country exported spices worth $3,332.02 million. In February 2023, the exports of spices from India increased by 44.12% to $379.51 million. In 2021-22, India exported 1.53 million tonnes of spices. From 2017-18 to 2021-22, the total exported quantity from India grew at a CAGR of 10.47%. For FY22, total volumes of chilli, cumin, turmeric and ginger exports were 0.55, 0.21, 0.15 and 0.14 million tonnes. 

Pros and strengths

Diversified product basket: The Company provides diversified product such as blended spices and whole wheat flour. Further, these products are available in different varieties. It is able to serve better with such diversified product basket. This helps it build brand recognition and customer loyalty. 

Well established brand name and goodwill amongst market players: It operates in a brand sensitive market. It has earned goodwill & competitive edge through its consistent quality oriented service. Few famous spices from the house of Srivari are turmeric powder (haldi), chilli powder (mirchi), coriander powder (dhaniya), madras sambar masala, chicken masala, garam masala and mutton masala and whole wheat flour (chakki atta). In view of its innovative business model and quality products, it was awarded with the title of ‘Best Emerging Spices Brand- 2021’ by Business Mint. It’s innovative and quality products help it to achieve brand recall among its consumers which strengths its brand equity.

Quality assurance and quality control of products: It is committed towards quality of its products. Its determination towards quality is demonstrated by well-defined quality and safety procedures at various stages of its manufacturing process from procurement of raw material to distribution of its products. Owing to the expertise of its experienced and trained team forming part of its Quality Division, all its products are manufactured strictly as per the regulatory standards. All its manufacturing facilities have a fully equipped Quality Division with experienced and qualified staff to carry out quality checks and inspections at all the stages of its manufacturing process. It has in-house laboratories and necessary infrastructure to test its raw materials and finished products to match the quality standards as specified by the relevant customers.

Risks and concerns

Unable to grow business in additional geographic regions:  The Company seeks to grow its market reach domestically to explore untapped markets and segments; however, it cannot assure that it will be able to grow its business as planned. Infrastructure and logistical challenges in addition to the advancement of research and development in the food and spices industry, changing customers’ taste and preferences may prevent it from expanding its presence or increasing the penetration of its products. Further, customers may be price conscious and it may be unable to compete effectively with the products of its competitors. If it is unable to grow its business in these new markets effectively, its business prospects, results of operations and financial condition may be adversely affected.

Operate in competitive business environment: The food and spices industry in India is competitive with both organized and unorganized markets. However, it 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. It may has 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, 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.

Dependent on third party transportation providers: To ensure smooth functioning of its manufacturing operations, it needs to maintain continuous supply and transportation of the raw materials required from the supplier to its manufacturing units and transportation of its products from its units to its customers, which may be subject to various uncertainties and risks. It is significantly dependent on third party transportation providers for the delivery of raw materials to it and delivery of its products to its customers. Uncertainties and risks such as transportation strikes or delay in supply of raw materials and products could have an adverse effect on its supplies and deliveries to and from its customers and suppliers.

Outlook

Incorporated in 2019, the company is engaged in the business of manufacturing spices and flour (chakki atta) and market & sell it in and around Telangana and Andhra Pradesh. It handpick its raw materials from various parts of the country and process its products with utmost care without the use of artificial preservatives or chemicals, thereby creating a product portfolio of organic spices and flour, which carry the freshness and goodness of each ingredient. On the concern side. It is significantly dependent on third party transportation providers for the delivery of raw materials to it and delivery of its products to its customers. Uncertainties and risks such as transportation strikes or delay in supply of raw materials and products could have an adverse effect on its supplies and deliveries to and from its customers and suppliers.

The company is coming out with an IPO of 21,42,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 40-42 per equity share. The aggregate size of the offer is around Rs 8.57 crore to Rs 9.00 crore based on lower and upper price band respectively. On performance front, the total income of the company for fiscal year 2023 was Rs 3,582.01 lakh against Rs 1,764.21 lakh total income for Fiscal year 2022. Profit after tax for the Fiscal 2023 was at Rs 312.61 lakh against profit after tax of Rs 72.84 lakh in fiscal 2022, a 329.20% increase. Going forward, the company’s intends to improve efficiencies to achieve cost reductions so that they can be competitive. It intends to invest in developing and enhancing recognition of its brands, through brand building efforts, communication and promotional initiatives such as exhibitions, fairs, organizing food events, participation in industry events, public relations and investor relations efforts. This will help it to maintain and improve its global and local reach.

Sangani Hospitals coming with an IPO to raise up to Rs 15.17 crore
Aug-03-2023   13:56 Hrs IST

Sangani Hospitals

  • Sangani Hospitals is coming out with a 100% book building; initial public offering (IPO) of 37,92,000 shares of Rs 10 each in a price band Rs 37-40 per equity share.
  • The issue will open for subscription on August 04, 2023 and will close on August 08, 2023.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 3.70 times of its face value on the lower side and 4.00 times on the higher side.
  • Book running lead manager to the issue is Unistone Capital.
  • Compliance Officer for the issue is Gaurav Patadia.

Profile of the company

The company is a multi-specialty healthcare provider operating in Keshod and Veraval region of Gujarat. Its services primarily include super specialty services, specialty services and other support services. It also operates pathology laboratory and medical store. Currently, it operates out of two hospitals i.e. Sangani Hospital at Keshod, Junagadh, Gujarat and Sangani Super Speciality Hospital, Veraval, Gujarat. Sangani Hospital is multi-speciality hospital with primary, secondary and tertiary care facilities. It is strategically located near Keshod bus stand. Sangani Super Speciality Hospital is multi-speciality hospital with significant focus on tertiary care facilities. 

Both its hospitals offer a comprehensive range of healthcare services in specialties and super specialties, including cardiac sciences, neurosciences, orthopaedics, renal sciences and mother & childcare. It has provided dialysis facility to many patients and many sessions annually free of cost under the Mukhyamantri Amrutum Yojana (MAA Yojana) and Pradhan Mantri Jan Arogya Yojana (PMJAY). Its team of qualified medical practitioners are trained to handle all kinds of emergencies and ensures that patients get quality healthcare services. Its healthcare staff comprises of Clinical Pharmacist, Microbiologist (DMLT), Medical Officers, Clinical Assistants, Nursing staff, Attendants and Technicians. It strives to deliver advanced healthcare while providing affordable medical services to its patients.

Proceed is being used for:

  • Carrying out the capital expenditure for expansion in Sangani Hospital at Keshod, Gujarat.
  • Carrying out the capital expenditure for expansion in Sangani Super Speciality Hospital at Veraval, Gujarat.
  • General corporate purposes.

Industry overview

The Indian healthcare sector is expected to record a three-fold rise, growing at a CAGR of 22% between 2016-22 to reach $372 billion in 2022 from $110 billion in 2016. As of February 20, 2023, more than 220.63 crore COVID-19 vaccine doses have been administered across the country. By FY22, Indian healthcare infrastructure is expected to reach $349.1 billion. India climbed to the 63rd rank among 190 countries in the World Bank’s ‘Ease of Doing Business’ rankings in 2020. 

The Indian pharmaceutical industry ranks third globally in pharmaceutical production by volume and is known for its generic medicines and low-cost vaccines. The sector contributed to around 1.32% of the Gross Value Added (at 2011-12 constant prices) of the Indian Economy in 2020-21. The total annual turnover of Pharmaceuticals in the fiscal year 2021-22 was Rs 3,44,125 crore ($42.34 billion). Major segments of Indian Pharmaceutical Industry include generic drugs, OTC medicines, bulk drugs, vaccines, contract research & manufacturing, biosimilars and biologics. India is a global leader in the supply of DPT, BCG, and Measles vaccines. India is one of the biggest suppliers of low-cost vaccines in the world.

In the Economic Survey of 2022, India’s public expenditure on healthcare stood at 2.1% of GDP in 2021-22 against 1.8% in 2020-21 and 1.3% in 2019-20. The Government is planning to increase public health spending to 2.5% of the country's GDP by 2025. Between 2016-22, the market is expected to record a CAGR of 22.52%. The e-health market size is estimated to reach $10.6 billion by 2025. 

Pros and strengths

Focus on under-served areas with dense population: The Company’s hospitals, pathology laboratory, and medical stores are currently located in under-served areas with a dense population, such as Keshod and Veraval. This is in line with the company's mission to deliver advanced healthcare in these areas and improve the healthcare infrastructure. The company recognizes the need for high-quality healthcare services in under-served areas and its presence in these markets provides an opportunity to meet this need.

Growth opportunities in existing facilities and diversification into new services: The Company's strength lies in its ability to leverage on land space and diversification into new services. This is particularly advantageous as hospitals typically have to incur significant capital costs when expanding, mainly for the procurement of land. However, the company has an inherent advantage in expanding its services in the locations it is currently in. In terms of expansion capacity, the company has identified that it can add up to total 100 beds at Keshod Hospital and up to total 80 beds at Veraval Hospital without significant further major investments in infrastructure.

‘Doctor-led’ hospitals driven by skilled and experienced doctors: The Company is led by a team of highly qualified and experienced professionals, including Dr Ajaykumar Sangani, who holds an MBBS, DLO, and MS in E.N.T., Dr Rajeshkumar Sangani, who is an MBBS and MD (Physician), Kamalkumar Sangani, and Dr Vaishali Sangani, who holds MBBS & MD (Obstetrics & Gynaecology). These individuals have been actively involved in the management of the company since inception and have been instrumental in its growth and expansion.

Risks and concerns

Face competition: It competes with other hospitals, clinics and dispensaries of varying sizes with the ability to perform different kinds of services, some or all of which it may or may not be able to offer. Its competitors also include healthcare facilities owned or managed by government agencies and trusts, which may be able to obtain financing or make expenditure on more favorable terms than private healthcare facilities such as it. Its ability to compete in a given market is driven significantly by the extent and depth of diagnosis and procedural capabilities of its competitors and the complexities involved. The healthcare industry is driven by, amongst others, brand value and reputation, including skills of consulting doctors and the abilities of the surgeons.

Dependent on key management personnel: It depends on its current pool of Key Management Personnel to carry out its day-to-day management and overseeing of operations. It also rely on them significantly to plan and execute its growth strategy in the future. The availability of senior management talent in the healthcare industry, especially those with experience in handling hospitals is limited. It may not be able to retain the services of the current management team and could lose talent to competition. Replacement of Key Management Personnel may not be easy, and it may need to wait indefinitely to fill positions until it find suitable candidates. Any significant loss of senior management or key personnel could materially and adversely affect its business and prospects.

Revenue is dependent on inpatient treatment: Its inpatient admissions and treatment contribute significantly to its revenue. In the event there is a decline in the number of inpatients serviced by it, its financial condition and results of operations will materially stand impacted. If its patients choose to avail inpatient healthcare services from its competitors, instead of availing such healthcare services from it, growth in revenue could stand materially impaired.

Outlook

Incorporated in 2021, the company is a multi-specialty healthcare provider operating in Keshod and Veraval region of Gujarat with a combined bed capacity of 68 beds. its services primarily include super speciality services, speciality services and other support services. On the concern side. It depends on its current pool of Key Management Personnel to carry out its day-to-day management and overseeing of operations. It also rely on them significantly to plan and execute its growth strategy in the future. Any significant loss of senior management or key personnel could materially and adversely affect its business and prospects.

The company is coming out with an IPO of 37,92,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 37-40 per equity share. The aggregate size of the offer is around Rs 14.03 crore to Rs 15.17 crore based on lower and upper price band respectively. On performance front, the company's total revenue for the financial year 2022-23 is Rs 1566.79 lakh. This represents a 52.36% increase compared to the previous financial year's total income of Rs 1028.32 lakh. Profit after tax (PAT) is Rs 148.37 lakh for the financial year 2022-23 as compared to Rs 219.41 lakh in financial year 2021-22. Going forward, the company’s expansion strategies are centred on establishing hospitals which focus on offering quality healthcare services across a spectrum of specialties such as neurology, nephrology, invasive cardiac care, critical care, gastrology and oncology. It intends to continue to strengthen its capabilities in these specialties. To this end, and together with its strategy to expand its hospitals to new geographies, it intends to strengthen its specialties by setting up multi-specialty hospitals which focuses on these specialties.

Concord Biotech coming up with IPO to raise upto Rs 1551 crore
Aug-02-2023   15:05 Hrs IST

Concord Biotech

  • Concord Biotech is coming out with a 100% book building; initial public offering (IPO) of 2,09,25,652 shares of Rs 1 each in a price band Rs 705-741 per equity share.
  • Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
  • The issue will open for subscription on August 4, 2023 and will close on August 8, 2023.
  • The shares will be listed on BSE as well as NSE.
  • The face value of the share is Rs 1 and is priced 705 times of its face value on the lower side and 741 times on the higher side.
  • Book running lead managers to the issue are Kotak Mahindra Capital Company, Citigroup Global Markets India and Jefferies India.
  • Compliance Officer for the issue is Prakash Sajnani.  

Profile of the company

The company is an India-based biopharma company and one of the leading global developers and manufacturers of select fermentation-based APIs across immunosuppressants and oncology in terms of market share, based on volume in 2022, supplying to over 70 countries including regulated markets, such as the United States, Europe and Japan, and India. It commanded a market share of over 20% by volume in 2022 across identified fermentation-based API products, including mupirocin, sirolimus, tacrolimus, mycophenolate sodium and cyclosporine. As of March 31, 2023, it had a total installed fermentation capacity of 1,250 m3. In 2016, it launched its formulation business in India as well as emerging markets, including Nepal, Mexico, Indonesia, Thailand, Ecuador, Kenya, Singapore and Paraguay, and has further expanded to the United States.

The company manufactures (i) bio-pharmaceutical APIs through fermentation and semi-synthetic processes, across the therapeutic areas of immunosuppressants, oncology and anti-infectives; and (ii) formulations, which are used in the therapeutic areas of immunosuppressants, nephrology drugs and anti-infective drugs for critical care. APIs are active pharmaceutical ingredients which have effects such as preventing or curing diseases. Formulations refer to drug products that are used by patients, such as tablets, capsules or injections. Immunosuppressants are drugs that are typically used by patients undergoing organ transplants, as these drugs suppress the immunity of the patient such that the body accepts the transplanted organ. Further, immunosuppressants are also used for the treatment of autoimmune disorders. Anti-infectives are medicines that prevent or treat infections, and include anti-bacterial and anti-fungal medications. Oncology and nephrology drugs are used in the treatment of cancers and kidney conditions, respectively.

Proceed is being used for:

  • Achieving the benefits of listing the Equity Shares on the Stock Exchanges.
  • Carry out the Offer for Sale of up to 2,09,25,652 Equity Shares by the Selling Shareholder. 

Industry overview

India's domestic healthcare market is growing rapidly and is projected to grow at a CAGR of 8% to 10% from 2023 to 2026. In addition to improving private insurance coverage and greater willingness to spend on healthcare, government policies provide catalytic stimuli. These policies include the Ayushman Bharat Program, the Ayushman Bharat Health Infrastructure Mission, and the Pradhan Mantri Bhartiya Janaushadi Pariyojana. India is a crucial supplier of generic drugs, supplying to address almost 40% of the total U.S. generic drug (formulation) demand and approximately 25% of the total drug demand in the United Kingdom. According to the Indian Brand Equity Foundation (“IBEF”), India also accounts for 60% of global vaccine production, contributing 70% of the WHO’s demand. This success can be attributed to the advanced capabilities in formulation manufacturing, the capability to meet global standards and governmental support. 

According to the Ministry of Commerce & Industry, while India's formulations are expected to grow, and they accounted for approximately 77% of the pharmaceutical export share in the Financial Year 2023, there are opportunities to address bottlenecks in raw material (active pharmaceutical ingredients (APIs) and key starting materials (KSMs) manufacturing and expand its current share of approximately 18% in the pharmaceutical exports in the Financial Year 2023. Challenges facing India’s API and KSM sector include high dependence on China for raw materials, inadequate infrastructure in select areas such as fermentation and delays in land acquisition and environmental clearance. However, several factors, such as regulatory policies, provide stimulus to the API segment in India.  India's growth trajectory of the API market is well-cemented for domestic API consumption as well as exports. The Indian API market, valued at $ 17 billion (Rs 1,377 billion) in 2022, comprises APIs manufactured for export and APIs consumed in formulation manufacturing. These formulations are domestically consumed as well as exported to the global market. While API exports accounted for $5 billion (Rs 356 billion) in 2022, APIs required for formulation manufacturing amounted to $12 billion (Rs 1,035 billion) in 2022.

Pros and strengths

Established presence across the complex fermentation value chain: The company has established capabilities across the fermentation value chain. The fermentation value chain encompasses aspects such as R&D, patents, key starting materials, API and formulation manufacturing, as well as marketing and distribution of fermentation-based products. In addition, it has honed its capabilities across the fermentation value chain, which it leveraged to build a track record across multiple products in various therapeutic areas. Over the last two decades since 2001, it has been able to build difficult-to-replicate technical expertise in the fermentation process, which has enabled it to develop and commercialize a wide spectrum of fermentation-based APIs. Fermentation is a challenging process requiring specialized manufacturing expertise, as it involves working with microbial strains and culture, controlling multiple process parameters and performing various purification steps. Small modifications to the process may lead to relatively large variances in the output. These factors, coupled with the complex technical capabilities, difficulties in scaling up operations and the substantial capital investment in infrastructure and resources required, have resulted in significant barriers to entry in the fermentation-based API space.

Global leadership in immunosuppressant APIs along with a wide spectrum of complex fermentation-based APIs across multiple therapeutic areas: The company is one of the leading global developers and manufacturers of select fermentation-based APIs across immunosuppressants and oncology in terms of market share, based on volume in 2022. It commanded a market share of over 20% by volume in 2022 across identified fermentation-based API products, including mupirocin, sirolimus, tacrolimus, mycophenolate sodium and cyclosporine. As of March 31, 2023, it had six fermentation-based immunosuppressant APIs. As of 2022, more than 90% of the approved and commonly prescribed small-molecule organ transplant drugs were fermentation-based. The global demand for immunosuppressant APIs is expected to increase, driven by the growth of the immunosuppressant formulation markets. In particular, the growth is expected to be driven by organ transplantation becoming more common, where patients would need to take immunosuppressants for the rest of their lives. However, the end use of immunosuppressants in organ transplantation requires stringent quality standards to minimize variations during the fermentation process. 

Scaled manufacturing facilities with consistent regulatory compliance track record: The company has three manufacturing facilities in the state of Gujarat, India. Its API manufacturing facilities in Dholka and Limbasi are divided into a total of 41 manufacturing blocks to process different classes of APIs, which provides flexible plant configuration and allows it to scale up production volume to meet increased demand, such as through running parallel processes across different classes of APIs. It also has a formulation manufacturing facility in Valthera, which had an annual installed production capacity of 801.64 million units, with an average dosage capability of 0.45 million tablets, 0.36 million capsules and 646.46 bottles of dry syrup per shift, which is defined as eight hours of production. It has the ability to expand its installed capacity at the existing manufacturing facilities, which may help it reduce the need for significant capital expenditure on capacity expansion in the near term, as compared to setting up new manufacturing facilities. It focuses on undertaking measured capacity expansion in line with its plans of product launches and increase in product sales.

Diversified global customer base with long-standing relationships with key customers: Over the years, the company has established long-standing relationships with certain key customers, including leading global generic pharmaceutical companies. As of March 31, 2023, it had over 200 customers in over 70 countries for both its API and formulation products. For its APIs, it had filed 128 DMFs across several countries, including 20, 65 and four, respectively, in the United States, Europe and Japan, as of June 30, 2023. It supplies APIs to customers such as Intas Pharmaceuticals and Glenmark Pharmaceuticals, which have been its long-term customers. For the Financial Years 2021, 2022 and 2023, it recognized aggregate revenues of Rs 867.58 million, Rs 887.74 million and Rs 1,071.40 million from its long-term supply agreements with customers, constituting 14.06%, 12.45% and 12.56% of its total revenue from operations, respectively. For the Financial Years 2021, 2022 and 2023, it generated revenues from operations of Rs 2,725.28 million, Rs 3,101.90 million and Rs 3,778.11 million, respectively, or approximately 44.17%, 43.51% and 44.28%, respectively, of its revenue from operations for the same years, from its ten largest customers by revenue for the respective years. 

Risks and concerns

Depend on a limited number of customers: While the company has not experienced any instances of discontinuation of the purchases from its ten largest customers by revenue in the past three Financial Years, its dependence on a limited number of customers may expose its to risks such as significant reductions in demand for its products from them in the future, including due to reasons beyond its control, such as them experiencing adverse market conditions or financial difficulties. Their demand for its products may also decrease in the future due to the deterioration of its relationships with them, potentially due to factors including disagreements or disputes relating to the quality, timeliness of delivery or pricing of its products. In addition, it may be susceptible to pricing pressures from them. It cannot assure that it will be able to maintain or increase the revenues generated from such customers, or maintain or improve its relationships with them. Also, while it seeks to broaden its customer base, it cannot assure that, in the event of any loss of the business of such customers, it will be able to derive revenues from other customers. Such occurrences may adversely affect its business, financial condition and results of operations.

Significant working capital requirements: The company’s business requires significant working capital, including to finance the purchase of raw materials and the development and manufacturing of products before payment is received from customers. Factors including unforeseen delays, cost overruns, unanticipated expenses, regulatory changes and economic conditions could result in increases in its trade receivables and/or write-offs of trade receivables, and may also require it to avail short-term borrowings in the future. Continued increases in its working capital requirements may have an adverse effect on its results of operations, cash flows and financial condition. Its sources of additional financing, in the event that it need to draw on them to meet its working capital needs, may include the incurrence of debt, the issue of equity or debt securities or a combination of both. If it does incur debt in the future, its interest and debt repayment obligations will increase, which may adversely affect its profitability and cash flows. It may also become subject to restrictive covenants in its financing agreements, which could limit its ability to access cash flows from operations and undertake certain types of transactions.

Face competition: The pharmaceutical industry in which the company operates is highly competitive. It competes with local companies, multi-national corporations and companies from the rest of the world. In particular, it faces competition in its overseas operations. Its competitors may have greater financial, manufacturing, R&D, marketing and other resources, more experience in obtaining regulatory approvals and broader product ranges. Its competitors may develop products that are more effective, more popular or cheaper than ours, which may render its products uncompetitive. In addition, it may compete for customers with larger pharmaceutical companies that have in-house API capabilities, which may acquire its existing customers. The entry of new competitors into the pharmaceutical industry may also further dilute its market share and affect its profitability. It cannot assure that its competitors will not gain significant market share at its expense in the future, particularly in the therapeutic areas in which it is focused. Such occurrences could adversely affect its business, financial condition and results of operations.

Changes in technology: The industry in which the company operates is continually changing due to technological advances, scientific discoveries and novel chemical processes, with frequent introduction of new and enhanced products and significant price competition. It cannot assure that it will be able to successfully keep up with technological improvements in order to remain competitive and meet its customers’ needs in a timely and cost-effective manner. The cost of implementing new technologies for its operations could be significant, which could adversely affect its business, financial condition, results of operations and cash flows. 

Outlook

Incorporated in 1984, Concord Biotech is an India-based R&D-driven biopharma company. The company is ranked among the leading global developers and manufacturers of select fermentation-based APIs across immunosuppressants and oncology in terms of market share, based on volume in 2022. Concord Biotech has a Global presence. They are supplying their products to over 70 countries including the USA, India, Europe, and Japan. The company manufactures Active Pharmaceutical Ingredients (API) through fermentation & semi-synthetic process and finished formulations. It started with a single product and has grown to become a wide-spectrum solution provider. Concord manufactures fermentation and semi-synthetic-based products in therapeutic segments such as Immunosuppressants, Anti-bacterial, Oncology, Antifungals & others. This wide range of products has attracted customers across the globe. Concord also has a robust pipeline of products under development. On the concern side, the company uses highly-flammable and hazardous materials, such as mycophenolic acid, in its R&D and manufacturing processes. The improper handling or storage of these materials could result in fire, industrial accidents, injuries to its personnel, property and damage to the environment.

The company is coming out with an IPO of 2,09,25,652 equity shares of face value of Rs 1 each. The issue has been offered in a price band of Rs 705-741 per equity share. The aggregate size of the offer is around Rs 1475.25 crore to Rs 1550.59 crore based on lower and upper price band respectively. On the financial front, total income increased by 20.66% to Rs 8,884.77 million for Financial Year 2023 from Rs 7,363.49 million for Financial Year 2022, primarily due to an increase in revenue from operations. The company’s profit for the year increased to Rs 2,400.84 million for the Financial Year 2023 from Rs 1,749.29 million for the Financial Year 2022. Meanwhile, the company intends to acquire new customers globally and expand its international customer base, through increasing worldwide marketing activities for its APIs. In addition, it endeavors to increase the global market share of its APIs through additional regulatory filings. The company intends to expand into new formulations that have relatively higher growth potential and continually calibrate its product mix to improve profitability. It plans to leverage its API capabilities to continue to develop new formulations.


Yudiz Solutions coming with an IPO to raise up to Rs 44.84 crore
Aug-02-2023   14:14 Hrs IST

Yudiz Solutions 

  • Yudiz Solutions is coming out with a 100% book building; initial public offering (IPO) of 2,717,600 shares of Rs 10 each in a price band Rs 162-165 per equity share.
  • The issue will open for subscription on August 04, 2023 and will close on August 08, 2023.
  • The shares will be listed on NSE Emerge Platform.
  • The face value of the share is Rs 10 and is priced 16.20 times of its face value on the lower side and 16.50 times on the higher side.
  • Book running lead manager to the issue is Narnolia Financial Services.
  • Compliance Officer for the issue is Deepak Kantilal Jain.

Profile of the company

The company is engaged into the business of providing IT solutions and consultancy focused on providing scalable and secure solutions to shape a business idea by implementing the latest and cutting-edge technologies. It has been engaged in several projects and successfully completed them. It offers web, mobile, game and blockchain solutions for business. It is an IT development company and an ideal digital transformation and technology services company for customer’s needs. The company also has ISO 13485:2016 certificate in the area of Medical Care and Quality Management Systems (QMS) Development in the respective field. Right from ideation to execution, it has consistently delivered the competitive edge in the form of robust, fore-sighted and qualitative solutions. With its agile, collaborative approach, it has provided tailored domain specific IT solutions that have successfully resolved different business issues. Its deep expertise in mobile app development, Blockchain, Game development, AR/VR and web development has helped it retains numerous clients for years. 

Its range of solutions and services includes web development, wearable device / IoT development, game development and mobile application development. The technologies used by it includes blockchain technology, metaverse, AR (Augmented Reality) / VR (Virtual Reality) / MR (Mixed Realty) and AI (Artificial Intelligence) / ML (Machine Learning), IIoT (Industrial Internet of Things), 2D/3D animation, UI/UX design, SEO (Search Engine Optimization) to efficiently provide the abovementioned solutions and services. Its other services includes designing, digital marketing, quality assurance, hire on contract, whitelabel product development, consulting, Development & IT Operations (DevOps) and Support & Maintenance.

Proceed is being used for:

  • Unidentified acquisition (in India & abroad) 
  • Development of new product & technology 
  • Networking & cabling 
  • Branding & marketing expenses 
  • Capital expenditure 
  • Working capital requirement 
  • General corporate purposes 
  • Issue expenses

Industry overview

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

According to National Association of Software and Service Companies (Nasscom), the Indian IT industry’s revenue touched $227 billion in FY22, a 15.5% YoY growth. According to Gartner estimates, IT spending in India is expected to increase to $101.8 billion in 2022 from an estimated $81.89 billion in 2021. Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing on investing internationally to expand their global footprint and enhance their global delivery centres. The data annotation market in India stood at $250 million in FY20, of which the US market contributed 60% to the overall value. The market is expected to reach $7 billion by 2030 due to accelerated domestic demand for AI. 

India is the top most offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. The Indian IT & business services industry is expected to grow to $19.93 billion by 2025. Spending on information technology in India is expected to reach $144 billion in 2023. By 2026, widespread cloud utilisation can provide employment opportunities to 14 million people and add $380 billion to India's GDP. As per a survey by Amazon Web Services (2021), India is expected to have nine times more digitally skilled workers by 2025.

Pros and strengths

Seasoned management team with domain expertise supported by a professional workforce: It is ably led by its promoters Bharat Shamjibhai Patel, Chirag Rajendrakumar Leuva, and Pratik Bhaskarbhai Patel, who are first generation entrepreneurs and established its business in 2011 and have experience in IT solutions and services industry. Bharat Shamjibhai Patel, promoter and chairman of the company, is a qualified electronics and communications engineer and has more than 03 (three) decades of technical experience. He is a Fellow member of Computer Society of India, The Institution of Engineers (India) (IEI), The Institution of Electronics and Telecommunication Engineers (India) (IETE) and a registered chartered engineer. Chirag Rajendrakumar Leuva, promoter and chief executive officer of the company, has a master’s degree in computer applications (MCA) and has more than a decade of experience. Pratik Bhaskarbhai Patel, promoter and managing director of the company, has a master’s degree in computer applications (MCA) and has more than a decade of experience.

Integrated business model offering one-stop-shop solutions: It provides its products and services through an integrated business model, encompassing its four business segments (being web development, wearable device / IoT development, game development and mobile application development). At the core of its business strategy, its integrated business model includes creating solutions and products from scratch as per its client’s specific requirements and needs. It provides comprehensive services right from the generation of an idea with technology research to deployment of the product and solution and subsequently marketing of that product and solution. Each step includes agile methodologies that maintain a constant feedback mechanism between it and its clients. The implementation of these agile methodologies helps its clients to avoid the engagement of any third party solution provider inturn making it a company offering one-stop-shop solutions and services that are required. Most common benefits of this is it saves time and overall cost, provides efficiency and also decreases the downtime during the entire process. Some of its clients for whom it has provided one-stop-shop solutions are in the field of social media, fantasy sports and oil & gas.

Low attrition rate: One of its missions is to focus on providing scalable solutions that require research and learning about modern as well as innovative technologies. Its workplace comprises experienced leaders ready to share their valuable knowledge which makes it an admirable place to work resulting in a low attrition rate.

Risks and concerns

Dependent on few customers: It has established and will continue to focus on strengthening long-standing relationships with its customers across the end-use industries that it caters to. However, it depends on certain customers who have contributed a substantial portion of its total revenue from operations. There is no guarantee that it will retain the business of its existing key customers or maintain the current level of business with each of these customers. The loss of these customers or a loss of revenue from sales to these customers may materially affect its business, financial condition, results of operations and cash flow.

Highly competitive: The industry in which the company operates is highly competitive in nature, and it expects competition to increase in the future from established competitors as well as new market entrants. These companies may have significant recognition, substantial resources and existing infrastructures and powerful economies of scale and scope, which allow them to rapidly develop and deploy new solutions. Many of its existing competitors have, and some of its potential competitors could have, substantial competitive advantages such as greater recognition and brand awareness, longer operating histories, larger client bases, larger sales and marketing budgets and resources, broader distribution and established relationships with partners and clients, greater professional services and client support resources and more mature intellectual property portfolios, and substantially greater financial, technical and other resources.

Major revenue is sourced from web development: It is engaged in the business of the web development and developing gaming interfaces and related activities. Its revenue from operations is bifurcated into web development, Wearable/IoT Device, Game Development and mobile application interface. The majority of its revenue from operations is concentrated in web development segment. However, web development is a huge market segment which is taking pace and in coming years, its high dependence on this segment could be risky for its operations as it is a competitive market. its inability of failure to source clients and new agreements could adversely affect its business. 

Outlook

Incorporated in 2012, the company is engaged into the business of providing IT solutions and consultancy focused on providing scalable and secure solutions to shape a business idea by implementing the latest and cutting-edge technologies. It has been engaged in several projects and successfully completed them. On the concern side, the industry in which the company operates is highly competitive in nature, and it expects competition to increase in the future from established competitors as well as new market entrants. These companies may have significant recognition, substantial resources and existing infrastructures and powerful economies of scale and scope, which allow them to rapidly develop and deploy new solutions.

The company is coming out with an IPO of 2,717,600 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 162-165 per equity share. The aggregate size of the offer is around Rs 44.02 crore to Rs 44.84 crore based on lower and upper price band respectively. On performance front, the company’s net revenue from operations for the period ended March 31, 2023, stood at Rs 2,731.45 lakh whereas in Financial Year 2021-22 it stood at Rs 1875.98 lakh representing an increase of 45.60%. The restated profit after tax for the Period ended March 31, 2023, stood at Rs 275.17 lakh whereas in Financial Year 2021-22 it stood at Rs 74.07 lakh representing an increase of 271.51%. Going forward, the company intends to commercialize the white label products developed by it. Over the period, it has developed certain white label products in the areas of fantasy sport, sports tech, e-commerce, card game, board game, on demand service, HRMS, dating application, food delivery, taxi booking, over the top (OTT), blockchain based game and skill based game. It has so far already commercialized fantasy sports, OTT and e-commerce. However, it now intends to commercialize the balance white label products that it has developed.

SBFC Finance coming up with IPO to raise upto Rs 1082 crore
Jul-31-2023   16:02 Hrs IST

SBFC Finance

  • SBFC Finance is coming out with a 100% book building; initial public offering (IPO) of 18,98,87,816 shares of Rs 10 each in a price band Rs 54-57 per equity share.
  • Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
  • The issue will open for subscription on August 3, 2023 and will close on August 7, 2023.
  • The shares will be listed on BSE as well as NSE.
  • The face value of the share is Rs 10 and is priced 5.40 times of its face value on the lower side and 5.70 times on the higher side.
  • Book running lead managers to the issue are ICICI Securities, Axis Capital and Kotak Mahindra Capital Company.
  • Compliance Officer for the issue is Jay Mistry.  

Profile of the company

The company is a systemically important, non-deposit taking non-banking finance company (NBFC-ND-SI) offering Secured MSME Loans and Loans against Gold, with a majority of its borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals. Among MSME-focused NBFCs in India, the company has one of the highest assets under management (AUM) growth, at a CAGR of 44% in the period from Fiscal 2019 to Fiscal 2023. It has also witnessed healthy disbursement growth, at a CAGR of 40% between Fiscal 2021 and Fiscal 2023. 

The company has a diversified pan-India presence, with an extensive network in its target customer segment. As of March 31, 2023, it has an expansive footprint in 120 cities, spanning 16 Indian states and two union territories, with 152 branches. Its geographically diverse distribution network, spread across the North, South, East and West zones, allows it to penetrate under banked populations in tier II and tier III cities in India. Among MSME focused NBFCs, it had the lowest proportion of AUM emanating from the largest state in its portfolio as of March 31, 2023, being 17.42%, demonstrating better diversification. As a result of its active management of state concentration, it has been able to maintain low levels of AUM concentration per state despite its growth over the years. Its AUM is diversified across India, with 30.84%, being Rs 15,242.41 million, in the North (in the states of Chandigarh, Delhi, Haryana, Punjab, Rajasthan, Uttar Pradesh and Uttarakhand), 38.53%, being Rs 19,047.97 million, in the South (in the states of Karnataka, Andhra Pradesh, Telangana, Tamil Nadu and Puducherry), and 30.63%, being Rs 15,137.85 million, in the West and East (in the states of Gujarat, Madhya Pradesh, Maharashtra, West Bengal, Assam and Bihar) collectively, as of March 31, 2023. Its disbursements across zones are also well-distributed, and it has reduced its concentration risk across industries and sectors, as demonstrated by the fact that no single industry, including the manufacturing sector, contributes more than 10% of its loan portfolio as of March 31, 2023.

The company’s complete portfolio of loans has in-house origination and benefits from its risk management framework. Leveraging its significant operational experience, it has set up stringent credit quality checks and customized operating procedures that exist at each stage for comprehensive risk management. It primarily focus on small enterprise borrowers, whose monthly income is up to Rs 0.15 million, with a demonstrable track record of servicing loans such as gold loans, loans for two-wheeler vehicles and have a CIBIL score above 700 at the time of origination. It sources customers directly through its sales team of 1,911 employees as of March 31, 2023, and have adopted a direct sourcing model through branch-led local marketing efforts, repeat customers or through walk-ins, which has helped it maintain contact with its customers and establish strong relationships with them, high levels of customer satisfaction and increased loyalty. Its risk management and underwriting processes, including its extensive customer assessment methods and monitoring systems, have aided its healthy portfolio quality indicators such as low rates of Gross NPAs and Net NPAs.

Proceed is being used for:

  • Augmenting the company's capital base to meet future capital requirements arising out of the growth of the business and assets.
  • Receiving the benefits of listing of the Equity Shares on the Stock Exchanges.
  • Enhancement of the company’s brand name and creation of a public market for Equity Shares in India.

Industry overview

The NBFC sector has, over the years, evolved considerably in terms of size, operations, technological sophistication and entry into newer areas of financial services and products. The number of NBFCs as well as the size of the sector have grown significantly, with a number of players with heterogeneous business models starting operations. Over the last few years, CRISIL MI&A has seen a transformation in the Indian financial services landscape. The increasing penetration of neo-banking, digital authentication and mobile phone usage as well as mobile internet has resulted in the modularization of financial services, particularly credit. The sector has also seen the emergence of several financial technology entities (“fintechs”) that leverage technology, data, and business insights to provide various financial products and services to identified customer segments. Fintech players in India started lending in Fiscal 2015 but they started gaining traction from Fiscal 2017 onwards. The business model of fintech firms differ widely but in almost all cases they use technology to change or support existing way of doing business, and hold the promise of enhancing customer convenience, facilitating access to credit for unserved or underserved customer segments and/or improving operating efficiency. 

Many times, fintechs enter into tie-ups with financing partners (banks and NBFCs) for taking the loans originated by them on the balance sheet of the partner. Reflecting the growing importance of NBFCs in the financial services landscape and their ability to offer differentiated solutions to meet the requirement of target customers, the market share of NBFCs in overall systemic credit has increased from approximately 16% in Fiscal 2017 to approximately 18% in Fiscal 2023. After a moderation in growth post COVID, NBFCs are back on track with an estimated credit growth of 12% -13% during Fiscal 2023. Going ahead, CRISIL MI&A expects the growth trend to continue, with credit growth at 13% - 14% during Fiscal 2024. The industry will continue to witness the emergence of newer NBFCs catering to specific customer segments. The pandemic and consequent acceleration in adoption of technology and change in consumer habits and increasing availability of data for credit decision-making has made it possible to build an NBFC lending business without investing large sums to have brick-and-mortar presence on the ground. Overall, between Fiscal 2023 to Fiscal 2025, CRISIL MI&A forecasts NBFC credit to grow at a CAGR of 12% - 14%. Further, retail credit given out by NBFCs is forecast to grow at a pace of 13% -15% CAGR over the same period.

Pros and strengths

Diversified pan-India presence with extensive network to cater to target customer segment: The company has strategically focused its expansion within its target customer segment which offers significant growth opportunities. It is a lender that provides loans to borrowers being entrepreneurs, small business owners, self-employed individuals, salaried and working class individuals. Most small businesses in India do not maintain documents such as income proof, business registration, GST registration, income tax filings, and bank statements, which makes access to credit challenging. Its understanding of local characteristics of these markets and customers has allowed it to address the needs of low and middle income customers and assisted it to penetrate deeper into such markets. As of March 31, 2023, it has an expansive footprint in 120 cities, spanning 16 Indian states and two union territories, with 152 branches. The extent of its network allows it to service its existing customers and attract new customers as a result of personal relationships cultivated through proximity and frequent interaction by its employees. This allows it to expand its presence across the country more seamlessly than regional players.

100% in-house sourcing, leading to favourable business outcomes: Prohibitive cost of delivering services physically and high risk perception has constrained traditional institutions’ ability to provide credit to underserved or un-served MSMEs and self-employed individuals historically. It acknowledges the complexities of underwriting such loans, and to ensure positive business outcomes, 100% of its loan portfolio has in-house origination, limiting its reliance on direct selling agents or connectors in order to ensure a more direct, thorough understanding of the customer’s profile. The company source customers directly through its sales team of 1,911 personnel as of March 31, 2023, and has adopted a direct sourcing model through branch-led local marketing efforts, repeat customers or through walk-ins, which has helped it maintain contact with its customers and establish close relationships with them, high levels of customer satisfaction and increased loyalty. Its AUM per employee has also increased from Rs 15.10 million as of March 31, 2021, to Rs 15.59 million as of March 31, 2022 and further to Rs 17.52 million as of March 31, 2023.

Comprehensive credit assessment, underwriting and risk management framework: The company has a credit assessment and risk management framework to identify, monitor and manage risks inherent in its operations. Credit management is crucial to its business since a significant number of its customers are from the underserved financial segment. It has a core focus area of small enterprise borrowers, whose monthly income is up to Rs 0.15 million, with a demonstrable track record of servicing loans such as gold loans, loans for two-wheeler vehicles, among others. High risk perception and prohibitive cost of delivering services physically have constrained formal lending to MSMEs. It focuses on customers who have better income profiles, providing it with a stable growth trajectory. Accordingly, as a lender, its lending decisions are contingent on its evaluation of the ability of the individual and the business to service the loan, and the basis for such assessment is a combination of credit history and present cash flows. The company’s risk management committee has developed risk management policies, addressing credit risk, market risk, liquidity risks and operational risks. Leveraging its significant operational experience, it has set up stringent credit quality checks and customised operating procedures that exist at each stage for comprehensive risk management.

Extensive on-ground collections infrastructure leading to maintenance of asset quality: While the company’s underwriting model contributes to suitable customers being onboarded, it has also created an extensive on-ground collections infrastructure to ensure that it maintain a high asset quality. Its branches are staffed with persons sourced from the local area, with each branch servicing an area with a limited radius, resulting in branch staff being able to quickly attend a customer’s location as issues arise. It also has an in-house collections team, responsible for detecting likely default early, thereby maintaining relatively low Gross NPA ratios. It has a three-tier collections infrastructure, comprising (i) tele-calling, (ii) field collection, and (iii) legal recovery, in order to optimize collections and minimize NPAs. It also tracks collections in real time through its mobile application. Its collection structure is comparable to larger NBFCs and banks, where there is an experienced regional supervisor reporting into an independent collection vertical dedicated to ensuring collection efficiencies. Additionally, it deploys collection agencies to assist its in-house collections team, and as of March 31, 2023, it has engaged 19 such agencies which are dedicated to its Secured MSME Loan portfolio.

Risks and concerns

Face difficulties and incur additional expenses in operating in semi-urban and rural markets: The company primarily serves low and middle income small business customers, salaried or working class individuals and self-employed customers in urban and semi-urban areas in India, comprising Tier – 2 and Tier – 3 cities, and are increasingly serving those in rural areas where there is scope for faster growth in bank credit activity as financial awareness increases. In semi-urban and rural locations, infrastructure may be limited, particularly for transportation, electricity and internet bandwidth. At some of its branch offices in remote markets, it may face difficulties in conducting operations, such as accessing power facilities, transporting people and equipment, and implementing technology measures. It may also face increased costs in conducting its business and operations and implementing security measures. The company cannot assure that such costs will not increase in the future as it expands its branch network further into semi-urban markets and also into rural markets, which could adversely affect its profitability.

Handle high volumes of cash and gold jewellery in a dispersed network of branches: The company’s business involves carrying out cash and gold jewellery transactions that expose it to the risk of fraud by employees, agents, customers or third parties, theft and burglary. Operational risks can result from a variety of factors, including failure to obtain proper internal authorisations, improperly documented transactions, failure to adequately deal with the risks associated with significant cash collections, failure of operational and information security procedures, computer systems, software or equipment, fraud, inadequate training and employee errors. These have been in the nature of misappropriation and criminal breach of trust by the branch staff, which has not had any material adverse impact on its business and operations. While it may endeavour to increase its non-cash collections, it cannot guarantee that it will be successful in its efforts to move towards digital collections. Also, while it retains insurance to mitigate cash and gold related risks including office protection and fidelity policies, it cannot assure that the insurance obtained by it adequately covers all risks involved or will be paid in relation to the entire amount involved, or at all.

Rely significantly on information technology systems: The company may be subject to disruptions, failures or infiltrations of its information technology systems arising from events that are wholly or partially beyond its control (including damage or incapacitation by human error, natural disasters, electrical or telecommunication outages, sabotage, computer viruses, cyberattacks or similar events, or loss of support services from third-parties, such as internet backbone providers). Although it has not experienced any significant disruptions to its information technology systems in the past, it cannot assure that it will not encounter disruptions in the future. Data security breaches could lead to the loss of intellectual property, public exposure of personal information of its customers and employees, which could result in breaches of applicable data security laws and resultant imposition of monetary penalties. Although it has not experienced any data security breaches in the past, any such security breaches or compromise of technology systems could result in institution of legal proceedings and potential imposition of penalties, which may have an adverse effect on its business, results of operations and reputation.

Fluctuations in the market values of company’s investments: As part of the company’s treasury management, it has formulated a board-approved investment policy in accordance with the RBI Master Directions. Its investment policy prescribes policies for investments in SEBI registered mutual funds, Government Securities/ treasury bills, liquid/ liquid plus mutual funds and fixed deposits with banks and small finance banks, subject to the overall investment limit fixed by the Board. The value of these investments depends on several factors beyond its control, including the domestic and international economic and political scenario, inflationary expectations, interest rate volatility and monetary policies. For instance, on June 23, 2023, the investment committee of the company has decided to exit 7.26% Government Securities maturing in 2032, since this investment was perceived to have high risk of volatility due to its long maturity period. The company exited this investment and has invested in treasury bills to be held till maturity to maintain the required Liquidity Coverage Ratio.

Outlook

SBFC Finance is a systemically important, non-deposit-taking Non-Banking Finance Company (NBFC-ND-SI). The primary customer base of the company includes entrepreneurs, small business owners, self-employed individuals, and salaried and working-class individuals. It provides its services in the form of Secured MSME Loans and Loans against Gold. SBFC Finance tends to extend its services to entrepreneurs and small business owners who are underserved or unserved by traditional financial institutions like banks. There are various factors taken into consideration while offering financial assistance in the form of loans. It offers its services so that entrepreneurs can fulfill their financial requirements and thrive. Technology is at the core of its operations and it has adopted a well-defined IT strategy since its inception. In terms of distribution, its centralized real-time lending system, is a multi-product digital platform supporting mobile customer on-boarding, paperless login and loan processing, which leads to quicker turn-around time. On the concern side, in making a decision whether to extend credit to prospective customers, it rely upon data received from its customers and third-party intermediaries to assess credit handling ability, debt servicing capacity, and overall risk level to determine lending exposure and loan pricing in accordance with its internal credit policy. If the company does not make accurate credit decisions, its business and financial results will be adversely affected, and the impact could be material.

The company is coming out with an IPO of 18,98,87,816 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 54-57 per equity share. The aggregate size of the offer is around Rs 1025.39 crore to Rs 1082.36 crore based on lower and upper price band respectively. On the financial front, the company’s total income increased by 39.51% from Rs 5,307.02 million in Fiscal 2022 to Rs 7,403.61 million in Fiscal 2023. Profit after tax (PAT) increased from Rs 645.21 million in Fiscal 2022 to Rs 1,497.36 million in Fiscal 2023. Meanwhile, the company plans to ensure that its information technology systems continue to help it with several functions, including loan origination, credit underwriting, collections and customer service. It intends to strategically invest its resources for leveraging technology for efficient operations as it scales up to ensure increased effectiveness of its operations. It intends to reduce its operating costs and increase efficiency in its business operations to improve the overall customer experience through increasing use of technology. It intends to continue strengthening and increasing the user-friendliness of its existing technology infrastructure.




Oriana Power coming with an IPO to raise upto Rs 59.66 crore
Jul-29-2023   13:49 Hrs IST

Oriana Power 

  • Oriana Power is coming out with a 100% book building; initial public offering (IPO) of 50,55,600 shares of Rs 10 each in a price band Rs 115-118 per equity share.
  • The issue will open for subscription on August 1, 2023 and will close on August 3, 2023.
  • The shares will be listed on NSE Emerge.
  • The face value of the share is Rs 10 and is priced 11.50 times of its face value on the lower side and 11.80 times on the higher side.
  • Book running lead manager to the issue is Corporate Capital ventures.
  • Compliance Officer for the issue is Tanvi Singh.

Profile of the company

Its business operations are primarily divided into two segments: Capital Expenditure (CAPEX) and Renewable Energy Service Company (RESCO). Under the CAPEX model, it offers Engineering, Procurement, construction, and operation of solar projects. In this model, customer invest in the Capital Expenditure at their own and Oriana does Engineering, Procurement, Construction and Operation on behalf of the client. This model may be executed in various manners such as rooftop and ground-mounted systems, as well as off-site solar farms. Under CAPEX Model it has delivered projects with a capacity exceeding 100 MWp across various locations across India till date since commencement of its business activity in this area of service i.e. June 2017.

Under the RESCO model, it operates through its 18 (eighteen subsidiaries). Its subsidiaries provide solar energy solutions on a BOOT (Build, own, operate, transfer) model basis, allowing its customers to enjoy the benefits of solar energy without the upfront investment. All the Investment, Commissioning and maintenance are done at its end and in lieu of that the company sells power to the end consumer through a Power Purchase agreement generally agreed for 25 years. This Business gives it Annuity income post recovery of Initial investment.

Proceed is being used for:

  • Funding of working capital requirements
  • Investment in subsidiary companies 
  • Capital expenditure on infrastructure & technology for expansion
  • General corporate expenses

Industry overview

India's energy demand is expected to increase more than that of any other country in the coming decades due to its sheer size and enormous potential for growth and development. Therefore, it is imperative that most of this new energy demand is met by low-carbon, renewable sources. India's announcement India that it intends to achieve net zero carbon emissions by 2070 and to meet 50% of its electricity needs from renewable sources by 2030 marks a historic point in the global effort to combat climate change.

The Indian renewable energy sector is the fourth most attractive renewable energy market in the world. India was ranked fourth in wind power, fifth in solar power and fourth in renewable power installed capacity, as of 2020. Installed renewable power generation capacity has gained pace over the past few years, posting a CAGR of 15.92% between FY16-22. India is the market with the fastest growth in renewable electricity, and by 2026, new capacity additions are expected to double. With the increased support of the Government and improved economics, the sector has become attractive from an investors perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 TWh by 2040, renewable energy is set to play an important role.

India’s ambitious renewables energy goals are transforming its power sector. Rising population and widespread electrification in rural homes is fueling the demand for energy to power homes, businesses and communities. Clean energy will reduce pollution levels as villages become self-sustainable with their use of clean energy. In 2022, India's renewable energy sector is expected to boom with a likely investment of $15 billion this year, as the government focuses on electric vehicles, green hydrogen, and manufacturing of solar equipment.

Pros and strengths

Investment in subsidiary companies: The Company has set up eighteen subsidiary companies for different solar power project. its subsidiary company have installed multiple MW capacities at Delhi, Rajasthan, Madhya Pradesh, Haryana, Gujrat , Maharashtra, etc. In addition, the company has also invested in subsidiary companies engaged in Resco projects. All the subsidiary companies are in similar line of business as a result it can avoid duplication of administration expenses. In addition, it can also use its expertise and experience in setting up and completion of new project in subsidiary companies on schedule. This helps to exercise control over its management and administrative effectively. 

24/7 Premium support system: It has a unique way to support the client and maximize the solar yield through its dedicated remote monitoring and analytic platform. Its continuous monitoring by in-house O&M team enables the client to take have optimum O&M cost and reduce the downtime.

Experience management team: It has an experienced management team led by its Promoters, Mr. Anirudh Saraswat, Rupal Gupta and Mr. Praveen Kumar each of whom has more than 15 years of work experience in diverse sectors including 5 years in the Steel, Automation, manufacturing and research and development of solar. Its management team is well qualified with significant industry experience and has been responsible for the growth in its operations

Risks and concerns

Operate in competitive industry: Its business depends on its ability to continually win bids for solar power projects and its current business strategy focuses on increasing the number of solar power projects to which it provides EPC services and expanding its operations into new geographies. It bids for solar power projects and compete with other EPC solutions providers based on, among other things, pricing, technical and design and engineering expertise, financing capabilities, past experience, amount and type of guarantees given and track-record. The bidding and selection process is also affected by a number of factors, including factors which may be beyond its control, such as market conditions or government incentive programs.

Dependency on top 10 customers: There are potential risks associated with dependency on a limited number of customers. Relying on a small group of customers for a significant portion of revenue may expose the company to volatility and potential disruptions in its business operations. Any adverse changes in these customer relationships, such as a loss of a key customer or a decrease in their demand, could impact the company's financial performance.

Success depends on key managerial personnel: Its success heavily depends upon the continued services of its Key Managerial Personnel, along with support of its Promoters. It also depends significantly on its Key Managerial Personnel for executing its day-to-day activities. The loss of any of its Promoters and Key Management Personnel, or failure to recruit suitable or comparable replacements, could have an adverse effect on it. The loss of service of the Promoters and other senior management could seriously impair the ability to continue to manage and expand the business efficiently. If it is unable to retain qualified employees at a reasonable cost, it may be unable to execute its growth strategy.

Outlook 

Incorporated in 2013, Oriana Power is a company that specializes in providing solar energy solutions to industrial and commercial customers. It offers low carbon energy solutions by installing on-site solar projects such as rooftop and ground-mounted systems, as well as off-site solar farms i.e. Open access. On the concern side, there are potential risks associated with dependency on a limited number of customers. Relying on a small group of customers for a significant portion of revenue may expose the company to volatility and potential disruptions in its business operations.

The issue has been offered in a price band of Rs 115-118 per equity share. The aggregate size of the offer is Rs 58.14 crore to Rs 59.66 crore based on lower and upper price band respectively. On performance front, the total revenue has increased by 9.87% from Rs 12,496.55 lakh in the fiscal year ended March 31, 2022 to Rs 13,730.17 lakh in the fiscal year ended March 31, 2023. The increase in revenue is on account of increase in sale due to the increase in the number of operations. Net Profit has increased by 57.42% from Rs 693.82 Lakh in the fiscal year ended March 31, 2022 to profit of Rs 1,092.24 lakh in the fiscal year ended March 31, 2023. Going forward, the company intends to cater to the increasing demand of its existing clients and also to increase its existing customer base by enhancing its geographical reach. Enhancing its presence in additional regions will enable it to reach out to a larger market and have direct access to the suppliers and clients which will allow it to have better understanding of their concept and ideas.

Vinsys IT Services coming with an IPO to raise upto Rs 49.84 crore
Jul-27-2023   15:30 Hrs IST

Vinsys IT Services 

  • Vinsys IT Services is coming out with a 100% book building; initial public offering (IPO) of 38,94,000 shares of Rs 10 each in a price band Rs 121-128 per equity share.
  • The issue will open for subscription on August 1, 2023 and will close on August 4, 2023.
  • The shares will be listed on NSE Emerge.
  • The face value of the share is Rs 10 and is priced 12.10 times of its face value on the lower side and 12.80 times on the higher side.
  • Book running lead manager to the issue is Beeline Capital Advisors.
  • Compliance Officer for the issue is Gayatree Neeraj Karandikar.

Profile of the company

Incorporated in 2008, Vinsys IT Services India is a part of Vinsys Group, headquartered in Pune, Maharashtra. Since inception, Vinsys Group has been dedicated to IT skill development, trainings and certification. The group comprise of 8 business entities, having its footprints in India, USA and Middle Eastern Countries. The company is engaged in IT business. Its core competence includes Training and Certifications, Digital Learning, Project Management, and technology training. Vinsys IT, an ISO 9001:2015 certified organization, is dedicated to becoming an accredited training service provider to meet the growing demand for training and workforce development. Vinsys specializes in corporate training and consulting across a broad range of domains. Its certifications of CMMIDEV/3 and ISO 27001: 2013 demonstrate its adherence to strict quality control standards.

The company is a trusted partner with CompTIA, Hybris Software, EC-Council, Red Hat, Oracle, CISCO, IBM, PECB, Autodesk, Skillsoft, AWS, PMI, PRINCE2, ISACA, ITIL, PeopleCert, Citrix and Microsoft in more than 30 countries, with a strong presence in India, USA, UAE. The company also has footprints by delivering services in Saudi Arabia, Oman, Qatar, Australia, Kenya, Tanzania, Singapore, and Malaysia.  In addition to certifications and training offerings, the company provides a comprehensive end to end solution by delivering robust and advanced digital learning solutions. Its OTS library of over 100,000 titles is compatible with all LMS and LXP platforms. Its advanced IT development services offer a seamless project execution process and a successful IT strategy. Its full suite of software service offerings includes ERP solutions, DevOps practices, architectural consulting, integration, and middleware services. The company also helps organizations reduce geographical diversity through its foreign language translation services. It caters to professionals across all industries and domains and offer assistance to organizations in formulating their learning and development strategies. Its organization, with its unwavering focus on quality, stands as a pioneer in the realm of training and development. Its dedication lies in offering, its clients with the best possible service, with trainers available on demand around the clock.

Proceed is being used for:

  • Meeting Working Capital Requirements.
  • Repayment of loan to Subsidiary.
  • Loan to Subsidiary.
  • General Corporate Purposes.
  • Meeting Public Issue Expenses.

Industry overview

The IT industry accounted for 7.4% of India’s GDP, as of FY22. India’s IT industry is expected to contribute 10% to India’s GDP by 2025. As of FY22, the IT industry employs 5 million people. According to National Association of Software and Service Companies (Nasscom), the Indian IT industry’s revenue touched $ 227 billion in FY22, a 15.5% YoY growth. As per a survey by Amazon Web Services (2021), India is expected to have nine times more digitally skilled workers by 2025. This indicates that a total of 3.9 billion digital skill trainings are expected by 2025. As of 2021, digitally trained employees constitute 12% of the country's workforce. Exports from the Indian services industry stood at $ 254.4 billion in FY22. The BPM sector in India currently employs >1.4 million people, while IT and BPM together have 4.5 million workers, as of FY21. The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth $ 88.94 billion between April 2000-June 2022. 

The sector ranked 2nd in FDI inflows as per the data released by Department for Promotion of Industry and Internal Trade (DPIIT). Computer software and hardware make up 14.70% of the cumulative FDI equity inflows. This push towards cloud services has boosted hyper-scale data centre investments, with global investments estimated to exceed $ 200 billion annually by 2025. India is expected to gain a significant share in the global market, with the country's investment expected to hit $ 5 billion annually by 2025. The IT industry added 4.45 lakh new employees in FY22, bringing the total employment in the sector to 50 lakh employees. The IT-BPM services revenue reached $ 194 billion in FY21. By 2025–2026, India is expected to have 60–65 million jobs that require digital skills, according to a Ministry of Electronics & IT report titled ‘India's trillion-dollar digital opportunity’. Exports from the Indian IT industry are expected to be around $ 178 billion in FY22.

Pros and strengths

Wide range of Service Portfolio: The company along with its subsidiaries offers wide arrey of services to the clients. It strives to provide one roof solutions to any corporate, engaged with it. The company provides 326 courses under training and certifications across 17 domains. In addition to certifications and training offerings, it provides a comprehensive end to end solution by delivering robust and advanced digital learning solutions. Its OTS library of over 100,000 titles is compatible with all LMS and LXP platforms. Its advanced IT development services offer a seamless project execution process and a successful IT strategy. Its full suite of software service offerings includes ERP solutions, DevOps practices, architectural consulting, integration, and middleware services. It also helps organizations reduce geographical diversity through its foreign language translation services.

Global Presence: Vinsys group has a global presence, providing training services in various countries worldwide. It understands the nuances of different cultures and tailor its training programs to meet local requirements. It is a trusted partner with CompTIA, Hybris Software, EC-Council, Red Hat, Oracle, CISCO, IBM, PECB, Autodesk, Skillsoft, AWS, PMI, PRINCE2, ISACA, ITIL, PeopleCert, Citrix and Microsoft in more than 30 countries, with a strong presence in India, USA, UAE and Strong delivery experience in Saudi Arabia, Oman, Qatar, Australia, Kenya, Tanzania, Singapore, and Malaysia.

Quality assurance: Vinsys IT, an ISO 9001:2015 certified organization, is dedicated to becoming an accredited training service provider to meet the growing demand for training and workforce development. Vinsys specializes in corporate training and consulting across a broad range of domains. Its certifications of CMMIDEV/3 and ISO 27001 demonstrate its adherence to strict quality control standards. 

Risks and concerns

Dependent on few numbers of customers: The company’s business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations. While its typically have long term relationships with its customers, it 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 its customers. The actual sales by the company may differ from the estimates of its management due to the absence of long-term agreements. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows. It cannot assure 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. 

Highly dependent on technology: The company relies on its information technology systems to provide it with connectivity across its business functions and connectivity with its trainers and end users through its software, hardware and network systems. Its business processes are majorly information technology enabled, and any failure in its information technology systems or loss of connectivity or any loss of data arising from such failure could disrupt its ability to track, record and analyze work in progress, monitor maintenance activities or share data with its network partners, process financial information, manage creditors/debtors or engage in normal business activities, which could have an adverse effect on its business and operations. Further, any failure, disruption or manipulation of its integrated information technology system could disrupt its ability to track and record transactions, which could have an adverse effect on its business and operations.

Requires significant amount of working capital: The company’s business requires significant working capital, part of which would be met through additional borrowings in the future. Its working capital requirements may increase under certain conditions, where payment terms do not include advance payments or include delayed payments from customers. Additionally, its working capital requirements have increased in recent years due to the general growth of its business. All these factors may result, or have resulted, in increases in its working capital needs.

Outlook 

Incorporated in 2008, Vinsys IT Services India is engaged in offering services in IT skill development, trainings, and certification domain. The company is a part of Vinsys Group. As of now, the group comprises 8 entities operating in India, as well as having a marked global footprint in the USA and Middle Eastern Countries. The strength and entrepreneurial vision of the company’s Promoters and management have been instrumental in driving steady growth of the company and implementing its strategies. The business of the company is customer oriented and always strives to maintain good relationship with the corporates. Leveraging its market skills and relationships is a continuous process in its organization and the skills that it imparts in its people give importance to customers. On the concern side, the company requires several statutory and regulatory permits, licenses and approvals to operate the business. Many of these approvals are granted for fixed periods of time and need renewal from time to time. The company is required to renew such permits, licenses and approvals. There can be no assurance that the relevant authorities will issue any of such permits or approvals in time or at all. 

The issue has been offered in a price band of Rs 121-128 per equity share. The aggregate size of the offer is Rs 47.11 crore to Rs 49.84 crore based on lower and upper price band respectively. On performance front, the revenue from operations for the FY 2022-23 was Rs 9485.01 lakh as compared to Rs 3184.72 lakh during the FY 2021-22 showing an increase of 197.83%. The company has reported Profit after Tax (PAT) of Rs 1511.50 lakh in FY 2022-23 as compared to net loss of Rs 32.39 lakh in the FY 2021-22. Meanwhile, the company intends to continue to grow geographical presence by increasing its reach to unexplored geographies. It also intends to continue to enhance scale in existing services across high end and mid segment to capitalize on the opportunity to cater rising acceptance and demand. Its wide service portfolio provides it competitive edge over its competitors. In order to maintain its competitive edge, it will continue to keep providing quality services. 

Zeal Global Services coming with an IPO to raise upto Rs 36.46 crore
Jul-26-2023   14:19 Hrs IST

Zeal Global Services

  • Zeal Global Services is coming out with an initial public offering (IPO) of 35,40,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 103 per equity share.
  • The issue will open for subscription on July 28, 2023 and will close on August 1, 2023.
  • The shares will be listed on NSE Emerge.
  • The share is priced 10.30 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Expert Global Consultant.
  • Compliance Officer for the issue is Monal Gupta. 

Profile of the company

The company is headquartered in Delhi and has presence in major locations such as Delhi and Mumbai. Its international logistics operations are supported by a network of service partners and vendors with whom it enters into agreements that enables it to service client requirements across India and abroad. The company is engaged in the business of providing logistics solutions in the Air Cargo Industry. It has been operating as General Sales and Service Agent (GSSA) and sales partner for airline in the region. The company realizes that clients have specific requirements with regards to their shipments. It therefore spend considerable time with clients individually to understand their specific requirements. Its approach is to bring economical solutions to its client's freighting needs through - excessive aircraft, load and destination compatibility analysis to suit ever changing needs of various industries such as fashion, pharmaceuticals, automotive and industrials.

Its promoters has experience of many years in the air cargo industry. Driven by the passion and commitment to a new way of thinking about GSSA expertise through its ‘Augmented GSSA’ strategy, taking into account its 4 pillars: Commercial, Abilities, Technology and Sustainability for growth and strong value system for the company. With their experience and progressive thinking, it aims to grow in Air Cargo space. Its commitment towards work has helped it attain immense confidence and trust of its clients. It provides services to its clients across countries namely India, China, Middle East, Sri Lanka, Singapore and Malaysia.

Proceed is being used for: 

  • Working capital requirement
  • Investments in subsidiaries for business expansion
  • Part repayment of debt
  • General corporate purposes
  • Meeting issue expenses

Industry overview

India is world's fifth largest economy by nominal GDP and is one of the fastest-growing economies globally. Efficient logistics is the bed rock for a growing economy like India. The reduction in logistics cost could be a key enabler in enhancing the competitiveness of all sectors of the economy. Improving supply chain efficiencies and reducing logistics costs are fundamental to India capitalizing on this strategic shift and meeting the well-defined aspiration to become a $5 trillion economy.

India's Air Freight Market is estimated to be $13.08 billion in 2023 and is expected to reach $17.22 billion by 2028, growing at a CAGR of 5.65%. According to the Trade and Transport Group's recently published report 'India Air Cargo Outlook 2023,' India generated 2.2 million tonnes of traffic in 2018, with a projected increase to 2.5 million tonnes in 2023. In terms of relative size, its air cargo traffic was one fifth the size of China's and one-tenth the size of the US air cargo market, with roughly 30% of traffic generated domestically and the remainder internationally.

The initiatives taken by the government will lead to the progress of the logistics sector. The integration in the form of a multi modal network of transport and warehousing will lead to increased efficiency in the transportation and storage of goods throughout the country. By focusing on the digital aspect, the government’s aim is to upgrade the existing system that will lead to faster, better communication with fewer errors that will benefit the sector significantly. The plan has a strong monitor system with periodic audits in order to check the implementation of policies and application of required corrective measures.

Pros and strengths

Scalable Business Model: Its business model is customer centric. It has attracted various airlines in India, such as Copa Airlines, Bringer Air cargo, Miat Mongolian Airlines, and Air Europa. Its locational advantage of being situated in Delhi, development of new markets both domestically and internationally. The company can also replicate the business model in other countries and expand geographically and across the world (like India) such as Middle East, Hong Kong, and Latin America. It has developed a Plug and Play business model on one side Airlines for Passenger and Cargo and on other side the Shipper / IATA Agents.

Long standing Customer Relationships: Currently there are 300 IATA agents in India, out of which total 250 IATA agents are currently on board with the company. Further, of the IATA agents on boarded with it, around 50% of customers are repeat customers over the years. Company approaches the registered agents on IATA portal, through available resources. These are the particular services which are available with the company and it can be provided at the best rate to those IATA’s agents and the IATA’s agents can sell it further to their customers. In the FY 22-23, it has provided its services to around 200 IATA agents. As of now, there is no long-term contract or agreement entered between it and such IATA’s agents in written. 

Handling of specialised cargo: The company provides specialized cargo service for unusual sizes and temperature-controlled cargo service for goods such as perishable goods, pharmaceutical drugs etc. It has handled unusual sizes of cargo as high as 29 tonnes.

Risks and concerns

Limited number of airlines: There are a very few airlines from which it has entered agreements for its cargo logistic and they may allocate their resources to service other clients ahead of it. While it could find additional airlines, any failure of it’s agreed airlines to provide services result, it may lose customers which could have a material adverse effect on its business, financial condition and results of operations.

Face competition: The market in which the company is doing business is highly competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes. Some of its competitors may have longer industry experience and greater financial, technical and other resources, which may enable them to react faster in changing market scenario and remain competitive. Moreover, the unorganized sector offers their services at highly competitive prices which may not be matched by it and consequently affect its volume of revenue 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.

Dependent on few numbers of customers and airlines: Its top 10 customers contribute to 41.59% of its revenue from operations for the period ended January 31, 2023 and its top 10 airlines contribute to 91.10% of its purchases for the period ended January 31, 2023. The loss of a significant client or airlines would have a material adverse effect on its financial results. It cannot assures that it can maintains the historical levels of business from these clients or that it will be able to replace these clients in case it losses any of them. Furthermore, major events affecting its clients, such as bankruptcy, change of management, mergers and acquisitions could adversely impact its business. If any of its major clients becomes bankrupt or insolvent, it may lose some or all of its business from that client and its receivable from that client would increase and may have to be written off, adversely impacting its income and financial condition.

Outlook

Incorporated in 2014, Zeal Global Services is engaged in the business of providing logistics solutions in the Air Cargo Industry. It has been operating as General Sales and Service Agent (GSSA) and sales partner for airline in the region. On the concern side, the market in which the company is doing business is highly competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes, beside the market in which the company is doing business is highly competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes.

The company is coming out with an IPO of 35, 40,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 103 per equity share to mobilize Rs 36.46 crore. On performance front, the company’s revenue from operations increased from Rs 6058.87 lakh in year ended March 31, 2021 to Rs 12,109.40 lakh in year ended March 31, 2022. An increase of 99.86% in Total Revenue because the market was on recovery mode from the covid pandemic effect, due to that demand was also increased for cargo sector and price was also hiked. Net Profit after tax increased from Rs 169.61 lakh in year ended March 31, 2021 to Rs 524.30 lakh in year ended March 31, 2022 with a resultant increase of 209.12% in year ended March 31, 2022. Going forward, it strives to focus on reducing the costs without losing on quality of service. Measuring and evaluating costs at each stage and mapping it with scientific standards is its core strategy to control costs. It does business with customers at centre of its approach and always strives to maintain healthy relationship. Leveraging its knowledge and relationships with stakeholders to cross sell and upsell its services. 

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