Gretex Corporate Services
Gretex Corporate Services has come out with an initial public offering (IPO) of 301600 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 170 per equity share.
The issue will open for subscription on July 27, 2021 and will close on July 30, 2021.
The shares will be listed on SME Platform of BSE.
The share is priced 17 times higher to its face value of Rs 10.
Book running lead manager to the issue is Aryaman Financial Services.
Compliance Officer for the issue is Janil Jain.
Profile of the company
The company is offering diversified financial and consultancy services in the areas of Capital Markets, Corporate Finance, Corporate Restructuring, Debt Syndication, Compliance Advisory. It started its operations in the year 2008, in the initial years the company was engaged in the business of providing project finance services to companies through banks and financial institutions. In the year 2011 the company started providing services of capital market such as Direct listing of companies on nationwide stock exchanges. This new venture gave management an interest to explore more opportunities in capital market.
Over the time the company has developed an expertise in the area of identifying Small and Medium Enterprises, determine its funding requirement and carter company’s funds needs by taking the company public by the mean of an IPO on the SME Exchange in India. It primarily cater the needs of Small and Medium Enterprises, but its services are not limited to SMEs, over the period of years its company has been able to successfully create its name in Primary markets for successfully executing 21 SME IPOs and 1 BSE Startups Segment under SME Platform of BSE.
The company’s office facilities are well equipped with streamlined process to ensure quality of services and timely fulfillment of its assignment. It provides the best-in-class solutions to its esteemed customers spread over all the sectors. It offers best to all its customers which makes it possible by understanding its client’s needs and strive to deliver beyond their expectations. It is always committed to fulfil the requirements of its clientele according to their needs. In order to meet these requirements, it has adapted to best measure in the industry. It is providing services that ensure customer satisfaction. It has long-term and stable relationships developed over the years with its key suppliers and its key customers through the quality of services it provide.
Proceed is being used for:
Payment of security deposit for renting of office space.
Working capital requirements.
General corporate purposes.
Industry overview
India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The banking regulator has allowed new entities such as payment banks to be created recently, thereby adding to the type of entities operating in the sector. However, financial sector in India is predominantly a banking sector with commercial banks accounting for more than 64% of the total assets held by the financial system. The Government of India has introduced several reforms to liberalise, regulate and enhance this industry. The Government and Reserve Bank of India (RBI) have taken various measures to facilitate easy access to finance for Micro, Small and Medium Enterprises (MSMEs). These measures include launching Credit Guarantee Fund Scheme for MSMEs, issuing guideline to banks regarding collateral requirements and setting up a Micro Units Development and Refinance Agency (MUDRA). With a combined push by Government and private sector, India is undoubtedly one of the world's most vibrant capital markets.
As of January 2021, AUM managed by the mutual funds industry stood at Rs. 32.29 lakh crore ($438.27 billion). Inflow in India's mutual fund schemes via the Systematic Investment Plan (SIP) route reached Rs 82,453 crore ($11.70 billion) in 2019. Equity mutual funds registered a net inflow of Rs. 8.04 trillion ($114.06 billion) by end of December 2019. Another crucial component of India’s financial industry is the insurance industry. Insurance industry has been expanding at a fast pace. The government has approved 100% FDI for insurance intermediaries and increased FDI limit in the insurance sector to 74% from 49% under the Union Budget 2021-22. The Indian equity market is expanding in terms of listed companies and market capitalization, widening the playing field for brokerage firms. Sophisticated products segment is growing rapidly, reflected in the steep rise in growth of derivatives trading.
Pros and strengths
Rich management experience: The company’s Promoters have collective experience in financial services industry of approximately 3 decades. It is managed by a team of experienced and professional personnel, exclusively focused on different aspects of the industry. The team comprises of personnel having operational experience and they are capable of creating and facing the challenges of growth within the company. Its management team’s experience and their understanding of its industry will enable it to continue to take advantage of both current and future market opportunities. Its Management’s experience and knowledge enables it in addressing and mitigating various risks inherent in its business, including competition, the global economic crisis related effects and fluctuations in the prices.
Diversified portfolio of services offered: The company provide various diversified financial and consultancy services in the areas of Capital Markets, Corporate Finance, Corporate Restructuring, Debt Syndication, Compliance Advisory. For past six years it has been carrying out the business of management of fund-raising activities, investment advisory, underwriting of issues, manager, consultant or adviser to any issue including corporate advisory services and as consultant or adviser to the issuer and other services like De-Listing, Open Offer, Exit Offer, Right Issue, Valuation, Private Equity, Venture Capital, Bank Finance and Issue of Debt Securities, Mergers & Acquisitions, Takeover, Demergers, Statutory Compliances and secretarial support services.
Long-term relationships: Long term client relationships provide the foundation for company’s business. Its client list includes SME companies from various sector such as Business Process Management Services, Pharma, Garment Manufacturing, Plastic sheets and granules Manufacturing, Industrial Machinery, Hotels, Containers & Packaging, IT Consulting & Software, Railway Infrastructure, Protective gear Manufacturing. Apart from clients it has been able to create a long-term relationship with intermediaries involved in the due process of IPOs such as Printers, Registrar and share transfer agents, legal firms, Printers and advertisers, stock brokers, depository participants, stock exchanges, wealth managers, investment advisors, merchant bankers, NBFCs, banks etc.
Risks and concerns
Depends on top 5 customers: The company’s top five and top ten customers contribute to a substantial portion of its revenues for the year ended March 31, 2021. The contribution of its top 5 and top 10 customers to its total revenue was 69.42% and 91.97% respectively for FY 2020-21. Any decline in its quality standards, growing competition and any change in the demand for its service by these customers may adversely affect its ability to retain them. It has maintained good and long-term relationships with its customers. However, there can be no assurance that it will continue to have such long-term relationship with them, also any delay or default in payment by these customers may adversely affect its business, financial condition and results of operations. It 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.
Dependent on number of key managerial personnel: The company’s performance depends largely on the efforts, expertise and abilities of its Key Managerial Personnel, senior management, and its operational personnel who possess significant experience in the industry in which it operate. The inputs and experience of its KMP and senior management, in particular, and other key personnel are valuable for the development of its business, operations and the strategic directions taken by the company. It cannot assure you that these individuals or any other member of its senior management team will not leave it or join a competitor or that it will be able to retain such personnel or find adequate replacements in a timely manner, or at all. It may require a long period of time to hire and train replacement personnel when qualified personnel terminate their employment with the company.
Face intense competition: The company compete on the basis of a number of factors, including execution, depth of product and service offerings, innovation, reputation and price. Its competitors may have advantages over it, including, but not limited to substantially greater financial resources; Longer operating history than in certain of its businesses; Greater brand recognition among consumers; Larger customer bases in and outside India; or More diversified operations which allow profits from certain operations to support others with lower profitability. These competitive pressures may affect its business, and its growth will largely depend on its ability to respond in an effective and timely manner to these competitive pressures.
Outlook
Incorporated in 2008, Gretex Corporate Services is a financial and consultancy service provider in India. It is a SEBI registered merchant banker that key business activities include fund raising management activities, investment advisory, underwriting of issues, corporate advisory services, and more. Initially, the company has started its business as a project finance service provider through banks and financial institutions but over the period, it has expanded its product portfolio and presently, offers services in different areas i.e. capital markets, corporate finance, debt syndication, corporate restructuring, and compliance advisory. The company has a team of able and experienced professionals with ability to actively manage funding operations. This coupled with proven Directors track record allows the Company to rapidly grow its client portfolio and business. On the concern side, the company does not have any long-term contracts with its customers and it provide services on basis of regular work order with its customers which could adversely affect the business of the company. The company has obtained insurance coverage in respect of certain risks. There can be no assurance that its insurance policies will be adequate to cover the losses in respect of which the insurance has been availed.
The company is coming out with an IPO of 301600 equity shares of Rs 10 each at a fixed price of Rs 170 per equity share to mobilize Rs 5.12 crore. On the performance front, the company’s total revenue increased by Rs 179.32 lakh or 123.41% to Rs 324.63 lakh for the financial year 2020-21 from Rs 145.31 lakh for the financial year 2019-20. The company’s profit after tax increased by 161.98% to Rs 71.41 Lakhs for the financial year 2020-21 from Rs (115.21) lakh for the financial year 2019-20, reflecting a net increase of Rs 186.62 lakh. The company intends to maintain its position in the financial market in terms of Issue Management operations by acquiring new clients who will also strengthen its advisory business and increase the number of advisory transactions. It intends to explore and evaluate strategic acquisition and technology alliance opportunities to gain access to new clients and sectors, add new technology capabilities to its offerings that drive synergies with its existing business ventures.
