Dhyaani Tile and Marblez coming with an IPO to raise upto Rs 2.45 crore

Dhyaani Tile and Marblez

• Dhyaani Tile and Marblez is coming out with an initial public offering (IPO) of 4,80,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 51 per equity share.
• The issue will open on March 30, 2022 and will close on April 4, 2022.
• The shares will be listed on SME Platform of BSE.
• The share is priced 5.10 times higher to its face value of Rs 10.
• Book running lead manager to the issue is GYR Capital Advisors.
• Compliance Officer for the issue is Foram Ajmeri.

Profile of the company

Dhyaani Tile and Marblez is promoted by Chintan Nayan Bhai Rajyaguru. He associated with the Company in 2020 and at present look after the overall management, day to day affairs and is the guiding force behind the strategic decisions of the company. His industry knowledge and understanding of the current market situation enables the company to improve its geographic horizon and market presence. The company shall be able to create a market position by adhering to the vision of its Promoter and senior management and their experience.

The company is engaged in the business of trading of vitrified tiles used primarily for flooring solutions. It commenced this business in year 2019, upon takeover of the business from the earlier promoters. Earlier to this the company was engaged in the business of trading of agro commodities.

The company’s business operations are broadly divided into two product categories: (i) Double Charge Vitrified Tiles: Double charge vitrified tiles are tiles that are fed through a press which prints the pattern with a double layer of pigment, 3 to 4 mm thicker than other types of tiles. This process does not permit complex patterns but results in a long-wearing tile surface, suitable for heavy traffic commercial projects. (ii) Glazed Vitrified Tiles: Glazed vitrified tiles are flat slabs manufactured from ceramic materials such as clay, feldspar and quartz and other additives and fired at high temperatures to ensure high strength and low water absorption. These tiles are coated with glaze materials prior to the firing process.

Proceed is being used for:

• Funding the working capital requirements of the company.
  
• General Corporate Purposes.

Industry Overview

In CY19, India maintained its position as the second largest tile producer with an increase in volumes from 1,145 million sqm to 1,266 million sqm (+10.6%). The increase was not so much driven by domestic consumption, which grew by just 4% to 780 million sqm, as by a fresh surge in exports. The 20% growth in exports recorded in CY18 (274 million sqm) was followed by a further 31.4% increase in CY19 (360 million sqm), making India the world’s third largest exporting country after China and Spain. It was a mixed year for the Indian tile industry with a see-saw in its fortunes. Tile offtake remained dismal in the initial months of the fiscal owing to pandemic-mandated lockdown, shaken consumer confidence and logistical challenges.

Tier II and III towns and rural India witnessed the first uptick in demand owing to the relatively muted impact of the pandemic on themselves and their livelihoods. Demand from urban pin codes and metros resurged the second half of the fiscal as the adversities of the first wave of Covid-19 waned. As a result, while the first half of FY21 remained largely muted for the national brands, the second half was significantly better. The going was relatively better for the Morbi cluster. Despite disruptions caused by the Covid-19 pandemic, India’s largest hub of ceramic industry at Morbi enjoyed significant demand from international markets. 

This was owing to the anti-China policy adopted by some and the China+1 strategy adopted by some other tile consuming nations. This helped open new markets. India’s tiles exports increased significantly in FY21 as compared to the previous year. This diversion mandated the informal players to reduce supply to traditional domestic regions; it helped national brands to make inroads into the domestic market.

Pros and strengths

Widespread distribution network: The company generally sell its products through a network of distributors and dealers/traders located at different locations of the country. At present, it has distribution network of around 40 traders spread across various states. Its widespread distribution network provides it wide geographical presence in terms of coverage of different states of the country. Its distribution network leverages its marketing and reduces its concentration customer wise and state wise.

Quality assurance: The company manufactured quality products and aims to deliver qualitative products to the satisfaction of customers. It has an in-house testing laboratory to test the products. Its finished product passes quality check to ensure relevant quality parameters are as per the standards set. Its in-house testing laboratory regulates and monitors the quality, strength and the thickness of the Ropes and Nets as per the requirements of the customer.

Strategically beneficial location: The geographic location of its business unit provides the company a competitive advantage as this location is surrounded by the customers. This location enables the company to cater to on the spot orders in a quick manner. Besides this, the company is also situated at an approachable distance from developed ports like Pipavav and Mundra which enables the company to ship the consignments in a timely manner and reduced local transportation costs.

Risks and concerns

No definitive agreements with dealers or customers: The company has not entered into any long term or definitive agreements with its dealers or customers, and instead rely on purchase orders to govern the volume, pricing and other terms of sales of its products. However, such orders may be amended or cancelled prior to finalization, and should such an amend mentor cancellation take place, it may be unable to seek compensation for any surplus unpurchased products that it manufactures. Its customers do not, typically, place firm purchase orders until a short time before the products are required from it as a result of which, it does not hold a significant order book at any time, making it difficult for it to forecast revenue, production or sales. Consequently, there is no commitment on the part of the customer to continue to source their requirements from it, and as a result, its sales from period to period may fluctuate significantly as a result of changes in its customers’ vendor preferences.

Dependent on third parties for logistics: The company does not have an in-house transportation facility and it relies on third party transportation and other logistic facilities at every stage of its business activity including for procurement of products from its suppliers and for transportation from its distribution centres to various stores. Its operations and profitability are dependent upon the availability of transportation and other logistic facilities in a time and cost-efficient manner. Accordingly, its business is vulnerable to increased transportation costs, transportation strikes and lock-outs, shortage of labour, delays and disruption of transportation services for events such as weather-related problems and accidents. Further, movement of goods encounters additional risks such as accidents, pilferage, spoilage, shrinkage may adversely affect its operations, results of operations and financial condition. Although it has not experienced any material logistics and transport related disruptions in the past, any prolonged disruption or unavailability of such facilities in a timely manner could result in delays or non-supply or may require it to look for alternative sources which may not be cost-effective, thereby adversely affecting its operations, results of operations, cash flows and financial condition.

Stiff competition: The market for its services is competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes such as quality of products, distribution network, skilled man power, pricing and timely delivery and quality of services. Some of its competitors may have longer industry experience and greater financial, technical and other resources, which may enable them to react faster in changing market scenario and remain competitive. Moreover, the unorganized sector Issues their products at highly competitive prices which may not be matched by it and consequently affect its volume of revenue and growth prospects. Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition.

Outlook

Dhyaani Tile and Marblez is involved in the business of trading and producing tiles for floors, bathrooms, kitchens, balconies, and stairwells. The company offers two categories of products: Double Charge Vitrified Tiles and Glazed Vitrified Tiles. The company warehouse and the physical store are located in Ahmedabad. The company produces rustic, polished glazed, polished, and textured tiles. The company identifies its customer's needs and allows them to choose the perfect design from its wide range of tiles samples. The company has well-known brand suppliers located all over India. On the concern side, the company has not entered into any long term or definitive agreements with its dealers or customers. If its dealers or customers choose not to source their requirements from it, its business, financial condition and results of operations may be adversely affected.

The company is coming out with a maiden IPO of 4,80,000 equity shares of Rs 10 each at a fixed price of Rs 51 per share to mobilize Rs 2.45 crore. On performance front, the total income of the company for fiscal year 2021 was Rs 1,511.33 lakh against Rs 712.77 lakh total income for Fiscal Year 2020, an increase of 112.04% in total income. Moreover, profit after tax for the Fiscal 2021 was positive at Rs 26.96 lakh against a loss of Rs 7.25 lakh in fiscal 2020. The company is customer satisfaction oriented company and strives to maintain good relationship with the customers. It continuously strives to increase the sales in the existing states and customers. However it aims at widening its distribution network so as to enhance its geographical presence and consequently its customer base.