SecMark Consultancy coming with an IPO to raise up to Rs 15.03 crore

SecMark Consultancy

• SecMark Consultancy is coming out with an initial public offering (IPO) of 11,14,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 135 per equity share.
• The issue will open on September 18, 2020 and will close on September 23, 2020.
• The shares will be listed on SME Platform of BSE.
• The share is priced 13.5 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Indorient Financial Services.
• Compliance Officer for the issue is Sunil Kumar Bang.

Profile of the company

The company was originally incorporated as a private limited company under the Companies Act, 1956 in the name and style of ‘SecMark Consultancy Private Limited’ dated August 03, 2011 issued by the Registrar of Companies, Mumbai, Maharashtra. Subsequently, the company was converted into public limited company pursuant to a shareholders’ resolution passed at an Extra-Ordinary General Meeting held on January 28, 2020, and name of the company was changed to ‘SecMark Consultancy Limited’ and fresh Certificate of Incorporation dated March 02, 2020, was issued by Registrar of Companies, Mumbai, Maharashtra.

The company offers services in the areas of compliance, operations, risk management, outsourcing, software development, and legal matters to financial market participants and others. Its clients primarily include stock and commodity brokers, depository participants, stock exchanges, wealth managers, research analysts, insurance companies, insurance brokers, corporate agents, portfolio managers, investment advisors, NBFCs, banks etc. It offered services to about 125 clients in the Financial Year 2015 which has increased to about 200 in the Financial Year 2019-20. Its Registered Office is situated at Mumbai, and its team executes assignments all over India. It has local representatives at various locations like New Delhi, Ahmedabad, Indore, Jaipur, Bangalore, Chandigarh, and Raipur etc.

Proceed is being used for:

• Financing development and/or procurement of technology, applications, software, infrastructure etc. including strategic acquisitions of Firms/Companies in the technology space to complement and enhance company’s value proposition.
• Expanding and retaining its leadership team that will lead the company into the next phase of growth.
• Acquiring certain fixed assets.
• Repayment of bank facilities.
• General corporate expenses.

Industry overview

The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment. India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction. Services sector comprises about 55% of the total size of the economy and Gross Value Added (GVA) growth, increasing significance of services sector in the Indian economy. The services sector is the key driver of India’s economic growth. The sector has contributed 54.17% of India’s GVA at current price in 2018-19. India’s services sector GVA grew at a CAGR of 6.96% to $1,356.49 billion in FY19 from $846.84 billion in FY12. Net export estimate from April to November 2019 in services is $142.02 billion and import is $89.24 billion.

Information Technology (IT) & Information Technology Enabled Services (ITES) industry is well diversified across verticals such as Banking, Financial Services and Insurance (BFSI), telecom and retail. India is a preferred destination for IT & ITES in the world and continues to be a leader in the global sourcing industry with 55% market share. India’s IT sector market is projected to reach $100 billion by 2025. In FY19 Exports in IT & ITES registered a growth of 17% to reach Rs 1.09 lakh crore ($15.63 billion). IT services refer to the application of business and technical expertise to enable organizations in the creation, management and optimization of or access to information and business processes. The IT services market can be segmented by the type of skills that are employed to deliver the service (design, build, run).

The Indian BPM industry has grown leaps and bounds in the last decade. The value proposition of the industry has moved to value beyond cost and today the Industry is providing end to end, Business transformation and platform based solutions. The industry has adopted a truly global delivery model and has grown in strength to strength not only in Voice processes but also in Analytics based solution, Supply chain management and proving business transformation services. The BPM Industry has set a vision of delivering $50 billion of revenue by 2020. Interestingly, the total IT exports from India in 2009 was $50 billion and within a span of one decade, the BPM Industry has matured to assume a prominent role in the total growth of IT Industry in the country.

Pros and strengths

Qualified and experienced team: The company is managed by professionals having a varied experience in financial services. The team of company exhibits a synergy of both, qualified professionals (Chartered Accountants, Cost and Management Accountants, Company Secretaries, Advocates, CISAs, DISAs, Engineers, Technology Experts, Management Professionals etc.) as well as experienced personnel having diversified experience in the fields of Software Development, Operations, Outsourcing, Corporate Consultancy and Compliance, and the like. Since its Management has been actively involved in the Financial Services Industry and has gained requisite domain knowledge, experience and industry networks, going forward they would be able to take benefits of opportunities in the Financial Services Industry thereby improving its operational performance and brand value.

Long-term relationships: Long term client relationships provide the foundation for company’s business. Its client list includes stock brokers, depository participants, stock exchanges, wealth managers, research analysts, insurance companies, insurance brokers, corporate agents, portfolio managers, investment advisors, merchant bankers, NBFCs, banks etc. Its track record of delivering solutions to complex business problems backed by demonstrable industry and technology expertise has helped it forge strong relationships with its clients.

Risks and concerns

Dependent upon increasingly cohesive, interdependent IT systems: The company is a technology-driven financial infrastructure and services provider to brokerage houses, depository participants, stock exchanges, wealth managers, research analysts, insurance companies, insurance brokers, corporate agents, portfolio managers, merchant bankers, investment advisors, banks and NBFCs. Its business is dependent upon increasingly cohesive and interdependent information technology systems. It offers a diverse portfolio of technology-based services and has developed and implemented several technology platforms to service its clients efficiently. The size and complexity of its computer systems may make them potentially vulnerable to breakdowns. Many of its services are provided through the internet, which increases its exposure to potential cyber security attacks including viruses, ransom ware and spam attacks. 

Substantial portion of revenues depends on few customers: The company is dependent on a limited number of clients for a significant portion of revenues. The company negotiates pricing terms with these clients on a periodic basis and its contracts permit them to terminate their arrangements with it by providing reasonable written notice, after which they may engage the services of its competitors. Certain of its contracts with its clients include provisions pursuant to which it is liable to such client for losses, including any indirect or consequential losses, arising in connection with error or omission, fraud, negligence or default caused by it, any of its employees actions. The loss of one or more of company’s significant clients or a reduction in the amount of business or fees it obtains from them or an adverse change in the determination of the fees that it receive from them could have an adverse effect on its business and results of operations.

Outlook

Incorporated in 2011, SecMark Consultancy is a Mumbai-based financial service company. It is a one-stop-shop that offers multiple services in the area of setting up a business to regulatory registration, software development, compliance, outsourcing, risk management, taxation, and legal matters. The company is managed by professionals having a varied experience in financial services. The company’s track record of delivering solutions to complex business problems backed by demonstrable industry and technology expertise has helped it forge strong relationships with its clients. On the concern side, the markets for company’s services continue to evolve and are competitive. It competes with a number of entities that provide similar services in each of the business lines in which it operates. The company requires a number of approvals, licenses, registrations and permits in ordinary course of its business. Additionally, it may need to apply for renewal of approvals which expire, from time to time, as and when required in the ordinary course.

The company is coming out with a maiden IPO of 11,14,000 equity shares of Rs 10 each at a fixed price of Rs 135 per equity share to mobilize Rs 15.03 crore. On the performance front, the company’s total revenue increased by 47.37% to Rs 574.73 lakh for the Financial Year 2019-20 from Rs 389.99 lakh for the Financial Year 2018-19. Its profit after tax increased by 19.93% to Rs 116.31 lakh for the Financial Year 2019-20 from Rs 96.98 lakh for the Financial Year 2018-19. The company intends to further increase the brand recognition through initiatives, like participation in industry events, public relations and investor relations efforts. The same would enhance the visibility of its brand name and enhance its position and image in the industry. It also intends to invest adequate time and resources for training its employees, which would foster mutual trust, improve the quality of its customer service and place further emphasis on its continued retention.