Tejas Cargo India

• Tejas Cargo India is coming out with an initial public offering (IPO) of 63,00,000 equity shares in a price band Rs 160-168 per equity share.
• The issue will open on February 14, 2025 and will close on February 18, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 16.00 times of its face value on the lower side and 16.80 times on the higher side.
• Book running lead manager to the issue is New Berry Capitals.
• Compliance Officer for the issue is Neelam. 

Profile of the company

Tejas Cargo India is a logistics company based in Faridabad, Haryana, providing long haul supply chain transportation services by road across India. It offers express supply chain transportation services by road under Full Truck Load (FTL), to a diverse range of companies who are inter alia engaged in the logistics, steel and cement, e-commerce, industrial & chemicals, FMCG and white goods sectors. As of September 30, 2024, it had carried out more than 61% of the trips through owned fleets and the remaining is undertaken through fleets hired from the open market on an ad-hoc basis. 

It offers technology enabled logistics services to its clients to optimize its operations and minimize contingencies. It completed over 98,913 trips during Fiscal 2024 and 58,943 trips for the six months period ended September 30, 2024 on a pan India basis. It derives more than 98% of its revenue by providing long haul supply chain transportation services. Its services include shipment planning, route optimisation, fleet selection, documentation, tracking, communication and coordination and performance evaluation.

It specializes in supply chain transportation services by road under FTL wherein it offers its fleet to fulfil its long-term contract obligations as well as address its adhoc demands to achieve network optimization and efficient freight management. It also provides its vehicles in the open market through its strategic network to optimise its fleet utilization. It has also, through its strategic network with multiple logistics service providers, expanded its reach and enhanced its service offerings by providing integrated logistics solutions to its clients. 

Proceed is being used for:

• Purchasing additional trailers for the company
• Meeting working capital requirements
• Repayment and/or pre-payment, in full or part, of certain borrowings availed by the company
• General corporate purposes

Industry Overview 

Third-Party Logistics (3PL) market involves outsourcing logistics and supply chain management tasks-such as transportation, warehousing, inventory management, and order fulfillment to specialized external firms. This approach helps businesses focus on their core operations, improving efficiency, reducing costs, and enhancing customer service. 3PL providers use their expertise, technology, and resources to optimize logistics, ensure smooth coordination among manufacturers, suppliers, and retailers, and act as intermediaries to facilitate product flow, ultimately boosting overall efficiency and customer satisfaction. India handles 4.6 billion tonnes of goods each year, amounting to a total annual cost of Rs 9,50,000 crore. These goods represent a variety of domestic industries and products - 22% are agricultural goods, 39% are mining products and 39% are manufacturing-related commodities. Trucks and other vehicles handle most of the movement of these goods. Railways, coastal and inland waterways, pipelines, and airways account for the rest. Major domestic freight is still transported by road which accounts for 71% (25% globally) followed by rail - 24% (60% globally), waterways - 5% and balance through pipelines.

During the period CY19-23, market size of the industry grew by a CAGR of 19.5%, from Rs 763.9 billion in CY19 to Rs 1,557.3 billion in CY23. This growth in demand for third-party logistics (3PL) services in India can be attributed to various factors such as growth in manufacturing sector, rise in healthcare logistics on account of increasing health awareness and rising global sales of prescription drugs, rising rural demand, and economic expansion in Tier 2 and Tier 3 cities leading to a thriving market environment. A key driver is the country's fast-expanding e-commerce sector, which has significantly increased the need for effective and scalable logistics solutions. Notably, India's supportive regulatory framework and varied geographical features create a need for specialized expertise in addressing logistical challenges, driving the demand for outsourced logistics services. Furthermore, strategic initiatives implemented by industry players are further driving this market growth.

The industry market size is expected to grow at a CAGR of 13.2% from CY23-29. The market size is expected to grow from Rs. 1,557.3 billion in CY23 to Rs. 3,278.2 billion by CY29. One of the major drivers of this projected growth is the increasing use of advanced technologies like artificial intelligence, big data analytics, and the Internet of Things (IoT) by 3PL providers which improves operational efficiency, reduces errors, and elevates the overall visibility of supply chain, attracting a wide range of industries. This trend is expected to drive the growth of the 3PL market in India over the forecast period, creating a favorable environment for both domestic and international logistics companies to seize new opportunities. Additionally, expanding manufacturing sector, rise in healthcare logistics along with rise in cold chain solutions market on account of increasing trade of perishable goods are other drivers that will propel future growth in this industry. Moreover, the boom in e-commerce segment and demand for last-mile delivery services is further expected to provide impetus to this growth.

Pros and strengths

Heavy asset ownership model: As on October 31, 2024, the company owns a fleet of 1,131 vehicles which consists of 218 trailers and 913 container trucks. This enables it to have direct control over its operations and maintenance. It further hires additional vehicles from the open market on an ad-hoc basis to adapt and meet fluctuating client demands. Its current business model ensures a high vehicle availability rate, high indent fulfilment and lower non placements. By owning and operating its fleet, it achieves the reduction in operating and maintenance costs compared to market rates. This enables it to offer competitive pricing while maintaining reliable services.

Leveraging modern technology to operate and monitor its fleet: The company’s technology platform is a key differentiator, enabling it to deliver quality services. It provides assurance of security to its clients for cargo by IoT-based solutions such as Geo Fencing, Centralised Digital Locking, GPS and SIM based tracking, ADAS/DSM (only for trailers), as well as AI-powered rear camera technology (only for trailers) in its fleet assisting in on-time delivery and improving safety standards. Moreover, its route alerts reduce transit times ensures faster delivery and increased client satisfaction. The integration of ADAS+DSM with AI Rear Anti-Theft Camera minimizes theft and damage risks, further solidifying its commitment to safety and security. It has currently outsourced the technical support which has developed ERP software for it to run and monitor its operations effectively. Its ERP system automates key processes such as indent matching, fleet allocation, and route optimization, while enabling real-time fleet monitoring.

In-House maintenance and direct procurement: The company’s vehicles are primarily serviced at authorized manufacturer workshops. However, it also utilizes its in-house maintenance facility located in Gurugram, Haryana for servicing vehicles including out of warranty vehicles. Its aforementioned maintenance facility is equipped with a team of expert technicians and can accommodate up to 40 trucks which ensures prompt and efficient maintenance, reducing breakdowns due to technical and mechanical faults and improving vehicle uptime. Its maintenance facility includes 12 repair bays, advanced diagnostic equipment, and on-site dedicated representatives from leading manufacturers providing personalized support to achieve low breakdown. 

Risks and concerns

Debt-to-equity ratio is significantly high at 3.27: The company is into capital intensive business and its debt to equity ratio is at 3.27 as on September 30, 2024 which is higher than its peers. As on September 30, 2024, it has an outstanding borrowing amounted to Rs 20,498.63 lakh. Out of the total debt, Rs 13,639.03 lakh is towards purchase of commercial vehicles to increase its fleet size. Its high indebtedness levels, and other financial obligations and contractual commitments, could lead to a downgrade of its credit rating by domestic rating agencies, thereby adversely impacting its ability to raise additional financing, as well as the interest rates and commercial terms on which such additional financing is availed of.

Operates in a highly fragmented and competitive industry: The company operates in a highly competitive industry, dominated by a large number of unorganized players. Many segments within the logistics industry are highly commoditized and have low barriers to entry or exit, leading to a market with a very high degree of fragmentation. Increased competition from other organized and unorganized third-party logistics (including its business partners) may lead to a reduction in its revenues, reduced profit margins or a loss of market share. Its success depends on its ability to anticipate, understand and address the preferences of its existing and prospective customers as well as to understand evolving industry trends and its failure to adequately do so could adversely affect its business.

Significant working capital requirement: The company’s business is working capital intensive. A significant portion of its working capital is utilized towards trade receivables. It intends to continue growing by expanding its business operations. This may result in increase in the quantum of current assets particularly trade receivables. Its inability to maintain sufficient cash flow, credit facility and other sources of fund, in a timely manner, or at all, to meet the requirement of working capital could adversely affect its financial condition and result of its operations. 

Outlook

Tejas Cargo India is a logistics company located in Faridabad, Haryana, that provides supply chain transportation services by road throughout India. The company provides express road transportation services under Full Truck Load (FTL) to various sectors, including logistics, steel, e-commerce, FMCG, and white goods. The company has diversified client base and revenue sources. It has a track record of growth and robust financial position. On the concern side, the company requires significant amounts of working capital for continued growth. Its inability to meet its working capital requirements may have an adverse effect on its results of operations. Moreover, the company operates in a highly fragmented and competitive industry and increased competition may lead to a reduction in its revenues, reduced profit margins or a loss of market share.

The company is coming out with a maiden IPO of 63,00,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 160-168 per equity share. The aggregate size of the offer is around Rs 100.80 crore to Rs 105.84 crore based on lower and upper price band respectively. On performance front, the revenue from operations increased by 9.83% to Rs 41,932.61 lakh for the year ended March 31, 2024 from Rs 38,178.52 lakh for the year ended March 31, 2023, primarily due to increased number of placements, wherein it completed 98,913 placements in FY2024 as compared to 93,239 placements in FY2023. Moreover, the company has reported 34.12% rise in net profit at Rs 1,322.22 lakh in FY24 as compared to Rs 985.85 lakh in FY23.

The company has recently submitted an application to Container Corporation of India to lease a train, marking its expansion into rail logistics. This agreement will allow it to hire/lease a train for transportation of cargo by rail, complementing its inland road operations while optimizing both operational costs and transportation efficiency. Rail transportation offers the ability to move larger volumes of cargo, thereby increasing its capacity and enabling it to enter new markets. Additionally, rail logistics will enable it to offer its clients a more sustainable transportation option, reducing carbon emissions and environmental impact. This expansion will also create new job opportunities and stimulate economic growth in the regions it serves.

Quality Power Electrical Equipments

• Quality Power Electrical Equipments is coming out with a 100% book building; initial public offering (IPO) of 2,05,21,400 shares of Rs 10 each in a price band Rs 401-425 per equity share.
• Not more 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 February 14, 2025 and will close on February 18, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 10 and is priced 40.10 times of its face value on the lower side and 42.50 times on the higher side.
• Book running lead manager to the issue is Pantomath Capital Advisors.
• Compliance Officer for the issue is Deepak Ramchandra Suryavanshi.

Profile of the company

Quality Power Electrical Equipments is an Indian player serving global clients in critical energy transition equipment and power technologies. It provides high voltage electrical equipment and solutions for electrical grid connectivity and energy transition. It is a technology-driven company specializing in the provision of power products and solutions across power generation, transmission, distribution, and automation sectors. Additionally, it offers equipment and solutions tailored for emerging applications such as large-scale renewables. Its manufacturing facilities adhere to the quality standards required by its global conglomerate clientele, including those listed on the Fortune 500. Additionally, the company’s Test & Research Lab in Sangli holds ISO 17025:2017 accreditation from the National Accreditation Board for Testing and Calibration Laboratories (NABL), certifying it as an independent test laboratory that complies with both Indian and international standards for systems up to 765kV. 

The company is among the few global manufacturers of critical high voltage equipment for High Voltage Direct Current (HVDC) and Flexible AC Transmission Systems (FACTS) networks. These equipment and networks form key components for energy transition from renewable sources to traditional power grids. With over two decades of experience in the energy transition space, it provides an extensive range of products crucial for effective power transmission and advanced power automation. Its offerings include reactors, transformers, line traps, instrument transformers, capacitor banks, converters, harmonic filters, and reactive power compensation systems. Additionally, its grid interconnection solutions feature technologies such as STATCOM and static var compensator systems (SVC). Its domestic and global footprint allows it to cater to both Indian and global customer bases.

The company’s portfolio of high voltage products and solutions is critical for advancing and modernizing electrical networks. Its technologies are designed to enhance grid reliability and performance by providing critical support for power grid management and overall network stability. Engineered to meet the demanding requirements of contemporary electrical infrastructure, these products ensure optimal efficiency and resilience. The company’s high voltage solutions help to maintain and improve network performance, offering advanced capabilities to address the complexities of modern energy systems and assist operators in effectively managing power quality and operational reliability. 

Proceed is being used for:

• Payment of the purchase consideration for the acquisition of Mehru Electrical and Mechanical Engineers
• Funding capital expenditure requirements of the company for purchase plant and machinery
• Funding inorganic growth through unidentified acquisitions and other strategic initiatives and general corporate purposes

Industry Overview

The global energy landscape is undergoing a significant transformation, often referred to as the Energy Transition & Power Technologies industry. This Energy Transition & Power Technologies marks a shift from traditional, carbonintensive energy sources like coal, oil, and natural gas to cleaner, more sustainable energy sources such as solar, wind, and hydrogen. At the core of this transition is the adoption of energy transition equipment & power technologies, which encompasses a broad range of novel methods, advanced equipment, innovative technologies and devices designed to facilitate the generation, storage, distribution, and efficient use of renewable energy. The Energy Transition & Power Technologies market is growing rapidly, driven by the global need to combat climate change, reduce greenhouse gas emissions, and increase energy efficiency. Countries around the world are implementing policies to promote the adoption of clean energy technologies, including renewable energy targets, carbon pricing mechanisms, and subsidies for green technology. These policies, combined with the declining cost of renewable energy technologies, are creating a favorable environment for the energy transition equipment market to expand.

There has been a significant shift globally in the generation capacity mix due to the growing concerns towards the environment and climate change. India is an active participant and has taken initiatives towards sustainable development and cleaner environment including significant additions of renewable energy generation capacity. As per REN21 Renewables 2022 Global Status Report, India currently ranks 4th globally in total renewable energy installed capacity, wind power capacity and solar power capacity with generation from non-fossil fuel sources being 43% of the total installed generation capacity in 2024. The total potential of renewable power in India is estimated to be 1,639 GW as compared to installed capacity of 191 GW as on March 2024. The installed capacity of renewable energy has grown by 123 GW over FY19-FY24, implying a CAGR of around 9%.

The global HVDC market witnessed significant growth in the past decade, driven by large-scale projects in regions like Europe, Asia-Pacific, and North America. The development of intercontinental HVDC links and submarine cables contributed to market expansion. Whereas the increasing share of renewable energy in power generation and the growing need for efficient transmission are expected to drive the demand for HVDC transmission lines. In addition, the need for grid resilience against disturbances and fluctuations is expected to increase the adoption of FACTS devices to stabilize voltage and improve power quality. The Global HVDC and FACTS market is expected to grow at a CAGR of 75-80% from $23,791 million in 2024 to $2,49,744 million in 2028.

Pros and strengths

Global energy transition and power technology player catering to diverse industry segments: The company is a technology-driven company specializing in the provision of high voltage electrical equipment and solutions for electrical grid connectivity and energy transition across power generation, transmission, transition, distribution and automation areas. Besides, it offers equipment and solutions tailored for emerging applications such as large-scale renewables. It is among the few global manufacturers of critical high voltage equipment for HVDC and FACTS networks. These equipment and networks form key components for energy transition from renewable sources to traditional power grids. With supplies across 100 countries, it caters to various industries like automobiles, oil and gas industries, cement, chemical, renewables, traction & locomotives, steel & metal industries, power utilities in different markets spanning across 6 continents, thereby enabling it to be a global player. It offers equipment and solutions tailored for emerging applications such as largescale renewables. Its product portfolio contributes to advancing decarbonization efforts, sustainability, and green energy initiatives.

Diversified customer base of global businesses with long lasting relationships: Since its inception, the company has ensured delivery of high-quality high voltage electrical equipment and solutions for electrical grid connectivity and energy transition and services. As of September 30, 2024, it had 143 customers. Its end customers include power utilities, renewable energy players and industries like automobiles, oil and gas industries, cement, chemical, renewables, traction & locomotives, steel & metal industries, power utilities. Its customers have specific pre-approval criteria based on past experiences, test qualifications, and brand preferences. These factors significantly influence their purchase decisions, guiding them towards products and services that meet their standards and expectations. Its customers include large business conglomerates listed in Fortune 500 category.

Comprehensive product portfolio in the energy transition equipment and power technologies sector: The company began its operations by manufacturing reactors and transformers, and gradually expanded its portfolio in high voltage electrical equipment and solutions for electrical grid connectivity and energy transition. With over two decades of experience, it now provides a wide range of products, including reactors, transformers, line traps, composites, capacitor banks, harmonic filters, SVC Systems and reactive power compensation systems. It specialises in high voltage electrical equipment products and solutions across power generation, transmission, transition, distribution, and automation sectors. Its current product portfolio is divided into two categories, being, (i) power products and (ii) power quality equipments.

Demonstrated record of strategic acquisitions along with an enhanced order book contributing to growth: The company has demonstrated a record of strategic acquisitions, to further enhancing its capabilities, asset base, customer reach, product offerings and expanding its reach in key markets. These strategic acquisitions significantly bolster its position in energy transmission sector, enabling it to offer more comprehensive solutions to its clients. As it integrated these businesses and assets into its operations, they have contributed to its growth trajectory, enhancing its capabilities and solidifying its market presence. It has successfully integrated the acquired businesses and assets in its operations which has helped it to improve its position in the energy transition value chain.

Risks and concerns

Maximum revenue comes from limited clients: The company derived more than 52.66% of its total revenue from operations from the sale of products to its top 10 customers during the six-month period ended September 30, 2024 and in Fiscal 2024, Fiscal 2023, and Fiscal 2022. It depends and expects to continue to depend on its top 10 customers for a substantial portion of its total revenue from operations. The loss of any of its top 10 customers (in particular its largest customer) for any reason (including due to loss of, or failure of its customers to win orders / contracts from their customers to renew its existing arrangements with its customers; limitation to meet any change in quality specification, change in technology; disputes with a customer; adverse changes in the financial condition of its customers, such as possible bankruptcy or liquidation or other financial hardship) could have a material adverse effect on its business, results of operations and financial condition.

Maximum revenue comes from international markets: The company derived majority of its revenue from international markets, which contributed to more than 74.00% of its total revenue during the six-month period ended September 30, 2024 and in each of the last three Fiscals. A substantial portion of its revenue is earned from overseas operations, which includes revenue generated from one of its subsidiaries i.e. Endoks which is based in Turkey. Any adverse events or circumstances in Turkey or in any other countries in which it operates, including a market slow down, economic crisis, epidemic, political unrest, or other factors affecting the power transmission industries, may have a material adverse effect on its business, financial condition, results of operations and cash flows.

No long term agreements with customers: The company does not have long-term agreements with any of its customers and manufacture and sell its products through purchase orders with certain customers within India and abroad. The success of its business is accordingly significantly dependent on it maintaining cordial relationships with its customers. There can be no assurance that it can continue to maintain its networks of customers on commercially favorable terms or at all. The success of its business depends on maintaining good relationships with customers and ensuring that these customers find its products to be commercially remunerative and have continuing demand on the market. In addition, its growth as a business depends on its ability to attract additional customers. Furthermore, it has limited ability to manage the activities of independent third party suppliers and it cannot assure that they will, at all times, strictly adhere to the terms and conditions of its arrangements with them.

Highly dependent on skilled personnel for day-to-day operations: The company’s success in expanding its business will also depend, in part, on its ability to attract, retain and motivate skilled personnel. Competition for skilled personnel in its industry is intense. Its competitors may offer compensation and remuneration packages beyond what it is offering to its employees. It may also be required to increase its levels of employee compensation more rapidly than in the past to remain competitive in attracting employees that its business requires. Because of these factors, there is no assurance that it can effectively attract and retain sufficient number of skilled personnel to sustain its expansion plans, which would have a material adverse impact on its business, results of operations, financial position and cash flows.

Outlook

Quality Power Electrical Equipments is engaged in the business of energy transition equipment and power technologies. The company provides high-voltage electrical equipment and solutions for grid connectivity and energy transition, specializing in power products across generation, transmission, distribution, and automation sectors. The company has comprehensive product portfolio in the energy transition equipment and power technologies sector in India and abroad with high trade barriers. It has demonstrated record of strategic acquisitions along with enhanced order book contributing to growth. On the concern side, the company is dependent on its top 10 customers who contribute to more than 52.66% of its total revenue from operations during the six-month period ended September 30, 2024 and in each of the last three Fiscals and the loss of any of these customers or a significant reduction in purchases by any of them could adversely affect its business, results of operations and financial condition.

The company is coming out with a maiden IPO of 2,05,21,400 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 401-425 per equity share. The aggregate size of the offer is around Rs 822.91 crore to Rs 872.16 crore based on lower and upper price band respectively. On performance front, the company’s revenue from contracts with customers in India by sale of products decreased by 5.33% to Rs 489.87 million for Fiscal 2024 from Rs 517.44 million for Fiscal 2023, primarily due to higher focus on exports and lower domestic sales for its products. The company’s profit after tax for the period increased by 39.06% to Rs 554.74 million for Fiscal 2024 from Rs 398.92 million for Fiscal 2023.

The company’s growth strategy focuses on strategic acquisitions and expanding into new markets, both domestically and internationally. It will continue to actively look for and evaluate acquisition opportunities which can complement, supplement or enhance its product offerings and add to its customer base and market reach. These acquisitions have helped it to establish and expand its control on the value chain of energy transition & power technologies. The company’s emphasis on inorganic growth & acquisitions is targeted towards adding capabilities, value chain enlargement, spreading product bouquet and de-risking its business model.

Royal Arc Electrodes

• Royal Arc Electrodes is coming out with an initial public offering (IPO) of 30,00,000 equity shares in a price band Rs 114-120 per equity share.
• The issue will open on February 14, 2025 and will close on February 18, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 11.40 times of its face value on the lower side and 12.00 times on the higher side.
• Book running lead manager to the issue is Fedex Securities.
• Compliance Officer for the issue is Mansi Bagadiya. 

Profile of the company

Incorporated in 1996, Royal Arc Electrodes is engaged in the business of manufacturing of welding consumables such as, welding electrodes, flux cored wire, MIG/TIG wires, which finds its application in the welding of tanks, boilers, heavy structures, beams, pipes, cylinders, pressure vessels, etc. which are used in industries like railways, roadways, airport infrastructure, refineries, shipyards, mines, sugar industries, telecom industries, thermal power stations, PEB sectors, etc. Further, the company is also engaged in the business of trading of ancillary/incidental products like wheels, electro slag, welding flux cored wire, electro slag strip cladding, saw flux and TIG /MIG wires.

It manufactures its products from copper coated wire, MS Strips, MS wire, SS strip, SS wire, nickel wire, ferro alloy powder, etc. conforming to international standards, from its highly sophisticated and technically competent manufacturing facility spread over an area of 25082.61 sq. mtr which is situated at Zaroli, Umbergaon Valsad, Gujarat, Bharat. At its manufacturing facility, the raw materials undergo through a process of wire drawing and cutting, powder mixing, covering and baking. Accordingly, its existing manufacturing plant consists of extrusion units, baking ovens, drawing units, cutting units, forming mills, powder mixers, packing machines and testing labs. 

The company has the necessary instruments such as, chemical analysis instrument, spectro-meter, material testing lab equipment and is backed by related quality assurance equipment’s for measuring chemical and mechanical properties along with their sizes and shapes of its raw materials and finished goods to match international and domestic standards as well as customer specifications. Its manufacturing facility is also accredited with ISO 9001:2015 certified by DNV - Business Assurance.

Proceed is being used for:

• Funding towards the expansion of its manufacturing facility situated at Village Zaroli, Umbergaon Valsad, Gujarat, Bharat
• Funding the working capital requirements of the company
• General corporate purposes

Industry Overview 

By 2030, the Indian government expects the electronics manufacturing sector to be worth $300 billion. Initiatives like Make in India, Digital India and Startup India have given the much needed thrust to the Electronics System Design and Manufacturing (ESDM) sector in India. Moreover, the government’s endeavors such as Modified Special Incentive Scheme (M-SIPS), Electronics Manufacturing Clusters, Electronics Development Fund and National Policy on Electronics 2019 (NPE 2019) have been a huge success. India's electronic manufacturing sector is projected to reach around $ 50 billion in the next five years, driven by technological advancements like 5 G and the Internet of Things (IoT). Currently, electronic exports stand at $125 to $130 billion, with the government aiming to double employment in the sector from 2.5 million jobs.

The machine tools market is expected to reach $3.2 billion by 2032, exhibiting a growth rate (CAGR) of 8.2% during 2024-32. The Indian machine tool market size reached $1.5 billion in 2023. The emerging trend of automation, along with the growing utilization of machine tools to increase the overall productivity and improve the efficiency of various products, is primarily driving the India machine tools market. The manufacturers of machine tools are mostly SMEs, few of them are mid-sized manufacturers which have an annual turnover varying between Rs 300-500 crore ($36-60 million). The types of machine tools currently manufactured are general/special purpose machines, standard Computer Numerical Control (CNC) machines, gear cutting, grinding, medium size machines, electrical discharge machining (EDM), presses, press brakes, pipe bending, rolling, bending machines, etc.

The electrical equipment market share in India is expected to increase from $52.98 billion in 2022 to $125 billion by 2027, implying a robust CAGR of 11.68%. Market size for the Indian Construction Equipment Market stood at $7.2 billion in FY23 and is forecasted to grow at a CAGR of 15% for next 5 years, as per the estimates of CII. Export policy is being established for the State of Uttar Pradesh to tap onto opportunities in international market, optimum utilization of the resources of the state, employment generation and to synergize with the Foreign Trade Policy 2020-25. The objective of this policy is to promote development and competition in the field of exports, to provide necessary export-related assistance and services to export ancillary institutions, to establish and develop technical and physical infrastructure to increase exports from the state. Further, the PLI Scheme for the automobile and auto components industry has been launched with a total budgetary outlay of Rs 25,938 crore ($3.17 billion) for a period of 5 years (FY23 to FY27).

Pros and strengths

Geographically spread across Bharat and overseas market: The company sells its products across various states in Bharat with a diverse customer base through its network of dealers and distributer and also directly to its end customers. It also has a sales and marketing team of 9 employees as at December 31, 2024, who aid the distribution process and are primarily engaged in distributor/dealer relationship management, appointment of dealers and distributors, procuring orders and collections. Its geographical widespread across Bharat have enabled it to cater to the growing demand for its products.

Long-standing relationships with customers across industries: The company has over 2.5 decades of business operations and have been engaged in the business of welding consumables since its incorporation. Over the years, it has a supplied its products to a diversified customer base such as, railways, roadways, airport infrastructure, refineries, shipyards, mines, sugar industries, telecom industries, thermal power stations, PEB sectors, etc. Its focus on quality, providing customized solutions to its customers and timely delivery of its product offerings have helped it to establish and maintain long term relationships with its customers.

Consistent financial performance: Over the years, the company has grown into a multi-product welding consumable manufacturing company. It has demonstrated consistent growth in terms of revenues and profitability. Its revenue from operations has grown from Rs 6,290.97 lakh in Fiscal 2022 to Rs 9,978.75 lakh in Fiscal 2024, registering a CAGR of 25.94%. Its PAT has grown from Rs 212.13 lakh in Fiscal 2022 to Rs 1,192.63 lakh in Fiscal 2024, registering a CAGR of 137.11%. It has been able to maintain its consistent financial growth, due to efficient business model over the years. It strives to maintain a robust financial position with emphasis on having a strong balance sheet and cash flows. 

Risks and concerns

Significant revenue comes from limited customers: The company is dependent on a limited number of customers for a significant portion of its revenues. The company has garnered 44.19%, 44.68% and 53.40% of its total revenue from top 10 customers in FY24, FY23 and FY22 respectively. While it has developed long-term relationships with certain of its customers, there is no commitment on the part of its key customers to continue to place new purchase orders with it and as a result, its cash flow and consequent revenue may fluctuate significantly from time to time. Further, it may not find any other customers for the surplus or excess capacity, in which case it may be forced to incur a loss. The loss of one or more of these significant customers or a significant decrease in business from any such key customer may materially and adversely affect its business, results of operations and financial condition.

Single manufacturing facility: The company sole manufacturing facility is located at Umbergaon, District Valsad, Gujarat. Further, the expansion will be constructed on the land where its existing manufacturing facility is situated. Any material adverse social, political or economic development, natural calamities, civil disruptions, or changes in the policies of the state government or local governments in this region could adversely affect its manufacturing operations, and require a modification of its business strategy, or require it to incur significant capital expenditure or suspend its operations.

Significant working capital requirements: The company’s business requires significant working capital in connection with manufacturing of its products, financing inventory, day-to-day operations, amongst other purposes which may be adversely affected in case there is any change in terms of credit or payment. Delays in payment from its existing customers or any increase in inventory and work in progress and/or accelerated payments to suppliers, could adversely affect its working capital, lower its cash flows and materially increase the amount of working capital requirements. Accordingly, it may require additional capital or financing from time to time to meet its working capital requirements. 

Outlook

Royal Arc Electrodes is engaged in the business of manufacturing of welding consumables such as, welding electrodes, flux cored wire, MIG/TIG wires. The company is used welding consumables for welding tanks, boilers, heavy structures, beams, pipes, cylinders, pressure vessels, and more, across industries such as railways, roadways, airports, refineries, shipyards, mining, sugar, telecom, thermal power stations, and PEB sectors. On the concern side, the company derived a significant portion of its revenue from a few customers and the loss of one or more such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for its products may adversely affect its business, results of operations, financial condition and cash flows. Moreover, the company operates only one manufacturing facility and therefore, any localized social unrest, natural disaster, or breakdown of services, in and around its manufacturing facility or any disruption in production at, or shutdown of its manufacturing facility could have a material adverse effect on its business and financial condition.

The company is coming out with a maiden IPO of 30,00,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 114-120 per equity share. The aggregate size of the offer is around Rs 34.20 crore to Rs 36.00 crore based on lower and upper price band respectively. On performance front, the revenue from operations marginally increased by 2.94% to Rs 9,978.75 lakh for the Fiscal 2024 from Rs 9,694.02 lakh for the Fiscal 2023. Moreover, the company recorded an increase of 24.65% in its profit for the year from Rs 956.82 lakh in Fiscal 2023 to Rs 1,192.63 lakh in Fiscal 2024.

The company has over the years increased its production capacities through consistent growth and innovation. The company commenced manufacturing of welding consumables of welding electrodes and flux cored wire with an installed capacity of 18,000 MTPA in its manufacturing unit situated at Umbergaon Valsad, Gujarat. In order to capture the market and cater to the growing demand, in the year 2003, it increased its manufacturing capacity and thereafter it further expanded its manufacturing facility in 2014 spread over around 25082.61 sq. mtr. Its strong presence in the Indian market positions it well to capitalise on the anticipated growth in demand of its products. It intends to expand the manufacturing capacity by establishing a new factory shed in the same premises as its manufacturing facility, which will increase the present capacity and subsequently boost its sales and profitability.

L.K. Mehta Polymers

• L.K. Mehta Polymers is coming out with an initial public offering (IPO) of 10,40,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 71 per equity share.
• The issue will open on February 13, 2025 and will close on February 17, 2025.
• The shares will be listed on SME Platform of BSE.
• The share is priced 7.10 times higher to its face value of Rs 10. 
• Book running lead manager to the issue is Swastika Investmart.
• Compliance Officer for the issue is Pooja Wadhwani.

Profile of the company

L.K. Mehta Polymers is actively involved in the trading and manufacturing of comprehensive array of Plastic products, addressing the diverse needs of its discerning customers. Its product line is specifically designed to encompass a wide range of ropes and twines, including monofilament ropes, danline ropes, tape ropes, baler twines, packaging twine (sutli). It is also engaged in trading and reprocessing of basic raw materials like polypropylene granules and polyethylene granules for its various customers. A significant milestone was reached in 2002 with the expansion of its operations with the establishment of a new production unit, the actual working of the unit was started by the company in 2004, focusing on woven sack bags and pipes. 

This strategic decision not only broadened the company's product range but also solidified its presence in the industry. Despite initial challenges with the availability of a high-power electricity line at its location, the company demonstrated remarkable resilience by successfully operating the unit until 2022. In 2022, the unit was transferred afterwards. Through continuous innovation and a relentless pursuit of excellence, the company navigated through challenges and emerged strong, maintaining its growth trajectory.

The company sells the products under the brand name of “Super Pack”, establishment of its brand “SuperPack” served as a testament to the company's commitment to delivering superior quality and building enduring relationships with customers. This brand identity not only resonated with consumers but also distinguished L.K.Mehta Polymers Limited from its competitors. The company based on its experience and its standards, conforms to major specifications and customer requirements. 

Proceed is being used for:

• Meeting incremental working capital requirement
• General corporate purposes 

Industry Overview

Plastic Rope Market size was valued at $1.67 Billion in 2021 and is projected to reach $2.85 Billion by 2030, growing at a CAGR of 6.13% from 2022 to 2030. The increased demand from the marine and fishing industry owing to the adoption in boat lines and sailing applications as plastic ropes offer durability, good strength, water resistance, and reasonable prices will foster the growth of the Plastic Rope Market. The Global Plastic Rope Market report provides a holistic evaluation of the market. The report offers a comprehensive analysis of key segments, trends, drivers, restraints, competitive landscape, and factors that are playing a substantial role in the market. There are certain restraints and challenges faced which will hinder the market growth. One of the major restraints is the requirement of high maintenance costs. Also, advanced raw materials are required for the production of plastic ropes. These factors might hamper the growth of the Plastic Rope Market up to a certain extent during the forecasted period.

India Rope Market registered a growth of 0.24% in value shipments in 2022 as compared to 2021 and an increase of 10.51% CAGR in 2022 over a period of 2017. In Rope Market India is becoming less competitive as HHI index in 2022 was 1566 while in 2017 it was 1122. Herfindahl Index measures the competitiveness of exporting countries. The range lies from 0 to 10000, where a lower index number represents a larger number of players or exporting countries in the market while a large index number means less numbers of players or countries exporting in the market. India has reportedly relied more on domestic production to meet its growing demand in Rope Market. India Rope market in 2023 has witnessed an HHI of 1628, which has decreased substantially as compared to the HHI of 2919 in 2017. The market is moving towards moderately competitive. Herfindahl index measures the competitiveness of exporting countries. The range lies from 0 to 10000, where a lower index number represents a larger number of players or exporting countries in the market while a large index number means fewer numbers of players or countries exporting in the market.

Ropes are crucial in various industries, including agriculture, shipping, and construction. The India rope market has witnessed growth due to increasing industrial activities and the agriculture sector`s demands. Natural and synthetic ropes are both widely used, with synthetic materials gaining popularity due to their strength and longevity. The India rope market`s growth is driven by the agricultural, construction, and shipping industries, where ropes play a crucial role in various applications. The expanding agricultural sector requires ropes for farming and harvesting, while the construction industry uses them for lifting and securing materials. Shipping and logistics also rely on ropes for cargo handling, emphasizing their importance in driving market growth. 

Pros and strengths

Quality service: The company has set stringent systems to ensure that all the products reach its customers on stipulated time and there are minimum errors. Its quality product has earned it a goodwill from its customers, which has resulted in customer retention and order repetition. It has also helped it to add to its existing customer base. It has developed internal procedure of checking the client orders at each stage from customer order to delivery. The company focuses on maintaining the level of consistently in its service, thereby building customer loyalty.

High level of customer satisfaction: The company’s customers are highly satisfied with its services ranging from purchase order, delivery to customer, quality product and customer complain redressal mechanism. It has been able to achieve this customer satisfaction with the help of timely deliveries, ease of placing orders and its stellar customer services, this has helped in creating a customer base.

Existing client relationship: The company’s existing relationships help it to get repeat business from its customers. This has helped it to maintain a long term working relationship with its customers and improve its customer retention strategy. It has strong existing client relationships which generates multiple repeat orders. Its existing relationship with its clients represents a competitive advantage in gaining new clients and increasing its business.

Risks and concerns

Maximum revenue comes from limited customers: The company’s top 10 customers contribute almost 78.00% of its total sales for the year ended FY24, FY23 and FY22. The company is engaged in the business of manufacturing of comprehensive array of Plastic products. Its business operations are highly dependent on its customers and the loss of any of its customers may adversely affect its sales and consequently on its business and results of operations. The 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.

Geographical constrain: The company’s domestic sales are dependent on the Top 5 States including Madhya Pradesh, Uttar Pradesh, Bihar, Assam and Rajasthan. It generates almost 92.89%, 92.89%, 95.55% and 96.79% of the revenue of the Total Sales generated as on December 31, 2024, FY24, FY23 and FY22 respectively from these 5 states. Its domestic sales are depending on the above states and in future if any it is not able to sale its products to these states its revenue will impact majorly.

Dependent on a few suppliers for purchase of product: The company’s top 10 suppliers contribute more than 90% of its total purchases for the year ended FY24, FY23 and FY22. It cannot assure that it will be able to get the same quantum and quality of supplies, or any supplies at all, and the loss of supplies from one or more of them may adversely affect its purchases of stock and ultimately its revenue and results of operations. However, the composition and amount of purchase from these suppliers might change as it continues to seek new suppliers for its product for better quality and price in the normal course of business. Though it will not face substantial challenges in maintaining its business relationship with them or finding new suppliers, there can be no assurance that it will be able to maintain long term relationships with such suppliers or find new suppliers in time.

Outlook

L.K. Mehta Polymers is engaged in trading and manufacturing of Plastic products. The company is also involved in trading and reprocessing basic raw materials like polypropylene and polyethylene granules for various customers. The company has strict systems to ensure timely delivery and minimal errors, with procedures to check orders at each stage, focusing on consistent service and customer loyalty. On the concern side, the company is dependent on few numbers of customers for sales. Loss of any of this large customer may affect its revenues and profitability. The company is dependent on few States. Loss of any of this large States may affect its business operations.

The company is coming out with an IPO of 10,40,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 71 per equity share to mobilize Rs 7.38 crore. On performance front, during FY 2023-24, the company’s revenue from operations and other income increased to Rs 1887.40 lakh, from the amount of Rs 1713.80 lakh recorded in FY 2022-23. The restated profit after tax for FY 2023-24 has been significantly increased to Rs 85.56 lakh as against a loss of Rs 0.76 lakh in the FY 2022-23. 

The company is focused on dealing in the products which meets with the requisite quality standards as per the applicable regulatory norms. Providing the desired and good quality products help it in enhancing its company’s image and maintaining long term relationships with customers. Currently, the company’s business activities are focused only in domestic market; however, it intends to diversify its business globally. With this diversification in additional business, it will be able to increase its revenue. The company's business strategy encompasses two primary focal points, these distinct business strategies, rooted in ethical integrity and prudent operational decisions, have positioned the company advantageously within its industry.

Shanmuga Hospital

• Shanmuga Hospital is coming out with an initial public offering (IPO) of 38,18,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 54 per equity share.
• The issue will open on February 13, 2025 and will close on February 17, 2025.
• The shares will be listed on SME Platform of BSE.
• The share is priced 5.40 times higher to its face value of Rs 10. 
• Book running lead manager to the issue is Finshore Management Services.
• Compliance Officer for the issue is Veera Pratap Reddy Gandluru.

Profile of the company

Shanmuga Hospital, a Multispecialty Hospital, was strategically established in Salem. Equipped with advanced healthcare technology and having 151 bed capacity, it addresses the community’s medical needs, serving patients from nearby regions. Accredited by the National Accreditation Board for Hospitals and Healthcare (NABH Accredited) and National Accreditation Board for Testing and Calibration Laboratories (NABL Accredited), its hospital is committed to high-quality healthcare services, including prevention, treatment, and rehabilitation.

Its medical facility encompasses an Oncology Unit, High Dependency Unit (HDU), Emergency Department (ED), Outpatient Consultation Services, Cardiac Care Unit (CCU), Intensive Care Unit (ICU), Neonatal Intensive Care Unit (NICU), Labour Room, Endoscopy Room, Neurosurgery Unit, and Cardiac Unit. The Diagnostic Centre features advanced laboratory and imaging technologies such as X-Ray, Ultrasound, Computed Tomography (CT) scan, Magnetic Resonance Imaging (MRI), and modular operational theatres. Providing extensive inpatient and outpatient care across various Medical and Surgical specialties, its facility is well-equipped to meet diverse healthcare needs.

The company’s success comes from providing quality healthcare at affordable rates, appreciations to its skilled medical professionals who connect personally with patients. It has built a reputation for delivering top-notch medical services at competitive prices. As a growing organization, its goal is to solidify its position as a leading healthcare provider. It is committed to continuous improvement in its facilities, aiming for a higher standard of care and quality. 

Proceed is being used for:

• Funding capital expenditure towards purchase of additional medical equipment
• General corporate purposes 

Industry Overview

Healthcare has become one of India’s largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services, and increasing expenditure by public as well as private players. The Indian Healthcare industry continued its healthy growth in 2023 and reached a value of $372 billion driven by both the private sector and the government. As of 2024, the Indian healthcare sector is one of India’s largest employers as it employs a total of 7.5 million people. Progress in telemedicine, virtual assistants, and data analytics is expected to create 2.7-3.5 million new tech jobs. India’s public expenditure on healthcare touched 2.1 % of GDP in FY23 and 2.2% in FY22, against 1.6% in FY21, as per the Economic Survey 2022-23. India's hospital market was valued at $98.98 billion in 2023, projected to grow at a CAGR of 8.0% from 2024 to 2032, reaching an estimated value of $193.59 billion by 2032.

In FY24 (Till February 2024), premiums underwritten by health insurance companies grew to Rs 2,63,082 crore ($31.84 billion). The health segment has a 33.33% share in the total gross written premiums earned in the country. Indian medical tourism market was valued at US$ 7.69 billion in 2024 and is expected to reach US$ 14.31 billion by 2029. According to India Tourism Statistics, around 634,561 foreign tourists came for medical treatment in India in 2023, which was nearly 6.87% of the total international tourists who visited the nation. With $5-6 billion size of medical value travel (MVT) and 500000 International patients annually, India is among the global leader destinations for international patients seeking advanced treatment. The e-health market size is estimated to reach $10.6 billion by 2025. As per information provided to the Lok Sabha by the Minister of Health & Family Welfare, Dr. Bharati Pravin Pawar, the doctor population ratio in the country is 1:854, assuming 80% availability of 12.68 lakh registered allopathic doctors and 5.65 lakh AYUSH doctors.

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 lakh crore ($132.84 billion) by FY22 from Rs 4 lakh crore ($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. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep. Rising income levels, an ageing population, growing health awareness and a changing attitude towards preventive healthcare are expected to boost healthcare services demand in the future. Greater penetration of health insurance aided the rise in healthcare spending, a trend likely to intensify in the coming decade. The Government aims to develop India as a global healthcare hub and is planning to increase public health spending to 2.5% of the country's GDP by 2025. 

Pros and strengths

Oncology presence: One of its standout competitive strengths lies in its robust oncology department. With a dedicated team of oncologists, state-of-the-art technology, and advanced treatment modalities, it is at the forefront of cancer care in the region. The company’s comprehensive oncology services encompass diagnosis, treatment, and supportive care, ensuring that patients receive holistic and personalized treatment plans tailored to their specific needs. Its commitment to excellence in oncology care has established it as a trusted destination for cancer treatment, attracting patients from far and wide seeking the highest standards of care and expertise.

Cost affordable to regional population: A key competitive advantage for Shanmuga Hospital is its unwavering commitment to providing high-quality healthcare services at affordable prices tailored to the needs of the regional population. Recognizing the diverse socioeconomic backgrounds of its patients, it has implemented cost-effective measures and streamlined processes to minimize healthcare expenses without compromising on quality or safety. Its transparent pricing policies, coupled with financial assistance programs and payment plans, ensure that patients have access to the care they need without facing undue financial burden, further strengthening its bond with the community and enhancing patient satisfaction.

Tie-up with government and private insurance companies: Another significant competitive strength of Shanmuga Hospital is its strategic alliances with government agencies and private insurance companies. These collaborations enable it to expand access to healthcare services, streamline administrative processes, and provide financial assistance to patients through cashless treatment facilities and insurance coverage. By partnering with government health schemes and leading insurance providers, it ensures that patients can avail themselves of its services seamlessly, regardless of their financial circumstances or insurance coverage. This strategic advantage not only enhances patient convenience and satisfaction but also reinforces its position as a preferred healthcare provider trusted by both public and private stakeholders.

Risks and concerns

Substantial portion of revenues comes from few customers: The company’s revenue comes from In-patient and Out-patient and through tie-up arrangements with governmental organisations and corporate entities. While its in-patient and Out patients cannot be categorised under the top ten category however based on the patients who come through Governmental organisations and corporate entities under the tie-up arrangements, its top 10 customers relating to such Governmental organisations and corporate entities contribute 43.01%, 45.70%, 48.51% and 44.98% of its revenues during September 2024 and the financial year 2023-24, 2022-23 and 2021-22 respectively, whereas, its top 5 customers contribute 40.35%, 42.57%, 45.64% and 36.44% of its revenues during September 2024 and the financial year 2023-24, 2022-23 and 2021-22. However, the loss of any significant customer would have a material effect on its financial results.

Substantial portion of its purchases of medicines is dependent upon few suppliers: The company’s top 10 and top 5 suppliers contribute majority of its purchase during September 2024 and the financial year 2023-24, 2022-23 and 2021-22. Its top 10 suppliers contribute 30.91%, 30.46%, 25.82% and 28.41% of its purchase of medicines during September 2024 and the financial year 2023-24, 2022-23 and 2021-22 respectively, whereas, its top 5 suppliers contribute 23.10%, 20.74%, 18.13% and 20.29% of its purchase of medicines during September 2024 and the financial year 2023-24, 2022-23 and 2021-22 respectively. The company has not entered into long term agreements with the suppliers and the success of the business is accordingly dependent on maintaining good relationships with the various suppliers for regular supply of medicines required. The inability of a supplier to meet these requirements, the loss of a significant supplier, could disrupt the supply of medicines which may have an adverse effect on business, results of operations and financial condition of the company.

Limited operating history: The company was originally incorporated as a Private Limited Company under the name 'Shanmuga Hospital Private Limited' on June 26, 2020, in accordance with the Companies Act, 2013. Subsequently, the company converted into a public limited company, resulting in a name change to “Shanmuga Hospital Limited”. Post incorporation, the company acquired business undertaking of “Shanmuga Hospital (Partnership Firm)” pursuant to business transfer agreement dated December 15, 2023. As the company does not have significant operating and financial history in Shanmuga Hospital Limited, it may be difficult to evaluate its current or future prospects on the basis of historical results and performance. However, its group has experience of more than 40 years in running hospital since 1981. Past performance of its group should not be construed as an indication of its future performance.

Outlook

Shanmuga Hospital is a Multispecialty Hospital and equipped with advanced healthcare technology and having 151 bed capacity, it addresses the community’s medical needs, serving patients from nearby regions. The company has specialized equipment like LINAC, CATHLAB, MRI, MODULAR OT and has tie-up with Government and Private Insurance Companies. On the concern side, the company generate certain revenues from the arrangements with government sponsored health schemes, any adverse change in these regulations/government policies related to such schemes may adversely affect its business, results of operations, cash flows and prospects. Moreover, the company has limited operating history, and therefore investors may not be able to assess its prospects on the basis of historical results.

The company is coming out with an IPO of 38,18,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 54 per equity share to mobilize Rs 20.62 crore. On performance front, the overall revenue from operations has increased to Rs 4,303.74 lakh in FY 2023-24 from Rs 3,934.47 lakh in FY 2022-23 i.e. revenue from operation increased by Rs 369.27 lakh (9.39% for the said period). Moreover, the restated profit after tax for FY 2023-24 has been increased to Rs 526.15 lakh (12.13% of total income) as against Rs 476.22 lakh (12.06% of total income) in the FY 2022-23.

The company is a growing organization that aims at strengthening and establishing itself as the foremost healthcare services provider. It strives to serve with its ultra-modern medicinal practices and state of the art infrastructure for medical as well as surgical care solutions. Moreover, the location is the prime importance for the hospital to run successfully. Its hospital is situated at Saradha College Road, Salem, Tamil Nadu, which is well developed and one of the prime locations of Salem City. Its hospital is having around 45,311 sq. ft. area. The location is well connected by road hence the inflow of patients from various part of the city is easy. 

Maxvolt Energy Industries

• Maxvolt Energy Industries is coming out with an initial public offering (IPO) of 30,00,000 equity shares in a price band Rs 171-180 per equity share.
• The issue will open on February 12, 2025 and will close on February 14, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 17.10 times of its face value on the lower side and 18.00 times on the higher side.
• Book running lead manager to the issue is Smart Horizon Capital Advisory.
• Compliance Officer for the issue is Rajni. 

Profile of the company

Established in the year 2019, the company is primarily engaged in the business of manufacturing of lithium-ion batteries of various range supplied through a diversified sales & distribution mix viz. authorised dealers and distributors and OEMs under its brand name of “MaxVolt Energy” widely used in Electric Vehicles (i.e., E-Scooter, E- Rickshaw, ECycle), Energy Storage and Electronics Gadgets etc. It also manufactures customised batteries packs as per the requirement of manufacturers of different industries. In addition to manufacturing, it is supplier of Graphene Battery packs and Battery Chargers designed and developed by it in its own brand name. It designates some of dealers and distributors as service centres. As on September 30, 2024, it has services centre in the states Uttar Pradesh, Delhi, Bihar, Madhya Pradesh and Gujarat across, dealers and distributors have access to these service network to resolve the defects in the batteries. These service centers help it to provide fast and hassle-free service to its dealers and end customers.

The company is an ISO 9001:2015 certified. Its manufacturing unit situated at E- 82, Industrial Area, Bulandshar Road, Ghaziabad, Uttar Pradesh spread across in 18,000 square feet. Its manufacturing Unit is strategically located in the central part with availability of all modes of transportation and facilitates convenient transportation of its products, sourcing of raw materials and easy access to customers. Its registered office is located at F-108, Plot No. 1 F/F United Plaza, Community Centre, Karkardooma, New Delhi.

The company currently manufacture a variety of batteries and has combined capacity to manufacture up to 97.2 MWh batteries as on September 30, 2024. It intends to enhance its production capabilities through backward integration vide establishing a new battery line facility at its factory situated E-82, Industrial Area, Bulandshar Road, Ghaziabad, Uttar Pradesh, along with additional machineries for expansion. It intends to expand its capacity and increasing its product offerings through the expansion of its existing facilities, addition of battery lines, which will allow it to produce a new line of parts such as re-cycling of used batteries.

Proceed is being used for:

• Repayment or prepayment, in full or in part, of borrowings availed by the company from banks, financial institutions and non-banking financial companies
• Funding of capital expenditure requirements of the company towards purchase of plant and machineries
• General corporate purposes

Industry Overview 

The global automotive industry is experiencing a major transformation. Vehicles fully powered by electric batteries comprise an increasing share of new vehicle purchases. Compared to internal combustion engine vehicles, battery electric vehicles run fully on electricity, not gasoline or diesel. Therefore, battery electric vehicles do not directly emit carbon dioxide, and if the batteries’ electricity source has low or no carbon dioxide emissions, increased electric vehicle adoption can lower carbon dioxide emissions in the transportation sector, helping countries meet climate-related goals. For example, in India, the carbon dioxide emissions of electric vehicles are 8 percent to 24 percent lower than internal combustion engine vehicles over their lifetimes. Transitioning to electric vehicles can also strengthen countries’ energy security by reducing import dependence on oil, and it can increase countries’ economic prosperity by creating new market opportunities. Thus, many countries, including India, are incentivizing electric vehicle adoption.

Across the battery supply chain, India lacks notable production capacity, but it has existing production and significant growth potential in certain goods. For raw materials, India does not produce lithium, nickel, and cobalt, yet it produces other raw materials necessary in the battery supply chain like copper, graphite, and manganese. For precursor materials, India lacks processing capacity for several precursor materials such as lithium carbonate, but it has expertise producing other precursor materials such as aluminium, refined copper, and phosphoric acid. India also currently lacks production capacity in most cell components, yet Indian companies are building production capacity in cell components like anode material. Similarly, India does not have sizable production capacity for battery cells (i.e., less than 1 percent of global capacity), but Indian companies are building battery cell production facilities, with LFP chemistries estimated to represent 70 percent of India’s future battery production.

Furthermore, India already assembles battery packs for different types of electric vehicles, and with high downstream demand for two-wheeled and three-wheeled electric vehicles and government subsidies for purchasing such vehicles, India has considerable production potential for battery packs in two-wheeled and three-wheeled electric vehicles because downstream domestic demand incentivizes upstream domestic production. Lastly, like most countries, India lacks significant dedicated recycling capacity for electric vehicle batteries, but it does have a robust electronic waste recycling segment. In short, while India’s present role across the global battery supply chain is negligible, India could become a notable producer of certain goods in the global battery supply chain.

Pros and strengths

Wide range of products: The company is committed to innovation and excellence is reflected in its diverse range of lithium batteries, meticulously designed to meet the evolving needs of consumers across India. The company offers a wide range of batteries used in various industries. Maintaining a variety of products provides it with an opportunity to cater to diverse needs of different customer segment. Its product portfolio includes different specification of Lithium battery packs for all type of electric vehicles, energy storage systems & medical device batteries which it manufactures along with that it also supplies lead batteries, lead and lithium battery chargers. It also provides facility of customization w.r.t battery capacity, watt-hours, case dimension and weight etc. Its comprehensive range of products and this facility of customization enable it to capitalize on growth opportunities and demand in its industry.

Customized product development: The company’s customers prefer to have tailor-made product as per their particular requirement. Its manufacturing team focuses on the precise desires of customers and with the help of individual support, customized products are developed.

Quality assurance: The company’s dedicated quality control personnel rigorously inspect battery packs at multiple levels, ensuring excellence before customer delivery. With specialized expertise in lithium-ion battery integration, it optimizes performance and durability, employing proprietary techniques to minimize energy loss and enhance thermal management. It has been accredited with ISO 9001:2015 for manufacturing of lithium batteries for electric vehicles, energy storage solutions, electronic gadgets, medical equipments, lithium chargers which underscores its dedication to delivering top-notch quality products. With each step of its quality control process, it reaffirms its commitment to excellence, ensuring customer satisfaction. Having obtained such certification ensures that adequate quality systems as per industry standards are followed by it.

Risks and concerns

Limited operating history: The company was incorporated in 2019 and supplied its first li-ion battery in January 2020. As it has a limited operating history, there is a limited historical basis on which it can make judgements regarding its ability to develop, manufacture, and deliver batteries or their accessories or its results of operations, including its ability to achieve profitability in the future. Its historical revenue growth should not be considered indicative of its future performance.

Significant revenue comes from few customers: The company has garnered 85.28%, 81.14% and 63.43% of its total revenue from top 10 customers in FY24, FY23 and FY22 respectively. Given the nature of its business, there can be no assurance that it would be able to attract new customers or reduce its dependence on any of its top 10 customers. It will continue to be reliant on its major customers for the foreseeable future. Accordingly, any failure to retain these customers or to remain suppliers to these customers and/or negotiate and execute contracts on terms that are commercially viable, with these select customers, could adversely affect its business, financial condition and results of operations. In addition, any defaults or delays in payments by a major customer or the insolvency or financial distress by a major customer may have an adverse effect on business, financial condition and results of operations.

Geographical constrain: The company generates its major portion of revenue from its operations in certain geographical regions especially from Delhi, Haryana, Madhya Pradesh and Uttar Pradesh. Such geographical concentration of its business in these regions heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in these regions which may adversely affect its business prospects, financial conditions and results of operations. It may not be able to leverage its experience in such regions to expand its operations in other parts of India. Factors such as competition, culture, regulatory regimes, business practices and customs, industry needs, transportation, in other markets where it may expand its operations may differ from those in such regions, and its experience in these regions may not be applicable to other markets. 

Outlook

Maxvolt Energy Industries is engaged in the business of manufacturing of lithium-ion batteries. The company manufactures lithium-ion batteries for electric vehicles, energy storage, and electronics, sold through dealers, distributors, and OEMs under the “MaxVolt Energy” brand. The company has dealership network and presence in across various states with wide range of the products. On the concern side, the company’s few of customers contribute majority of its revenues from operations. If one or more of such customers choose not to source their requirements from it, its business, financial condition and results of operations may be adversely affected. Moreover, the company currently derives its revenue predominantly from the sale of batteries used in e-scooter. If the same is not well received by the market, its business and future prospects could be adversely impacted.

The company is coming out with a maiden IPO of 30,00,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 171-180 per equity share. The aggregate size of the offer is around Rs 51.30 crore to Rs 54.00 crore based on lower and upper price band respectively. On performance front, the revenue from operations has shown a growth of 253.61% from Rs 1,367.95 lakh in Fiscal 2023 to Rs 4,837.15 lakh in Fiscal 2024. This was mainly due to increase in revenue in overall business segments of company. In Fiscal Year 2024, the company achieved net profit of Rs 520.83 lakh, increase from Rs 27.88 lakh in Fiscal Year 2023. This growth can be attributed to a combination of higher revenue from operations and improved profit margins, driven by a robust demand for batteries in the electric vehicle (E-vehicle) sector.

The company is strategically focused on regularly updating and improving its manufacturing capabilities and infrastructure. It does this by adopting the technologies available to ensure its position in the lithium battery manufacturing industry. It is strategically moving towards fully automated the production process. To focus on operational efficiency, it intends to increase the production capacity in primary operations, automation of various processes to eliminate labor work, improve efficiency to reduce its fixed costs, to meet the clients demand for decreasing the lead times and to meet the EV Industries demands. To cater to the growing demand of its products from its existing customers and to meet requirements of new customers, it intends to expand its manufacturing capacities for existing products through backward integration and expansion.

Voler Car

• Voler Car is coming out with an initial public offering (IPO) of 30,00,000 equity shares in a price band Rs 85-90 per equity share.
• The issue will open on February 12, 2025 and will close on February 14, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 8.50 times of its face value on the lower side and 9.00 times on the higher side.
• Book running lead manager to the issue is GYR Capital Advisors.
• Compliance Officer for the issue is Mustafa Rangwala. 

Profile of the company

Voler Car is primarily engaged in providing employee transportation services (ETS) to IT/ITeS, large corporates and MNCs clients with presence across various major cities in India. Its ETS solutions cover comprehensive home-to-office-to-home transportation, supported by 24/7 customer service, dedicated location teams, and a fleet of verified vehicles and chauffeur-drivers. It manages a pooled fleet of over 2,500 vehicles, including small cars, sedans, SUVs, electric vehicles, buses, and tempo travellers. In the fiscal year 2023-24, it successfully completed around 3,23,550 trips, averaging over 884 trips per day. Meanwhile, in the fiscal year 2024-25 (up to November 30, 2024), it has completed around 2,84,039 trips, with a daily average exceeding 1,183 trips.

The company operates largely on an asset-light model where the majority of its vehicles are sourced from vendors rather than owned. This strategy allows it to maximize revenue by optimizing seat usage and enhancing overall employee mobility. As on date, the company operates in Kolkata, Mumbai, Pune, Bhubaneshwar, Delhi-NCR, Ahmedabad, Lucknow, Jaipur and Ludhiana with a fleet that includes both vendor-sourced and company leased vehicles. Its service offers a complete solution for corporate transportation needs, adhering to service level agreements (SLAs) to guarantee timely pick-ups and drop-offs.

the company makes it a priority not to drop off women passengers last, and if such a situation arises, it ensures that an escort is provided for their safety. It has integrated GPS tracking system into its services. Its operation team handles reservations, operations, car tracking, incident response, and manage the client SLAs. The integration of its third party technology with its GPS tracking system allows it to easily manage its client’s corporate travel requirements from a single integrated system.

Proceed is being used for:

• Funding working capital requirements of the company
• General corporate purposes.
• IPO issue expenses

Industry Overview 

The corporate employee transportation service market size is predicted to reach $49.33 billion in 2028 at a compounded annual growth rate (CAGR) of 8.3%. The growth in the corporate employee transportation service market is due to growing corporate office presence in the Asia-Pacific region is expected to hold the largest corporate employee transportation service market share. Major players in the corporate employee transportation service market include Massachusetts Bay Transportation Authority, Smart24X7 Services, Global Charter Services, Prairie Bus. The COVID-19 pandemic hampered the market by forcing many companies to work from home, resulting in less employee transportation. However, as economies have recovered from the lockdown, a return to office is expected to provide transportation service operators with numerous opportunities in the coming years.

The employee transportation service market, is estimated to have generated a revenue of Rs 503.5 billion ($6.1 billion) as of CY2023, and it exhibits steady expansion growing in line with development of corporates such as IT, Global Capability Centers (GCC) segments etc. It is expected to grow at a CAGR of 11.8% to reach Rs 1097.6 billion ($13.2 billion) revenue in CY2030. This aligns with India's growing economy, the rise of the organized sector, and increasing employee expectations for convenient commutes. The ETS market caters primarily to corporates, particularly in tier-1 cities, with pricing models varying based on vehicle type, route distance, and service customization. Common models include per-employee, per-trip, and fixed monthly charges.

By CY2028, India's Tier 2 and Tier 3 cities are projected to host 57% of the urban workforce. Although Tier 1 cities currently contribute significantly to corporate mobility revenue, mobility providers are aiming to capitalize on these smaller cities as additional revenue sources. The expansion of ITES and increasing business travel needs correlate directly with growth in corporate mobility. In addition, India's strong IT sector and cost-effective workforce are fueling the growth of Global Capability Centers (GCCs). The number of GCCs is expected to rise from 1580 in CY2023 to 2400 by CY2030. Government policies promoting R&D and innovation hubs in key sectors like IT, electronics, and EVs further strengthen this growth. Additionally, development of GCC clusters in Tier 2 & 3 cities like Hosur and Nashik complements established centers in Pune and Bengaluru. This in turn is leading to higher demand for quality employee transport from these GCCs.

Pros and strengths

Established brand built over years through operational excellence: The company has built a notable presence in Kolkata, Mumbai, Pune, Delhi-NCR, Ahmedabad, Bhubaneshwar, Ludhiana, Lucknow and Jaipur. Its vehicles are outfitted with necessary amenities and are driven by professionally trained and verified drivers. The company makes it a priority not to drop off women passengers last, and if such a situation arises, it ensures that an escort is provided for their safety. Its dedicated operations team, which provide its corporate customers with a single point of contact for all mobility-related needs, 24x7 manned customer care, high safety and hygiene standards, well-maintained fleet quality check processes, and seamless technology integrations have all helped to build its brand in the employee transportation service segment. It also uses GPS tracking to control the entire logistics cycle and ensure that operational efficiency is not impacted. The level of service provided has resulted in a notable brand presence with minimal spends on advertising.

Asset-light business model: It operates largely on an asset-light model where the majority of its vehicles are sourced from vendors rather than owned. This strategy allows it to maximize revenue by optimizing seat usage and enhancing overall employee mobility. This model eliminates the need for capital-intensive investments in vehicle ownership, maintenance, and fuel, thereby enabling scalability and flexibility. With higher revenue directly enhancing profitability due to the absence of substantial fixed costs, the company can achieve improved profit margins. This model also augments its ability to serve its clients in more efficient and reliable way by making fleet available at all times. This strategic approach helps the company sustain its competitive edge and leverage its asset-light model for continued growth and profitability.

Scalable business model: As a service-oriented company, the company’s business model is centered on fulfilling customer demands while maximizing the efficient use of its existing resources. This approach has proven both successful and scalable, allowing it to grow steadily in recent years. It is well-positioned to expand further and actively promote its services, all while maintaining the highest standards of quality.

Risks and concerns

Maximum revenue comes from limited customers: Revenue from its top ten customers constituted 99.73%, 99.65%, 99.50% and 99.55% of its revenue from operations for period ending September 30, 2024, March 31, 2024, March 31, 2023 and March 31, 2022 respectively. The majority of its clients are in the information technology and business process outsourcing industries. It has entered into service agreements with its customers and loss of any significant customers would have an adverse effect on its financial results. It expects that it will continue to be reliant on its major customers for the foreseeable future. Accordingly, any failure to retain these customers and/or negotiate and execute contracts with such customers on terms that are commercially viable, could adversely affect its business, financial condition and results of operations.

Geographical constrain: It runs its operations in India with presence in Kolkata, Mumbai, Pune, Bhubaneswar, Delhi-NCR, and Ahmedabad, Jaipur, Ludhiana and Lucknow in India. However, a significant percentage of its revenue is contributed by Kolkata and Mumbai. It experiences greater competition in these both cities in India than it does in other markets in which it operates. As a result, its geographic concentration, its business and financial results are susceptible to economic, social, weather, and regulatory conditions or other circumstances in each of these cities. Any deterioration of macroeconomic conditions or decline in travel demand in these cities could unfavourably impact the volume of car rentals.

Huge working capital requirements: The company’s business requires significant amount of working capital and major portion of its working capital is utilized towards debtors. The company’s trade receivables as on September 30, 2024, March 31, 2024, March 31, 2023, and March 31, 2022 were Rs 372.58 lakh, Rs 369.74 lakh, Rs 237.61 lakh and Rs 168.83 lakh respectively. The results of operations of its business are dependent on its ability to effectively manage its trade receivables. To effectively manage its trade receivables, it must be able to accurately evaluate the credit worthiness of its customers and ensure that suitable terms and conditions are given to them in order to ensure its continued relationship with them. However, if its management fails to accurately evaluate the terms and conditions with its customers, it may lead to write-offs bad debts and/ or delay in recoveries which could lead to a liquidity crunch, thereby adversely affecting its business and results of operations. A liquidity crunch may also result in increased working capital borrowings and, consequently, higher finance cost which will adversely impact its profitability. 

Outlook

Voler Cars is engaged in the business of providing reliable and efficient employee transportation services (ETS) to large MNC's and corporate clients. The company offers comprehensive home-to-office transportation with 24/7 customer service, dedicated teams, and a fleet of over 2,500 vehicles, including cars, SUVs, electric vehicles, buses, and tempo travelers. The company has established brand built over years through operational excellence with scalable business model. On the concern side, the company’s top ten customers contribute majority of its revenues from operations. Any loss of business from one or more of them may adversely affect its revenues and profitability. Moreover, it generates a significant percentage of its revenue from operations from customers in Kolkata and Mumbai in India. If its operations in these cities are negatively affected, its financial results and future prospects would be adversely impacted.

The company is coming out with a maiden IPO of 30,00,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 85-90 per equity share. The aggregate size of the offer is around Rs 25.50 crore to Rs 27.00 crore based on lower and upper price band respectively. On performance front, the revenue from operations of the company for fiscal year 2024 was Rs 3,089.71 lakh against Rs 2,396.07 lakh revenue from operations for Fiscal year 2023, an increase of 28.95% in revenue from operations. Moreover, profit after tax for the Fiscal 2024 was at Rs 356.29 lakh against profit after tax of Rs 199.23 lakh in fiscal 2023, an increase of 78.83%.

The company’s strategy involves expanding its presence into additional Tier-I and Tier-II cities across India while also increasing its market penetration in cities where it already operates. Currently, the company is active in Kolkata, Mumbai, Pune, Bhubaneswar, Delhi-NCR, Ahmedabad, Lucknow, Jaipur and Ludhiana. It plans to expand into Tier-I cities such as Chennai, Bangalore and Hyderabad and Tier-II cities such as Chandigarh and Surat. By extending its reach to new locations and strengthening its position in these existing markets, it aims to drive further growth and enhance its overall footprint.

PS Raj Steels

• PS Raj Steels is coming out with an initial public offering (IPO) of 20,20,000 equity shares in a price band Rs 132-140 per equity share.
• The issue will open on February 12, 2025 and will close on February 14, 2025.
• The shares will be listed on SME Platform of NSE.
• The face value of the share is Rs 10 and is priced 13.20 times of its face value on the lower side and 14.00 times on the higher side.
• Book running lead manager to the issue is Khambatta Securities.
• Compliance Officer for the issue is Suman. 

Profile of the company

PS Raj Steels is one of the growing and leading manufacturers & supplier of Stainless-Steel Pipes & Tubes in India. It takes pride in offering an extensive array of over 250 standard sizes and providing customized solutions tailored to customer preferences. This makes it one of the manufacturers in India to manufacture such wide range of product sizes. In addition to its core manufacturing operations, as on March 31, 2024 around 29.81% of its revenue comes from trading in Stainless-Steel Coils & Strips, Sheets & Plates, and Bars and as on September 30, 2024 around 25.42% of its revenue comes from trading in Stainless-Steel Coils & Strips, Sheets & Plates, and Bars.

The company’s products serve a wide range of sectors for fabrication and industrial applications. Key sectors include railways, furniture, households, gate railing, door frames, rice plants, sugar mills, food processing and heat exchanger etc. The company is selling goods to manufacturers as well as traders/stockits. These manufacturers produce goods for various industries like railways, rice plants, sugar mills, food processing, machinery equipment, decorative items, furniture and fixtures. Some of the items produced by these manufacturers include trolleys for airports made of SS pipes, pipes used in plant & machinery for sugar, rice, and food processing industries.

Proceed is being used for:

• Meeting working capital requirements of the company

Industry Overview 

The three groups comprising the Indian steel industry are primary producers, secondary producers, and large producers. India is the second-largest producer of crude steel in the world, producing 121.29 MT of finished steel and 125.32 MT of crude steel in FY23. India is estimated to have produced 123–127 MT of steel in FY24, an increase of 4-7% y-o-y. The availability of inexpensive labour and raw material such as iron ore domestically has been a key growth driver of the Indian steel industry. Consequently, steel contributes a significant part of India's manufacturing output. The production of finished steel and crude steel was 114 MT and 118 MT, respectively, in FY24 until January 2024. India recorded finished steel consumption of 119.17 MT in FY23, compared to 105.75 MT in FY22. The country consumed 135.90 MT of finished steel in FY24. The per-capita consumption of steel stood at 86.7 kg in FY23.

Over the last ten to twelve years, India's steel industry has grown dramatically. Since 2008, domestic steel demand has climbed by over 80% while production has increased by 75%. Steel production capacity has increased in tandem with the growth in demand, which has mostly been organic. The production of finished steel was 120.01 MT and that of crude steel was 133.60 MT in FY22. Finished steel production was 121.29 MT while 125.32 MT of crude steel was produced in FY23. The production of finished and crude steel was 138.5 MT and 143.6 MT, respectively, in FY24. In FY22, 105.75 MT of finished steel was consumed in India. The amount of finished steel consumed in FY23 was 119.17 MT, while in FY24, finished steel consumption stood at 135.90 MT. In FY23, the per capita use of steel was 86.7 kg. Finished steel import and export totalled 6.02 MT and 6.7 MT, respectively, in FY23. The quantity of finished steel imported and exported in FY24 was 8.32 MT and 7.49 MT, respectively.

India is the world's second-largest producer of steel and is on the verge of surpassing China as the world's second-largest consumer of the metal, with the sector contributing roughly 2% of the country's GDP. The Indian steel industry has the capacity and potential to help the country regain a positive steel trade balance. The National Steel Policy of 2017 aims to achieve a production capacity of 300 million tonnes by 2030-31. Over the previous five years, the per capita use of steel climbed from 57.6 kg to 74.1 kg. By 2030–31, the government seeks to increase the amount of steel consumed per person in rural areas from the present 19.6 kg to 38 kg. Owing to the relatively low per capita steel consumption and the anticipated increase in consumption brought about by increased infrastructure construction as well as the country's booming automotive and railway sectors, there is much room for India’s steel sector to witness robust growth going forward.

Pros and strengths

Extensive & customized product range: The company offers a diverse array of over 250 standard sizes of high-quality stainless-steel products, including NB (Nominal Bore) and OD (Outer Diameter) pipes, which cater to various industrial applications. This breadth of products positions it as a comprehensive solution provider in the stainless-steel industry. The company also offers customization facilities to the customers, so that they can avail the products as per their specifications. The companies which require the products as per their specification approach it. The company designs the products as per the specifications and requirements of the clients. This provides a complete satisfaction to its clients and enables it to expand its business from existing customers, as well as address a larger base of potential new customers.

Cost-effective supply chain: The company’s proximity and partnership with Jindal Stainless Limited (JSL) provide it with a significant cost advantage and a reliable supply of raw materials. Since JSL, its main supplier, located around 25 km from its plant, transportation costs are minimized, which allows it to maintain competitive pricing, reduce production costs, and ultimately increase profitability.

Strong distribution and customer focus: The company’s established distribution network, spread over 18 states of India and direct engagement with OEMs ensure timely deliveries and tailored solutions. This focus on customer satisfaction builds long-term relationships and enhances market presence. It distributes its products through a strong network of dealers and direct sales to Original Equipment Manufacturers (OEMs) where around 60% of its revenue generates through its dealers and around 40% from direct sales to its customers. It has a strong dealer-based network having dealers from different parts of India explicate.

Risks and concerns

Maximum revenue comes from limited customers: The company has garnered 57.01%, 55.04% and 46.18% of its total revenue from top 10 customers in FY24, FY23 and FY22 respectively. It is difficult to forecast the success or sustainability of any strategies undertaken by any of its key customers in response to the current economic or industry environment. Unfavourable industry conditions can also result in an increase in commercial disputes and other risks of supply disruption. A sustained decline in the demand for products produced by its OEM customers could prompt them to cut their production volumes, directly affecting the demand from OEM customers for its products. In addition to decline in demand for existing products, insufficient demand for new products launched by its OEM customers may also prevent growth in demand for its products from such OEM customers.

Geographical constrain: The company’s business is largely concentrated in four states and is affected by various factors associated with these states. The company has garnered 36.84%, 24.78%, 21.73% and 6.71% from Uttar Pradesh, Haryana, Delhi and Madhya Pradesh in six month ending on September 30, 2024. This concentration of its business in these states are subjects it to various risks. Any such adverse development affecting continuing operations at its manufacturing facility could result in significant loss due to an inability to meet customer contracts and production schedules, which could materially affect its business reputation within the industry. The occurrence of or its inability to effectively respond to, any such events or effectively manage the competition in the region, could have an adverse effect on its business, results of operations, financial condition, cash flows and future business prospects.

Significant working capital requirements: The company proposes to utilize Rs 2,650 lakh of the net proceeds for its estimated working capital requirements. It will utilize Rs 2,650 lakh in Fiscal 2025. The balance portion of the company working capital requirement, if any, shall be met from the working capital facilities availed/ to be availed and internal accruals. It requires a significant amount towards working capital requirements which is based on certain assumptions, and accordingly, any change of such assumptions would result in changes to its working capital requirements. A significant amount of working capital is required to finance the purchase of raw materials and trade receivables. As a result, it may continue to avail debt in the future to satisfy its working capital requirements. The company’s working capital requirements may increase if it undertakes larger or additional order from its customers or if payment terms do not include advance payments or such contracts have payment schedules that shift payments toward the end of a project or otherwise increase its working capital burden. 

Outlook

PS Raj Steels manufactures and supplies stainless steel pipes and tubes in India. The company's products cater to various sectors, including railways, furniture, households, gate railing, door frames, rice plants, sugar mills, food processing, and heat exchangers. The company has integrated manufacturing facility. It has long association with the Stainless-Steel Industry. On the concern side, the company is dependent on few numbers of customers. Any loss of top 10 customers will significantly affect its revenues and profitability. Moreover, the company’s business is largely concentrated in four states and is affected by various factors associated with these states.

The company is coming out with a maiden IPO of 20,20,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 132-140 per equity share. The aggregate size of the offer is around Rs 26.66 crore to Rs 28.28 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations increased by 32.08% to Rs 29,774.93 lakh for Fiscal 2024 as compared to Rs 22,542.65 lakh for Fiscal 2023. This increase in revenue from operations was primarily due to increase in trading revenue. Moreover, the company’s profit for the year increased by 74.24% to Rs 636.29 lakhs for Fiscal 2024 compared to Rs 365.19 lakh for Fiscal 2023.

The company has successfully delivered finished goods under the brand name “PSSR” around 18 states across the India. It plans to continue its strategy of diversifying and expanding its presence in these regions for the growth of its business. It is selective in expanding to new locations and look at new geographies where it can deliver quality products without experiencing significant delays and interruptions. Through further diversification of its operations geographically, it hopes to hedge against risks of operations in only specific areas and protection from fluctuations resulting from business concentration in limited geographical areas.

Hexaware Technologies

• Hexaware Technologies is coming out with a 100% book building; initial public offering (IPO) of 12,99,69,347 shares of Rs 1 each in a price band Rs 674-708 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 February 12, 2025 and will close on February 14, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 1 and is priced 674 times of its face value on the lower side and 708 times on the higher side.
• Book running lead managers to the issue are Kotak Mahindra Capital Company, Citigroup Global Markets India, J.P. Morgan India, HSBC Securities and Capital Markets (India) and IIFL Capital Services.
• Compliance Officer for the issue is Gunjan Methi.

Profile of the company

Hexaware Technologies is a global digital and technology services company with artificial intelligence (AI) at its core. It leverages technology to deliver innovative solutions that help its customers in their digital transformation journey and subsequent operations. It embeds AI into every aspect of its solutions and have created a suite of platforms and tools that allow its customers to adapt, innovate and optimize in this AI-first era. It manages its business through six operating segments based on the industries it serves: Financial Services, Healthcare and Insurance, Manufacturing and Consumer, Hi-Tech and Professional Services, Banking, and Travel and Transportation. Its offerings encompass five broad services: Design & Build, Secure & Run, Data & AI, Optimize, and Cloud Services, which form the foundation for its offerings. It delivers its services through its AI-enabled digital platforms such as RapidX for digital transformation, Tensai for AI-powered automation and Amaze for cloud adoption. It serves customers across the Americas, Europe and Asia-Pacific (including India and Middle East) (APAC).

The company’s capabilities are strengthened by its wide ecosystem of partnerships with enterprises which broaden its customer offerings and marketing reach. It serves a diverse range of customers, including 31 of the Fortune 500 organizations. It serves prominent enterprises across the industries in which it operates. Its customer-centric approach has enabled it to build strong relationships with its customers and continually expand its customer base. It has a global delivery presence comprising 39 delivery centers supported by 16 offices spread across the Americas, Europe and APAC as of September 30, 2024. As of September 30, 2024, it had a team of 32,536 employees in 28 countries. Its presence is spread across major countries, nationalities, languages, time zones and regulatory zones. 

Proceed is being used for:

• Achieving the benefits of listing the Equity Shares on the Stock Exchanges
• Carrying out the Offer for Sale of equity shares by the Selling Shareholders

Industry Overview

The global enterprise technology spends (which includes IT services, business process services, software and hardware) is expected to grow at a CAGR of approximately 7.3% during the period CY2024-29E to account for a total market size of around Rs 630.7 trillion ($7,552.7 billion), as per Everest Group estimates. With the anticipated interest rate cuts, enterprises are expected to increase spending, focusing on achieving heightened efficiency with leaner resources while maintaining a growth outlook. Enterprises are increasingly investing in technology to enhance their digital infrastructure, streamline operations, and improve customer experiences. The accelerated push towards cloud computing, artificial intelligence (AI), data, automation, and connected products is not only transforming traditional business processes but also driving the need for IT services. Digital transformation continues to be a pivotal agenda for businesses aiming to stay competitive in a digital-first economy. Organizations are leveraging advanced technologies to modernize legacy systems and innovate their products and services.

Meanwhile, Gen AI, a sophisticated branch of AI, focuses on the creation of new content by learning patterns from existing data. Its rapid ascent in the industry can be attributed to breakthroughs in deep learning algorithms, increased computational capabilities, and the proliferation of large datasets. It is also central to digital transformation initiatives for many enterprises. IT service providers are leveraging gen AI across three key categories: products and platforms, service offerings, and internal functions. By developing AI-led platforms, service providers are delivering powerful tools tailored to specific client needs. AI-infused service offerings are enabling advanced solutions that drive efficiency and scalability. Internally, AI is enhancing operations in areas such as HR, legal, and compliance, optimizing processes and automating deal solutioning with AI-generated RFP responses. The following exhibit explores the various use cases in each of these categories.

Within core AI-led services, traditional AI algorithms mainly perform repetitive tasks such as pattern recognition, while gen AI can generate entirely new content. This has given rise to applications such as creative writing, conversational search, summarization, asset generation (synthetic data/image/video/3D), and simulated environment creation, among others. With the rapid rise of consumer gen AI applications, coupled with advancements in enterprise AI solutions and automation technologies, the outsourced gen AI services market is projected to reach Rs 7.8-8.0 trillion ($ 93.4-95.8 billion) by 2029. This growth is expected to be driven by technological advancements and increasing adoption across various industries, leading to a CAGR of 60-62% over the period of CY2024-29E.

Pros and strengths

Deep domain expertise delivered through comprehensive solutions across industries: It provides comprehensive services and solutions to customers across six industries (each of which is an operating segment): Financial Services, Healthcare and Insurance, Manufacturing and Consumer, Hi-Tech and Professional Services, Banking, and Travel and Transportation. It leverages its deep expertise across its comprehensive portfolio of services, in-depth domain knowledge, and understanding of customer requirements to contextualize the use of different technologies and to help its customers develop and deploy their digital transformation strategies. Its deep domain expertise extends to multiple sub-verticals within each operating segment. It has developed capabilities to address the nuances of these sub-verticals, as customers in each of these sub-verticals may have different characteristics and needs.

AI-led digital capabilities and platforms built in-house with innovation as a strategic pillar: The company leveraged its domain expertise to develop three AI-enabled digital platforms that create value for its customers across its service offerings: (1) RapidX, for digital transformation, (2) Tensai, for AI-powered automation and (3) Amaze, for cloud adoption. Innovation is considered a key pillar in its business strategy, and it has prioritized innovation by building its intellectual property portfolio, enhancing its technological expertise and investing in next-generation technologies. Driven by its AI-enabled approach, it has incorporated AI and Gen AI across its solutions and services as well as its internal decision-making and human capital management processes, while maintaining data security and adhering to ethical and regulatory standards. Gen AI refers to generative artificial intelligence technologies and platforms that can create, interpret, summarize and customize content across text, code, images, audio and video.

Long-term and embedded relationships with diversified blue-chip customer base: The company serves a diverse range of customers, including 31 of the Fortune 500 organizations. According to the Everest Report, in the Financial Year 2023, it derived around 62% and nearly 83% of its revenue from operations from customers with over $5,000 million revenues and over $1,000 million revenues, respectively. It has a diversified presence across geographies: The Americas, Europe and APAC regions which also include the Middle East, Africa and Latin America, and across operating segments: Financial Services, Healthcare and Insurance, Manufacturing and Consumer, Hi-Tech and Professional Services, Banking and Travel and Transportation.

Go-to-market strategy focused on customer acquisition and expansion: The company is focused on developing relationships with new customers across the Americas, Europe and APAC through collaborative engagement. It achieves this through its go-to-market strategy, which combines the efforts of its New Customer Acquisition, Account Management, Hybrid Sales and Overlay Sales teams. It prioritizes acquiring large enterprises with substantial IT budgets and long-term growth potential as customers. According to the Everest Report, in the Financial Year 2023, it derived around 62% and nearly 83% of its revenue from operations from customers with over $5,000 million revenues and over $1,000 million revenues, respectively. Its Pre-Sales, Practice, Global Bid Management and Marketing teams provide further support to its sales efforts.

Risks and concerns

Significant revenue comes from limited customers: A significant portion of its revenue from operations is attributable to certain top customers, and often it is not their exclusive IT services provider. The company has garnered 48.70%, 48.4% and 51.3% of its total revenue from top 20 customers in FY23, FY22 and FY21 respectively. Any downsizing of the scale of such customers’ business or any deterioration of their financial conditions or prospects or any renegotiation of its contractual agreements may result in a reduction in their expenditure on the solutions it provide. Any failure to retain its top customers, expand the size of its business with them, or expand to new customers could have an adverse effect on its business, profits and results of operations.

Maximum revenue comes from only two sectors: The company derived 28.3% and 21.2% of its revenue from operations for the nine months ended September 30, 2024 and 27.2% and 21.7% of its revenue from operations for the Financial Year 2023 from its customers in the ‘Financial Services’ and ‘Healthcare and Insurance’ operating segments, respectively. Some of its customers may rely on funding from venture capital and other sources to drive their business. To the extent that this funding is reduced, such companies may be forced to reduce their outsourced expenditures, which could have an adverse effect on its business and results of operations. Although it has not had material instances of a decrease in its customer base in the Financial Services and Healthcare and Insurance operating segments in the last three Financial Years and the nine months ended September 30, 2024, all of these events could adversely affect its business, financial condition, cash flows, or results of operations.

Geographical constrain: The company has derived 73.4% and 71.5% of its revenue from operations from the Americas and 20.5% and 22.1% of its revenue from operations from Europe for the nine months ended September 30, 2024 and the Financial Year 2023, respectively. The concentration of its customers in the Americas and Europe exposes it to adverse economic or political circumstances in such regions, including on account of any on-going economic slowdown and inflationary trends in such economies. Any change in regulatory framework, political unrest, disruption, disturbance, or sustained downturn in such economies could adversely affect its customers, who could, in turn, terminate their engagements or fail to award new engagements to it.

Foreign exchange-related risk: The company’s reporting currency is in Indian rupees, and it transacts a significant portion of its business in foreign currencies, primarily the U.S. Dollar, the British Pound, the Euro and the Mexican Peso. Accordingly, changes in exchange rates may have a material adverse effect on its profitability and margins. If it expands into new markets, portions of its revenue from operations may be denominated in other currencies whose value may fluctuate in relation to the Indian rupee. Since the contracts that it enters into with its customers tend to run across multiple years and many of these contracts are at fixed rates, any appreciation in the Indian rupee vis-a-vis foreign currencies in which it generates revenue from operations will affect its margins, and hence its business, financial condition and results of operations.

Outlook

Hexaware Technologies is engaged in the business of global digital and technology services with artificial intelligence. The company uses technology to offer innovative solutions, integrating AI to help customers adapt, innovate, and improve in the AI-driven world. The company has go-to-market strategy focused on customer acquisition and expansion. It also has global, scalable, flexible delivery model with a certified and skilled talent pool. On the concern side, the company derived 73.4% and 71.5% of its revenue from operations from the Americas and 20.5% and 22.1% of its revenue from operations from Europe for the nine months ended September 30, 2024 and the Financial Year 2023, respectively. Any adverse changes in economic conditions that negatively affect the economic health of the geographies and markets in which it has a presence could affect its business, financial condition and results of operations. Moreover, a significant portion of its revenue from operations is attributable to certain top customers, and often it is not their exclusive IT services provider. If it cannot maintain and expand its existing customer base, its business, financial condition and results of operations may be adversely affected.

The company is coming out with a maiden IPO of 12,99,69,347 equity shares of Rs 1 each. The issue has been offered in a price band of Rs 674-708 per equity share. The aggregate size of the offer is around Rs 8759.93 crore to Rs 9201.83 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations increased by 13.60% from Rs 77,643 million for the nine months ended September 30, 2023 to Rs 88,200 million for the nine months ended September 30, 2024. The increase in revenue from operations was primarily due to an increase in the number of customers and an increase in the volume of revenue from operations from existing customers. The company’s profit increased by 6.03% from Rs 8,048 million for the nine months ended September 30, 2023 to Rs 8,533 million for the nine months ended September 30, 2024.

The company plans to continue to enhance its existing offerings and platforms to further expand its capabilities and its addressable market. It leverages its three AI-enabled digital platforms, RapidX for digital transformation, Tensai for AI-powered automation and Amaze for data and cloud adoption, across its services and solutions. It intends to continue investing in differentiated platforms and build add-on service capabilities in areas such as product engineering, security, data and analytics and emerging technologies adjacent to the business it operates in. It offers AI-led solutions across its operating segments, tailored to the specific needs of the industries it serves. For example, the company’s background research services cater to customers in the insurance industry, using defined document scheme to extract and filter data from various sources and generating reports with AI web scraping and chat prompts driven by large language models.

Ajax Engineering

• Ajax Engineering is coming out with a 100% book building; initial public offering (IPO) of 2,01,80,446 shares of Rs 1 each in a price band Rs 599-629 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 February 10, 2025 and will close on February 12, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 1 and is priced 599 times of its face value on the lower side and 629 times on the higher side.
• Book running lead managers to the issue are ICICI Securities, Citigroup Global Markets India, JM Financial, Nuvama Wealth Management and SBI Capital Markets.
• Compliance Officer for the issue is Shruti Vishwanath Shetty.

Profile of the company

Ajax Engineering is a leading concrete equipment manufacturer with a comprehensive range of concrete equipment, services and solutions across the concrete application value chain. As of September 30, 2024, it has developed over 141 concrete equipment variants catering to the concrete application value chain, and over the last ten years, it has sold over 29,800 concrete equipment in India. Since its inception 32 years ago, it has developed a comprehensive product portfolio that includes equipment such as self-loading concrete mixers (SLCMs) and batching plants for the production of concrete, transit mixers for the transportation of concrete, boom pumps, concrete pumps and self-propelled boom pumps for the placement of concrete, slip-form pavers for the paving of concrete and 3D concrete printers for depositing concrete.

SLCMs are versatile self-loading machines capable of mixing and transporting concrete ingredients, enabling on-site production of concrete. These machines are equipped with, among others, (i) self-loading arms with a hatch bucket to ensure smooth flow of concrete ingredients into the drum in order to minimise spillage, and (ii) concrete batch controllers to accurately measure all the ingredients in order to produce high quality concrete. During Financial Year 2024, around 14% of all concrete produced in India was processed through SLCMs, reflecting their growing importance in meeting the demand for faster and more reliable construction methods. Moreover, between Financial Year 2022 and the six months period ended September 30, 2024, its SLCM sales have experienced a CAGR of 45.70%, underscoring the rapid adoption and success of SLCMs in the construction sector.

It is a leading manufacturer of SLCMs in India, with an approximately 77%, 75%, 77% and 86% market share in the SLCM market in India in terms of number of SLCMs sold during the six months period ended September 30, 2024 and Financial Years 2024, 2023 and 2022, respectively. Moreover, during Financial Year 2024, 12% of the concrete production in India was through its SLCMs. It also continues to assist customers throughout the life of the equipment, and with that aim, it provides spare parts for the equipment sold by it and facilitate the provision of aftersales service by its dealers. 

Proceed is being used for:

• Achieving the benefits of listing the Equity Shares on the Stock Exchanges
• Carrying out the Offer for Sale of equity shares by the Selling Shareholders

Industry Overview

Cement forms one of the core elements of construction activity and contributes to ~11% of all inputs to the sector. Driven by the growth in construction activity, the demand for cement too has witnessed steady growth. In India, domestic cement consumption in FY 2024 was 405 million tonne while in FY 2019 it was 325 million tonne increasing at a CAGR of 4.4% and is projected to reach 595 million tonne by FY 2029 growing at a CAGR of 8%. The modest growth between FY 2019 and FY 2024 can be attributed to the disruption of construction activities during the COVID-19 pandemic. In terms of sectoral consumption, rural housing and infrastructure projects have the highest contribution at 33% and 30% respectively, followed by urban housing and industrial & commercial buildings at 23% and 14% respectively in FY 2024. With the significant influx of public investments to create affordable housing for rural segments, and the investments to boost infrastructure development, the consumption of cement for rural housing and infrastructure-related projects is projected to increase to 34% and 32% respectively by FY 2029.

Concrete production involves the mixing of cement, water, sand, and aggregates in specific proportions, using either manual methods or automated batching plants. The country has a robust infrastructure for concrete manufacturing, supported by a large network of cement plants and suppliers of raw materials. Concrete offers several advantages over other materials in use cases like bituminous roads and bricks in housing structures. It provides greater durability and longevity, requiring less maintenance over time. Concrete roads can withstand heavy traffic and extreme weather conditions better than bituminous roads, reducing repair costs and disruptions. In housing, concrete structures offer superior strength, fire resistance, and insulation properties compared to brick, contributing to safer and more energy efficient buildings.

Infrastructure development is a crucial driver of India's economic growth and is projected to increase at 8% CAGR from FY2024 to FY2029. This will necessitate the increased consumption of materials such as concrete. While manual mixing remains common in the country, the rapid pace of growth is accelerating the penetration of mechanization of concrete which is projected to increase from 25% in FY2024 to 41% in FY2029. This trend is projected to further propel the demand for mechanized concrete equipment in India and grow the industry from Rs 61 billion ($731 million) to Rs 178 billion ($2,148 million) from FY2024 to FY2029. Players that concentrate on key success factors will be well-positioned to capture opportunities in this expanding market. Ajax Engineering has become the leader in SLCM and has emerged as the second largest mechanized concreting equipment player in India by integrating these factors. Indian players can also capitalize on the potential demand for concreting equipment in emerging markets or sell construction equipment alongside their core concreting products to expand their revenue streams.

Pros and strengths

Market leader in a large and fast-growing SLCM market: The company is a leading manufacturer of SLCMs in India, with an around 77%, 75%, 77% and 86% market share in the SLCM market in India in terms of number of SLCMs sold during the six months period ended September 30, 2024 and Financial Years 2024, 2023 and 2022, respectively. Its SLCMs have a diverse range of applications and end-uses and are used Pan-India, based on after-sales data available to it. During the last 10 years, it has sold over 25,000 SLCMs in India, which is the largest among leading concrete equipment companies in India during this period. Its SLCMs also command the highest resale value as on Financial Year 2024 among leading concrete manufacturers in India on account of a number of factors, including first-mover advantage, the high quality and reliability of products, and strong aftersales service. Its SLCMs are sold under its ‘Argo’ brand, and utilize a variety of drum outputs ranging from 1.0 to 4.8 cubic meters per batch to cater to a wide range of industrial uses, including across mid-scale and smaller infrastructure projects.

Leading concrete equipment company with over 141 concrete equipment variations: The company is a leading concrete equipment manufacturer with a comprehensive range of concrete equipment, services and solutions across the concrete application value chain. Its portfolio includes equipment such as SLCMs and batching plants for the production of concrete, transit mixers for the transportation of concrete, boom pumps, concrete pumps and self-propelled boom pumps for the placement of concrete, slip-form pavers for the paving of concrete and 3D concrete printers for depositing concrete. As of September 30, 2024, it has over 141 concrete equipment variants catering to the concrete application value chain.

Strong in-house design and development capabilities: The company was co-founded by Krishnaswamy Vijay, its Executive Chairman and Whole-Time Director, the late Jacob John and the late Anil Kumar Singh, and its core ethos has been to design, develop and engineer innovative and high-quality concrete equipment for its customers. As of September 30, 2024, its in-house design, engineering, and development team includes 79 full-time employees, constituting approximately 15.96% of its total permanent workforce. Its team’s expertise is distributed across core technologies, including hydraulics, welding technology, and product specialization, and consists of 52 engineers, including 10 with M.Tech / M.Sc. degrees and 42 with BE/B.Tech degrees. By utilizing core technologies, its team has been able to efficiently design concrete equipment that are good quality and reliable.

Large dealer network with widespread distribution model: The company has utilized a dealer-led distribution and service model over the past three Financial Years and as of September 30, 2024, its dealer network comprised of 51 dealerships across 23 states in India, and it is accessible to its customers through 114 touchpoints, which comprise 51 dealer headquarters and 63 branches (of which, 34 also act as service centers) managed and operated by its dealers. This is the largest dealer network in terms of number of dealers and service touchpoints among leading concrete equipment companies in India, as of September 30, 2024. It maintains longstanding relationships with its dealers, and all its dealers are exclusive to it in the concrete equipment market. As of September 30, 2024, it has maintained relationships exceeding five years with 21 dealers, which constitutes 41.18% of its total dealer network in India.

Risks and concerns

Derive a significant majority of its revenue from the sale of SLCMs: The company’s product portfolio includes equipment such as self-loading concrete mixers (SLCMs) and batching plants for the production of concrete, transit mixers for the transportation of concrete, boom pumps, concrete pumps and self-propelled boom pumps for the placement of concrete, slip-form pavers for the paving of concrete and 3D concrete printers for depositing concrete. From its product portfolio, the company derived a majority of its revenue from the sale of SLCMs. The company’s business is highly dependent on the demand for concrete and concrete equipment in India, which is closely tied to the performance of key sectors such as construction, infrastructure, and real estate. While it has not faced any such instances of downturn that have materially and adversely affected its results of operations in the six months periods ended September 30, 2024 and September 30, 2023, and the past three Financial Years (other than the industry-wide effects of the COVID-19 pandemic), any sustained downturn in the construction, infrastructure and real estate sectors could lead to reduced demand for concrete and concrete equipment in the future, directly impacting its sales volumes and profitability.

Geographical constrain: The company has four operational assembling and manufacturing facilities and one additional expansion facility currently under construction, all situated in Karnataka. The concentration of its assembling and manufacturing facilities in Karnataka exposes it to regional risks and adverse events specific to the state. These regional risks include disruptions to infrastructure, significant natural disasters, workforce disruptions, changes in general economic conditions, civil unrest, the regulatory environment, and local government policies, among others. While it did not face any such disruptions to its assembling and manufacturing facilities that materially and adversely affected its results of operations in the six months period ended September 30, 2024 and the past three Financial Years, any such disruptions in the future could adversely affect its business, results of operations, financial condition, and cash flows.

Seasonal business: The concrete equipment industry in India is cyclical in nature and influenced by government spending on public infrastructure and overall economic conditions affecting private infrastructure since the demand for concrete equipment is primarily driven by government infrastructure initiatives and investments from the public sector. Government infrastructure projects and public sector investments are major drivers of demand for concrete equipment. Variations in government budgets, changes in political priorities, and shifts in economic policies can lead to fluctuations in government spending on infrastructure, directly impacting the demand for its construction equipment. During periods of increased government spending, it may experience higher sales and stronger financial performance. Conversely, during periods of reduced government spending or economic downturns, demand for its construction equipment may decline, adversely affecting its business.

Dependent on dealer network to sell and distribute a majority of its products and provide after-sales service: The company relies on its dealer network to sell and distribute its products (including spare parts) and to provide after-sale services to its end-customers. Its dealers are in direct contact with its end-customers and their conduct significantly influences customer perception of its brand. Further, pursuant to the terms of its dealership agreements, dealers are responsible for stocking spare parts, maintaining inventory levels, managing sales processes and service facilities. If its dealers fail to maintain the high standards that it set for service quality, whether due to insufficient training, non-adherence to its training manual, inadequate resources, or other factors, it could lead to customer dissatisfaction. This, in turn, may impact its reputation, result in an increase in warranty claims, and could lead to a potential decline in future sales. Moreover, if it is unable to maintain and expand its dealer network in the future, its customer base and market share could be impacted.

Outlook

Ajax Engineering manufactures a wide range of concrete equipment and services across the value chain. As of September 30, 2024, the company has developed 141 concrete equipment variants for the value chain and sold over 29,800 units in India in the last ten years. The company has diversified customer base with longstanding relationships in the concrete equipment market with large dealer network with widespread distribution model. On the concern side, the company derives a significant majority of its revenue from the sale of self-loading concrete mixers (85.13% of its revenue from operations for the Financial Year 2024). Any decrease in sales of SLCMs or demand for concrete equipment in India could adversely affect its business, results of operations, financial condition and cash flows. Moreover, its business is seasonal in nature and any decrease in sales during certain quarters could have an adverse impact on its financial performance.

The company is coming out with a maiden IPO of 2,01,80,446 equity shares of Rs 1 each. The issue has been offered in a price band of Rs 599-629 per equity share. The aggregate size of the offer is around Rs 1208.81 crore to Rs 1269.35 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations increased by 51.28% to Rs 17,414.03 million for the Financial Year 2024 from Rs 11,511.28 million for the Financial Year 2023, primarily attributable to an increase in sale of machines. The company’s restated profit for the year increased by 65.67% to Rs 2,251.49 million for the Financial Year 2024 from Rs 1,359.04 million for the Financial Year 2023.

The company’s primary aim is to increase its market share in SLCMs by capitalising on the growth opportunity for SLCMs in the concrete equipment market. As of March 31, 2024, around 65% of India’s cement consumption is attributed to the housing sector, with an additional 20-25% consumed by the infrastructure sector. This distribution underscores a robust growth opportunity for the adoption of SLCMs in the housing market, particularly as its SLCMs have a diverse range of applications and end-uses and are used Pan-India, based on after-sales data available to it. The company aims to maintain and grow the market share of its SLCMs by continuing to enhance its equipment offerings and actively incorporating and addressing customer feedback in its new development initiatives while delivering reliable and high quality concrete equipment to its customers. This includes an extensive validation and seeding process designed to ensure that its equipment is tested extensively prior to launch and meet the ‘first-time right’ metrics set by it and compliance with regulatory requirements.