IPO Analysis

Date Heading Details
29-Jun-2020   15:48 Hrs IST Bonlon Industries coming with an IPO to raise up to Rs 10.52 crore <P align=justify><STRONG>Bonlon Industries</STRONG> <UL><LI><DIV align=justify>Bonlon Industries is coming out with an initial public offering (IPO) of 37,56,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 28 per equity share. </DIV></LI><LI><DIV align=justify>The issue will open on June 30, 2020 and will close on July 03, 2020.</DIV></LI><LI><DIV align=justify>The shares will be listed on SME Platform of BSE.</DIV></LI><LI><DIV align=justify>The share is priced 2.80 times higher to its face value of Rs 10.</DIV></LI><LI><DIV align=justify>Book running lead manager to the issue is Sarthi Capital Advisors.</DIV></LI><LI><DIV align=justify>Compliance Officer for the issue is Naveen Kumar. </DIV></LI></UL><P align=justify><STRONG>Profile of the company</STRONG><P align=justify>The company was incorporated on January 21, 1997 as a private limited company under the provisions of Companies Act, 1956 with the Registrar of Companies, Jaipur in the name and style of Bonlon Steels Private Limited. Subsequently, the registered office of the company was shifted from Jaipur to New Delhi i.e. from one state to another w.e.f. December 01, 1998 with due approval of the Company Law Board, Northern Region Bench vide order dated October 29, 1998. Later on, the name of the company was changed from Bon Lon Steels Private Limited to Bonlon Industries Private Limited w.e.f. February 26, 2019. Further, the name of the company was again changed to Bonlon Industries Limited pursuant to its conversion into a public company vide shareholder's approval dated March 01, 2019 and fresh certificate of incorporation dated March 29, 2019 issued by Registrar of Companies, Delhi.<P align=justify>The company began its operations in the year 1997 with the trading of copper rods and copper bars which were manufactured by renowned market players like Hindustan Copper, Sterlite India and Hindalco Industries. Later on, in the year 2006 it began supervising the manufacturing activities of Colombo Copper, a company based in Colombo, Sri Lanka which was engaged in the business of manufacturing of copper bars. The manufactured copper made bars were imported by company in India and thereafter producing copper wires from the same on job work basis, they were then sold in the market by it. The company carried such activity for two years after which it started the manufacturing activity of copper bars from scrap in its partnership firm i.e. at first in Vaishno Metals and Allied Industries in Jammu and later on in B.C. Power Controls. With the evolution of time, it gained experience in the manufacturing, trading, and marketing of the products made from copper. Eventually in the year 2013, for the production of the copper rods, it started its own manufacturing unit at, RIICO Industrial Area, Bhiwadi, Alwar, Rajasthan.<P align=justify>In order to synergize the operations and attaining higher business efficiencies, three of company's group companies i.e. Smita Global (hereinafter referred as transferor company no. 1), Harshit Promoters (hereinafter referred as transferor company no. 2) and Harshit Infratech (hereinafter referred as transferor company no. 3), that were engaged in different segments of business, were amalgamated with the company in pursuance of Section 230-232 of the Companies Act, 2013 and the Order of the Hon'ble National Company Law Tribunal, Principal Bench, New Delhi dated June 13, 2018. In consequence to such amalgamation, the company is now operating its business in accordance to the new Memorandum of Association that contains the objects of the transferor companies as well. It is continuing its operations in all those the segments in which the aforesaid transferor companies were dealing and hence the business of the company is broadly categorized into the three segments i.e Metal, Hotel and Civil Construction. As of now, the company is operating only one hotel in the name and style of 'Hotel Bonlon Inn'. Inaugurated in the year 2010, the hotel is situated in Karol Bagh, which is near to the center of the city, having 24 rooms on four floors, i.e. 6 rooms at each of the floor. <P align=justify><STRONG>Proceed is being used for:</STRONG> <UL><LI><DIV align=justify>Meeting the working capital requirements of the company.</DIV></LI><LI><DIV align=justify>Meeting issue expenses.</DIV></LI></UL><P align=justify><STRONG>Industry Overview</STRONG><P align=justify>India's metals industry is categorized into two main divisions - the iron-based and non-iron-based. The iron-based segment includes the manufacturing of three different kinds of steel such as carbon steel, ferrochrome steel, and stainless steel. The non-iron-based category includes the production of copper, tin, brass, lead, zinc, aluminum, and manganese. The main operations of the of the basic metals industry in India are mining of ores, refining of the ore, casting, alloying, sheet, and rolling into foils. India holds a fair advantage in cost of production and conversion costs in steel and alumina. Its strategic location enables convenient exports to develop as well as the fast-developing Asian markets. India produces 95 minerals 4 fuel-related minerals, 10 metallic minerals, 23 non-metallic minerals, 3 atomic minerals and 55 minor minerals (including building and other minerals). Rise in infrastructure development and automotive production are driving growth in the sector. Power and cement industries are also aiding growth in the metals and mining sector. Demand for iron and steel is set to continue, given the strong growth expectations for the residential and commercial building industry. <P align=justify>The Indian tourism and hospitality industry have emerged as one of the key drivers of growth among the services sector in India. Tourism in India has significant potential considering the rich cultural and historical heritage, variety in ecology, terrains and places of natural beauty spread across the country. Tourism is also a potentially large employment generator besides being a significant source of foreign exchange for the country. In 2019, FEEs were $29.96 billion registering a growth of 4.8 percent year-on-year and reached $5.40 billion during January-February 2020. <P align=justify>Increased impetus to develop infrastructure in the country is attracting both domestic and international players. Private sector is emerging as a key player across various infrastructure segments, ranging from roads and communications to power and airports. In order to boost the construction of buildings in the country, the government has decided to come up with a single window clearance facility to accord speedy approval of construction projects. In the Union Budget 2020-21, the government has given a massive push to the infrastructure sector by allocating Rs 1,69,637 crore ($24.27 billion) for the transport infrastructure. As per Union budget 2020-21, Rs 72,216 crore ($10.33 billion) has been allocated to the Ministry of Railways. The government is also working on improving the country's energy infrastructure and investment opportunities worth Rs 21 lakh crore ($300 billion) will be available in the sector in the coming 10 years.<P align=justify><STRONG>Pros and strengths</STRONG><P align=justify><STRONG>Quality products and services:</STRONG> The company has always been dedicated towards the quality of the products and services offered by it and which has not only helped it to maintain long term relations with its existing customers but has also facilitated it to entrench with new customers. The company tries to make sure that whatever product or services it offers are matched with the standards in the industry.<P align=justify><STRONG>Strategic presence at the centre of the city:</STRONG> The presence of company's hotel Bonlon Inn in Karol Bagh which is near to the center of the city, give it an edge over competitors as it requires a significant time outlay to build and establish such a commercial project. Its hotel is situated at a walking distance from the Karol Bagh Metro Station and therefore, reaching out to the safest public transport is not an issue for its precious guests. Also, places like Connaught Place, India Gate, Chandani Chowk, New Delhi Railway Station, Indira Gandhi International Airport etc are not far away. <P align=justify><STRONG>Online Presence:</STRONG> The company's hotel Bonlon Inn has its online presence on all the major online platforms like Goibibo, OYO, Hotels.com, Yatra etc. With the growing internet penetration, it looks forward to leverage its position in the ever emerging online world. <P align=justify><STRONG>Risks and concerns</STRONG><P align=justify><STRONG>Civil construction segment business has not been operative as of now</STRONG>: In order to synergize the operations and attaining higher business efficiencies, three of company's group companies that were engaged in different segments of business, were amalgamated with the company. In consequence to the aforesaid scheme, the main objects of the transferor companies were also merged with the objects of the company and hence its Memorandum of Association was amended in this respect. The business of civil construction was initially in the objects of one of the transferor companies i.e. Harshit Promoters, Transferor Company no. 2. Post the amalgamation, the objects of the aforesaid transferor company was included in the objects of company. However, so far no project has been operative in such line of business. Though the company does wish to take a step forward in this segment and proceed with the business operations but there can be no assurance that such idea will be materialized. The company's inability to implement this strategy may hamper its growth plans in future.<P align=justify><STRONG>Face competition:</STRONG> The sectors in which the company operates are the competitive sectors in which there are several large competitors that operate in the respective industries, which may be developing new strategies and technologies. The development of new and superior products by a competitor could affect its ability to perform advantageously. There is a risk that existing competitors or new entrants to the market may develop superior or more cost effective products, which could have an adverse effect on its business and financial position. It may be unable to develop further products or keep pace with the improvements and developments in the market space, and may lose market share to its competitors.<P align=justify><STRONG>Majority of revenue comes from top 10 customers:</STRONG> The company's top 10 customers contributed 96.09%, 90.84%, 92.97% and 81.67% of its revenues for the nine months ended December 31, 2019 and for the financial year ended March 31, 2019, 2018 and 2017 respectively. Any decline in company's quality standards, growing competition and any change in the demand for its products by these customers may adversely affect its ability to retain them. The company cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability. However, the composition and revenue generated from these might change as it continues to add new customers in normal course of business. <P align=justify><STRONG>Outlook</STRONG><P align=justify>Incorporated in 1997, Delhi-based Bonlon Industries is engaged in manufacturing, trading, and marketing of copper rods and bars. They manufacture products for various industries including electrical, construction, transport, and automobile. With the amalgamation with three companies of the Bonlon group, the area of operations of company is extended in the manufacturing of metal, hotel business, and civil construction. The company has a strong management team with good industry experience. Its promoter and management team have demonstrated an ability to enhance its performance by growing business through different economic and industry cycles. On the concern side, as of now, the company own only one hotel i.e. Bonlon Inn and hence the entire revenue from the hotel segment of its business is generated from the same. Besides, the company has taken insurance which may not be adequate enough for covering the entire future unforeseen liabilities that might occur in the normal course of business. <P align=justify>The company is coming out with a maiden IPO of 37,56,000 equity shares of Rs 10 each at a fixed price of Rs 28 per equity share to mobilize Rs 10.52 crore. On the performance front, total revenue decreased by Rs 2,569.18 lakh and 10.57% from Rs 24,313.48 lakh in the fiscal year ended March 31, 2018 to Rs 21,744.30 lakh in the fiscal year ended March 31, 2019. The revenue has decreased due to overall sluggish conditions. Net Profit of the company has increased by Rs 254.53 lakh and 916.23% from profit of Rs. 27.78 lakh in the fiscal year ended March 31, 2018 to profit of Rs 282.32 lakh in the fiscal year ended March 31, 2019. The company seeks to create a work environment where employees are encouraged to take a creative and innovative approach to meeting its customers' needs. By committing to continuous improvement, it is able to offer its customers satisfactory solutions that differentiate it from its competitors. The company's driving force has been the maintenance of the quality of its products and services, as the same would enable it for long standing relationship with its customers. It will continue to strives its quality standards high.
23-Jun-2020   14:39 Hrs IST Ksolves India coming with an IPO to raise up to Rs 4.02 crore <P align=justify><STRONG>Ksolves India</STRONG><UL><LI><DIV align=justify>Ksolves India is coming out with an initial public offering (IPO) of 4,02,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 100 per equity share.</DIV></LI><LI><DIV align=justify>The issue opens on June 23, 2020 and will close on June 26, 2020.</DIV></LI><LI><DIV align=justify>The shares will be listed on SME Platform of NSE.</DIV></LI><LI><DIV align=justify>The share is priced 10 times higher to its face value of Rs 10.</DIV></LI><LI><DIV align=justify>Book running lead manager to the issue is Shreni Shares. </DIV></LI><LI><DIV align=justify>Compliance Officer for the issue is Dipanshu. </DIV></LI></UL><P align=justify><STRONG>Profile of the company</STRONG><P align=justify>The company was originally incorporated on July 17, 2014 as ‘Keyon Softwares Private Limited' vide under the provisions of the Companies Act, 2013 with the Registrar of Companies, Delhi. Further, the company has changed its name from ‘Keyon Softwares Private Limited' to ‘Ksolves India Private Limited' vide Special Resolution passed by the Shareholders at the Extra-Ordinary General Meeting held on September 27, 2014 and a fresh certificate of incorporation dated October 14, 2014 issued by the Registrar of Companies, Delhi. Further, the company was converted into Public Limited Company and consequently name of company was changed from ‘Ksolves India Private Limited' to ‘Ksolves India Limited' vide Special resolution passed by the Shareholders at the Extra-Ordinary General Meeting held on April 25, 2020 and a fresh certificate of incorporation dated April 28, 2020 issued by the Registrar of Companies, Delhi. <P align=justify>The company is an ISO certified software services and product company offering solutions that enables client organizations to rapidly develop powerful applications addressing their strategic business needs. The applications created by it enable organizations to drive digital transformation and competitive differentiation. This may include automation of routine business functions, making them faster, easier and more accurate and increasing the channels or devices through which these functions can be performed. The company is basically engaged in software development, enterprise solutions and consulting, providing a range of Information Technology (IT) solutions to companies across sectors such as Real Estate, E-commerce, Finance, Telecom and Healthcare etc. The company design, develop and maintain software systems and solutions, create new applications and enhance the functionality of its customer's existing software products. <P align=justify><STRONG>Proceed is being used for:</STRONG> <UL><LI><DIV align=justify>Meeting working capital requirement;</DIV></LI><LI><DIV align=justify>General corporate purpose; and</DIV></LI><LI><DIV align=justify>Meeting the issue expenses. </DIV></LI></UL><P align=justify><STRONG>Industry Overview</STRONG><P align=justify>The services sector's significance in the Indian economy has continued to increase, with the sector now accounting for around 55 percent of total size of the economy and GVA growth, two-thirds of total FDI inflows into India and about 38 per cent of total exports. The share of services sector now exceeds 50 percent of Gross State Value Added in 15 out of the 33 states and UTs, with this share more than 80 per cent in Delhi and Chandigarh. However, data on GVA growth, high-frequency indicators and sectoral trends suggest a moderation in services sector activity during 2019-20. <P align=justify>On the bright side, the very latest readings on most of these indicators suggest a recovery. Moreover, gross FDI equity inflows into services sector have registered a strong recovery and services exports have maintained their momentum during April-September 2019. Services exports have outperformed goods exports in the recent years, due to which India's share in world's commercial services exports has risen steadily over the past decade to reach 3.5 percent in 2018, twice the share in world's merchandise exports at 1.7 percent. India's education services imports have increased markedly in the recent years, up from about $2.3 billion in 2013-14 to $5.0 billion in 2018-19. <P align=justify>The Indian IT-BPM Industry has been the flag-bearer of India's exports for the past two decades, with industry size reaching about $177 billion in March 2019. The sector contributes significantly to the economy via employment growth and value addition. IT services constituted 51 percent of the IT-BPM sector in 2018-19, followed by Software &amp; Engineering Services (20.6 percent share) and BPM Services (19.7 percent share). Within the IT-BPM sector, IT services remained the dominant segment with about $91 billion in revenues in 2018-19. Out of the IT services, digital revenues grew (YoY) more than 30 per cent to reach $33 billion.<P align=justify><STRONG>Pros and strengths</STRONG><P align=justify><STRONG>Customer satisfaction and revenues from long standing customer relationships:</STRONG> The company has long-standing relationships with customers across the world. This is, in part, due to the high criticality of its product &amp; services and technical knowhow to many of its customer's business needs. It establishes long-term relationships with customers for multi-layered engagement with various departments and divisions of the customer's organizations. Its broad range of product and services offerings helps it to cross-sell to its existing customers as well as to acquire new customers. The company combines its comprehensive range of product and service offerings with industry-specific expertise to provide tailored solutions to its customers across business verticals, industries and geographies. Its commitment to customer satisfaction enables it to strengthen its relationships.<P align=justify><STRONG>Diversified revenue from multiple geographies</STRONG>: The company has diversified revenue from multiple geographical reach across the world and 100% of revenue are generated from exports sales from various countries. As an IT products &amp; service company, its presence in multiple geographies as service provider not only helps it in expanding its client base but also helps it by keeping itself in tune with the latest technological advancements world-wide. <P align=justify><STRONG>Focused on driving innovation:</STRONG> The company is focused on driving innovation and adopting solutions in line with rapidly evolving technological trends. Its inherent culture of innovation has enabled it to develop a track record of product innovation, expand the range of its offerings and improve the delivery of its products and services. It has a dedicated team of skilled individuals with technical background and domain expertise in each of its industry verticals with a focus on evolving technologies. These teams follow a structured innovation and solutions development process and work with delivery functions to identify the key concerns of its customers and generate solutions, ideas and concepts to address such concerns.<P align=justify><STRONG>Risks and concerns</STRONG><P align=justify><STRONG>Derive significant portion of revenues from top ten customers:</STRONG> The company's top ten customers contribute approximately 72% of its revenues for the financial year ended March 31, 2020. Any decline in quality standards, growing competition and any change in the demand for services by these customers may adversely affect ability to retain them. The company cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect revenues and profitability. However, the composition and revenue generated from these clients might change as it continue to add new clients in normal course of business. <P align=justify><STRONG>Highly competitive industry:</STRONG> The company's industry is highly fragmented and intensely competitive. Its competitors are numerous, ranging from small private firms to multi-billion dollar public companies. Contract awards are based primarily on quality of service, relevant experience, staffing capabilities, reputation, geographic presence, stability and price. In addition, the technical and professional aspects of its services generally do not require large upfront capital expenditures and provide limited barriers against new competitors. If company's competitors develop and implement methodologies that yield greater efficiency and productivity, they may be able to offer services similar to company's at lower prices without adversely affecting their profit margins. Even if its offerings address industry and client needs, its competitors may be more successful at selling their services. <P align=justify><STRONG>Increases in manpower cost could reduce cash flows and profit margins:</STRONG> Historically, manpower costs in the Indian IT services industry have been significantly lower than manpower costs in developed countries for comparable skilled technical personnel, which has been one of India's competitive strengths. However, manpower cost increases in India may prevent company from sustaining this competitive advantage and may negatively affect its profit margins. Increases in wages, including an increase in the cash component of company's compensation expenses, may reduce its cash flows and its profit margins and have a material adverse effect on business, financial conditions and results of operations.<P align=justify><STRONG>Outlook</STRONG><P align=justify>Incorporated in 2014, Ksolves India is a software services and product company. It is engaged in providing enterprise solutions, software development, consulting, and Information Technology solutions for clients. The company works for different sectors such as Healthcare, Telecom, E-commerce, Real Estate, and Finance. It provides digital solutions to client organizations to develop powerful applications, maintain software systems, and enhance the functionality of the software as per the business requirements. The company possesses multi-vertical industry expertise and target a broad spectrum of services in its business and product offerings. Its business model is order driven, and comprises of optimum utilization of existing resources, developing linkages with expertise of its development team and achieving consequent customer satisfaction. On the concern side, the company depends on executive officers and other key employees and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could harm business. The company has not taken any insurance which may expose it from potential losses to which it may be subject to risk and this may have a material effect on business and financial condition. <P align=justify>The company is coming out with a maiden IPO of 4,02,000 equity shares of Rs 10 each at a fixed price of Rs 100 per equity share to mobilize Rs 4.02 crore. On the performance front, during the year 2019-20 the total revenue of the company increased to Rs 814.51 lakh as against Rs 542.62 lakh in the year 2018-19, representing an increase of 50.10 % of the total revenue. This increase was mainly due to increase in sales of Softwares &amp; services. For the year 2019-20 the profit stood at Rs 67.19 lakh as against the profit of Rs 15.83 lakh for the year 2018-19, representing an increase of 324.45% to the previous year. This increase in profit after tax is happened due to increased turnover. The company planning to continue to expand the scope and range of services provided to its existing customers by continuing to build its expertise in major industries and extending its capabilities into new and emerging technologies. The company regularly analyzes its existing policies to be carried out for its technical and designing process which enables it to identify the areas of bottlenecks and correct the same. This helps company in improving efficiency and putting resources to optimal use.
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