IPO Analysis

Date Heading Details
28-Mar-2020   13:13 Hrs IST Nirmitee Robotics India coming with an IPO to raise up to Rs 3.24 crore <p align="justify"><strong>Nirmitee Robotics India</strong></p><div align="justify"><ul><li><div>Nirmitee Robotics India is coming out with an initial public offering (IPO) of 1,75,200 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 185 per equity share.</div></li><li><div>The issue will open on March 31, 2020 and will close on April 9, 2020.</div></li><li><div>The shares will be listed on SME Platform of BSE.</div></li><li><div>The share is priced 18.50 times higher to its face value of Rs 10.</div></li><li><div>Book running lead manager to the issue is Aryaman Financial Services.</div></li><li><div>Compliance Officer for the issue is Apurv Hirde.</div></li></ul></div><p align="justify"><strong>Profile of the company</strong></p><p align="justify">The Company was originally incorporated as ‘Nirmitee Robotics India Private Limited' on August 12, 2016 under the Companies Act, 2013 with the Registrar of Companies, Mumbai. Subsequently, the status of the Company was changed to public limited company and the name of the Company was changed to ‘Nirmitee Robotics India Limited' vide Special Resolution dated February 19, 2020. A fresh certificate of incorporation consequent to conversion was issued to the Company by the Registrar of Companies, Mumbai on March 02, 2020.</p><p align="justify">Nirmitee Robotics India is a tech based company making robots using robotic technology, and engaged in providing HVAC Duct Cleaning and Ozone sterilization services with these robots. It has customized robots that are controlled by machines to scrub, polish, scrap, remove dust, bacteria, and debris and to sanitize the duct for more months. The company has patented duct cleaning robots to do cleaning, inspection, and post-cleaning operations. These robots have an advanced controller mechanism along with a high-resolution camera. It serves a wide range of industries such as convention centers, trains, hospitals, offices, and builds house sensitive equipment such as data centers. It is an ISO certified company to implement a quality management system and work across different regions.</p><p align="justify"><strong>Proceed is being used for: </strong></p><div align="justify"><ul><li><div>Redemption of preference shares;</div></li><li><div>Acquisition of registered office, R&amp;D facility &amp; assembling unit on a long term sustainable basis; and</div></li><li><div>General corporate purpose.</div></li></ul></div><p align="justify"><strong>Industry Overview</strong></p><p align="justify">HVAC systems are becoming one of the key building blocks in modern infrastructure. These systems are found in almost all upcoming commercial as well as residential buildings. Rise in infrastructure, rapid urbanization and growth in commercial properties are some of the key factors fuelling the market for HVAC systems in India. With healthy growth anticipated in the real estate sector, the country is expected to witness strong infrastructure development, which would boost the market for HVAC systems over the next five years. The HVAC market in India is forecast to reach $3.97 billion by 2019. Growth in retail, hospitality and commercial sectors is significantly boosting the demand for such systems in the country, as these sectors involve large-scale application of HVAC systems in organized retail outlets, shopping complexes, hotels, etc. Moreover, with anticipated growth in FDI (Foreign Direct Investment), several international players are expected to enter and start operations in the Indian retail market. Driven by strong FDI inflow from multinational food processing companies, the retail market in India is projected to reach $726.62 billion by 2019, which is expected to further fuel the country's HVAC market. The room air conditioning segment captured majority revenue share in India HVAC market in 2013, and is expected to retain its dominance by 2019. The global HVAC systems market size was valued at $118.7 billion in 2017 and is projected to expand at a CAGR of 5.7% from 2018 to 2025. Increasing urbanization and emergence of energy efficient heating and ventilation systems is the driving force for the growth of the market. Furthermore, governments across the globe promote the use of the energy efficient Heating, Ventilation, and Air Conditioning (HVAC) units by offering incentives and a rebate program is anticipated to bolster the growth.</p><p align="justify"><strong>Pros and strengths</strong></p><div align="justify"><b>Qualified management team: </b>The promoters of the company have a significant industry experience and have been instrumental in consistent growth of the company. They are assisted by well qualified and experienced team, who has helped in providing the quality service to clients and having long term relations with the clients. The experience together with consistent and successful track record of quality assured service and client satisfaction provides the company a competitive edge.<br><br><b>Technology: </b>The company has a robust and comprehensive on-site and back office processes for operational excellence. The company also has an online helpdesk system allowing the public for a free consultation or even book the service by describing the air ducting problems and issues, if any.<br><br><b>Strong customer service: </b>The company specializes in providing on-site services in the form of consultative Needs Analysis, inspection of the facility and HVAC Air Duct cleaning services. Its team consists of mechanical engineers, electrical engineers and project engineers for smooth execution purposes. The team is highly competent, qualified and possess required technical expertise to serve its customers rightly.<strong><br></strong></div><div align="justify"><strong><br></strong></div><div align="justify"><strong>Risks and concerns</strong></div><div align="justify"><br></div><div align="justify"><b>Highly competitive:</b> HVAC Duct cleaning business is growing rapidly and hence it is competitive on account of both; domestically located small players and international large players. Players in this industry generally compete with each other on key attributes such as technical competence, quality of solutions, strong clientele, pricing and after sales service. Growing competition may result in a decline in its market share and may affect its margins which may adversely affect business operations and financial condition.</div><div align="justify"><br><b>No long term contracts:</b> Company's business is dependent on ability to provide timely executed cleaning services within set quality parameters and its continuing relationships with customers. The company does not have any long-term contract with most of the customers. Any dissatisfaction in the services, or any breach in the contract or disassociation of major customers can adversely affect the business of company. The loss of or interruption of work by, a significant customer or a number of significant customers or the inability to procure new orders on a regular basis or at all may have an adverse effect on its revenues, cash flows and operations.<br><br><b>Unable to maintain strong net profit margins:</b> Its net profit margins for 6 month period ended September 30, 2019, FY2019, FY2018, FY2017 were 2.65%, 10.21%, 3.08% and 9.01% respectively. Its net profit margins are low in some periods due to the nature of business. Its business is a service business operating in niche field of Duct Cleaning specially AC Duct cleaning by using innovatively designed robotic machines. This is a unique concept developed by the company however it being a new concept the awareness amongst its target customers is relatively low and hence the company is unable to charge heavy margins on the same currently. Due to this reasons it may continue to operate on low profitability margins in the coming years until the company is able to develop substantial market size as well as establish its products.<strong><br></strong></div><div align="justify"><strong><br></strong></div><div align="justify"><strong>Outlook</strong></div><div align="justify"><br></div><div align="justify">Nirmitee Robotics India is a tech-based company making robots using robotic technology and is also engaged in providing HVAC (Heating, Ventilation and Air Conditioning) Duct Cleaning and Ozone sterilization services with these robots. The Company makes custom- made robots- operated by machines that clean the inside of HVAC Air Ducts - by scrubbing, polishing, sucking, scraping and removal of the accumulated contaminants like dust, debris, bacteria, mold and even dead pests and rodents and provides the Ozone treatment to the ducts from the inside and thus sanitizes it for many more months to come. Bad Indoor Air Quality (IAQ) affects the health of the employees and other visitors and the majority of one's time is spent breathing indoor air. It offers service to offices, convention centres, hospitals, train and specializes in Buildings that house Sensitive Equipment like Data Centers. On the concern side, a solution designed for a particular duct for any customer cannot be used in other ducts of the same customer or any other customers. This nature of business requires the company to design specifically/ accordingly for its orders. This may possess operational risk to its business, as completion of any particular order is a lengthy process and requires substantial amount of working capital and human efforts. Its inability to manage them efficiently may possess serious risk to business.<br><br>The company is coming out with a maiden IPO of 1,75,200 equity shares of Rs 10 each at a fixed price of Rs 185 per equity share to mobilize Rs 3.24 crore. On the performance front, its revenue from operations in the last 3 fiscals starting from FY16-17 to FY18-19 was Rs 5.88 lakh, Rs 70.10 laks and Rs 203.11 laks respectively. While, it's Net Profit after tax in the last 3 years was Rs 0.53 lakh in FY2016-17, Rs 2.16 lakh in FY2017-18 and Rs 20.83 lakh in FY2018-19. For the six months period ended September 30, 2019, its revenue was Rs 99.38 lakh and the Net Profit after tax was Rs 2.63 lakh. Its revenue from operations has grown at a CAGR of 487.73% from Rs 5.88 lakh in 2017 to Rs 203.11 lakh in 2019. <br><br>Bad Indoor Air Quality (IAQ) affects the health of the employees, visitors and public at large and should never be ignored. Indoor pollution sources release gases or particles into the air and inadequate ventilation can increase indoor pollutant levels which can lead to immediate and long term health effects. The company intends to create awareness among the public as it is a matter of serious concern. The company intends to increase its presence in hospitals, railways, corporate parks, and commercial buildings, as these are the most operated places all round the year leading to be the most contaminated air ducts situation.f<br></div>
25-Mar-2020   16:01 Hrs IST DJ Mediaprint & Logistics coming with an IPO to raise up to Rs 2.40 crore <p align="justify"><strong>DJ Mediaprint &amp; Logistics</strong></p><div align="justify"><ul><li><div>DJ Mediaprint &amp; Logistics is coming out with an initial public offering (IPO) of 12,00,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 20 per equity share.</div></li><li><div>The issue will open on March 26, 2020 and will close on March 31, 2020.</div></li><li><div>The shares will be listed on SME Platform of BSE.</div></li><li><div>The share is priced 2.00 times higher to its face value of Rs 10.</div></li><li><div>Book running lead manager to the issue is Finshore Management Services.</div></li><li><div>Compliance Officer for the issue is Khushboo Mahesh Lalji.</div></li></ul></div><p align="justify"><strong>Profile of the company</strong></p><p align="justify">The Company was originally incorporated as 'DJ Logistic Solutions Private Limited' on February 24, 2009 under the provisions of the Companies Act, 1956, issued by the Registrar of Companies, Mumbai, Maharashtra. Subsequently name of the company has been changed to 'DJ Mediaprint &amp; Logistics Private Limited' vide a Certificate of Incorporation pursuant to change of name dated December 08, 2017. Subsequently the company was converted into Public Limited Company and the name of the Company was changed to 'DJ Mediaprint &amp; Logistics Limited' vide a fresh Certificate of Incorporation consequent upon conversion from Private Company to Public Company dated December 19, 2017, issued by the Registrar of Companies, Mumbai.</p><p align="justify">DJ Mediaprint &amp; Logistics is engaged in integrated printing, logistics and courier solutions in India and some other countries. The company offers bulk scanning, newspaper print advertising services, manpower supply, records management, speed post, bulk mailing, and other services. The services of the company can be divided into 14 categories which include printing solutions, variable data printing, continuous stationery printing, security printing, logistics, bulk mailing, speed post, international courier services, moving services, storage and record management services, bulk scanning, bulk SMS and e-mail, newspaper print advertising service and manpower supply.</p><p align="justify"><strong>Proceed is being used for: </strong></p><div align="justify"><ul><li><div>Meeting the working capital requirements of the company;</div></li><li><div>Meeting the issue expenses; and</div></li><li><div>General corporate purposes.</div></li></ul></div><p align="justify"><strong>Industry Overview</strong></p><p align="justify">India's Paper and Print Industries show large potential. Demand for paper is growing, also due to an increase of demand in packaged products. Resources for the paper market are limited, but domestic production is increasing. The paper industry of India is providing employment to 400,000 people directly and 1.5 million indirectly. Paper consumption in India is approximately 15 million tonnes per annum (TPA) but is expected to reach 23.5 TPA by 2025. Some of the paper mills are existing since several decades, which make up-gradation and investments into newer machinery necessary. This opens up opportunities for manufacturing companies in the sector.</p><p align="justify">The print market in India is growing as well, mainly because of growing demand for high-qualitative products. The print machinery production registered a year-on-year growth of 20% in the last few years. The two sectors projected to grow the most are packaging and published printing.</p><p align="justify"><strong>Pros and strengths</strong></p><p align="justify"><strong>Organizational stability along with management expertise:</strong> The company has an established track record of 11 years indicates the company's ability to weather economic and business cycles and competent promoters have over 2 decades of relevant experience. This indicates its ability to maintain business viability and steer the business though operational hurdles.</p><div align="justify"><b>Smooth flow of operations:</b> Established relationship with customers and suppliers ensure stability in demand and an uninterrupted supply of raw materials. It has maintained long-standing relationship with its major customers. It is successful in building a strong client base for its business. Its 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. Its existing relationship with its clients represents a competitive advantage in gaining new clients and increasing its business.<br><br><b>Quality and ISO Certifications: </b>Its ISO certificates and CRISIL rating shows its good quality of services and good financial performance and strength.<br></div><div align="justify"><strong><br></strong></div><div align="justify"><strong>Risks and concerns</strong></div><div align="justify"><br></div><div align="justify"><b>Dependence on third party logistic providers: </b>The company relies on third party logistic providers and consequently, any disruption in its transportation arrangements or increases in transportation costs may adversely affect its business, results of operations and financial condition. There are a limited number of such logistic providers and in the absence of a formal arrangement, it is exposed to fluctuations in transportation costs. Also, if the terms offered to such logistic providers by its competitors are more favorable than those offered by it, they may decline to provide their services and terminate their arrangements with the company. It may also be affected by transport strikes, which may affect its delivery schedules. <br></div><div align="justify"><br><b>Highly competitive: </b>The company operates in the highly competitive and fragmented printing and logistics services industries. The entry barriers in the business are low and numerous players operate in the industry. The company faces tough competition from a large number of unorganized and a few organized players. The margins of the company may be constrained in the future due to volatility in the price of raw materials and consumables and intense competition from new as well as established players. Its future success depends on its ability to compete effectively, including by distinguishing its products, content or services from its competitors, by expanding its brands and titles, by providing higher quality content, expanding its distribution, sales and marketing forces, or by expanding its portfolio of digital products and educational services.<br><br><b>Dependence on technology and infrastructure: </b>The company's printing process may suffer a huge loss in form of wastage of its printing materials like paper, ink, manpower hours, due to interruption of power supply or machinery break down. Although there have not been instances in the past where interruptions or problems with its technology and infrastructure have caused performance issues which have material impact, it may in future experience disruptions, data loss, outages and other performance problems with its technology infrastructure due to a variety of factors, including infrastructure changes, introductions of new functionality, human or software errors, capacity constraints, denial of service, machinery break down, attacks or other security-related incidents. In some instances, it may not be able to identify the cause or causes of these performance problems within an acceptable period of time. It may become increasingly difficult to maintain and improve its performance, especially during peak usage times. <strong><br></strong></div><div align="justify"><strong><br></strong></div><div align="justify"><strong>Outlook</strong></div><div align="justify"><br></div><div align="justify">DJ Mediaprint &amp; Logistics is engaged in integrated printing, logistics and courier solutions in India and some other countries. The company offers bulk scanning, newspaper print advertising services, manpower supply, records management, speed post, bulk mailing, and other services. The company's existing supplier relationship protects the business with terms of supply and pricing of the products, the quality of the products offered etc. The company being a small and medium size organization, rely on personal relationships with its suppliers. Further it also leverages the past experience of its management in maintaining effective supplier relationship. On the concern side, the company had negative cash flow in recent fiscals. Sustained negative cash flow could adversely impact its business, financial condition and results of operations. The company has reported negative cash flow in certain financial years and which could affect its business and growth.<br><br>The company is coming out with a maiden IPO of 12,00,000 equity shares of Rs 10 each at a fixed price of Rs 20 per equity share to mobilize Rs 2.40 crore. On the performance front, during the FY 2018-19 the revenue from operation and other income of the company increased to Rs 2067.31 lakh as against Rs 1733.66 lakh in the FY 2017-18, representing an increase of 19.25% of the revenue from operation. This increase was mainly due to increase in volume from operations. The restated Profit after Tax for FY 2018-19 has increased to Rs 92.38 lakh as against Rs 64.79 lakh in the FY 2017-18. The increase in profit before tax was 42.58% due to increase in sales volumes thereby absorbing its fixed cost.<br><br>The company intends to improve operating efficiencies to achieve cost reductions to have a competitive edge over the peers. It will be addressing the increase in operational output through continuous process improvements, quality check and technology development. Its employees are regularly motivated to increase efficiency with error free exercise. Further, this can be done through domestic presence and economies of scale. The company's has strong in-house management to control the entire process. It controls costs by eliminating unnecessary intermediaries for procuring materials in cost efficient manner by optimizing logistics and maximizing labor efficiency.<br></div>
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