Goel Food Products coming with an IPO to raise upto Rs 7.21 crore

Goel Food Products

• Goel Food Products is coming out with an initial public offering (IPO) of 1001600 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 72 per equity share.
  
• The issue will open on June 15, 2022 and will close on June 20, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 7.20 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Gretex Corporate Services.
  
• Compliance Officer for the issue is Satish Kumar Choudhury.   
  

Profile of the company

The company was incorporated on January 31, 1996. Initially, it started as an Indian Snacks and Sweets Manufacturing Company. While being into the Indian snacks and sweets business for more than decade, the company deal with various event management company to whom it provided services of marriage and other incidental services. During this period, its promoters saw an opportunity in the catering and event planning industry and in the year 2009, the company opened its 1st banquet hall in Ultadanga, Kolkata and since then it has been growing in terms of its presence in Kolkata. From one location it has expanded to four locations in Kolkata and currently it has 8 banquets halls and 2 Indian sweets and snack shop and one hotel and one guest house. It provide services such as organizing events like Marriages, Sangeet, Ring Ceremony, Birthday Parties, Anniversary Parties, Kitty Parties, Corporate Events, Kirtans (Devotional Singing), Thread Ceremony at its banquets hall and it serve Indian snack and Sweets at its retail shop. It also generate rent income from its hotels and guest house, apart from the event management business. The company operates only in one city i.e., Kolkata.

The company’s skilled team does a spectacular job in customizing the decoration of the entire venue preparation of food and management of the entire event. The contemporary design and lighting inside the venue gives every event a chic vibe. The beautifully decorated banquet hall and excellent services with a pleasant ambiance makes its banquet hall a perfect venue for small- and large-scale weddings or pre wedding events. An additional open area is also provided for setting-up the food. There is a new trend growing i.e., destination weddings and the company sees a great opportunity which can be taken upon. The company has started wedding packages which includes the destination weddings. It provide Marriage packages wherein it provide hotel for the guest to stay and banquet hall. This gives an opportunity to the company to enter into hospitality sector as well.

Proceed is being used for:

• Meeting working capital requirements.
  
• General corporate purposes.
  

Industry overview

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 an important source of foreign exchange in India similar to many other countries. The foreign exchange earnings from 2016 to 2019 grew at a CAGR of 7% but dipped in 2020 due to the COVID-19 pandemic. In 2020, the Indian tourism sector accounted for 39 million jobs, which was 8% of the total employment in the country. By 2029, it is expected to account According to WTTC, India ranked 10th among 185 countries in terms of travel & tourism’s total contribution to GDP in 2019. During 2019, contribution of travel & tourism to GDP was 6.8% of the total economy, Rs 13,68,100 crore ($194.30 billion).

India is the most digitally advanced traveller nation in terms of digital tools being used for planning, booking, and experiencing a journey. India’s rising middle class and increasing disposable income has supported the growth of domestic and outbound tourism. By 2028, Indian tourism and hospitality is expected to earn $50.9 billion as visitor exports compared with $28.9 billion in 2018. The travel market in India is projected to reach $125 billion by FY27 from an estimated $75 billion in FY20. The Indian airline travel market was estimated at $20 billion and is projected to double in size by FY27 due to improving airport infrastructure and growing access to passports. The Indian hotel market including domestic, inbound and outbound was estimated at $32 billion in FY20 and is expected to reach $52 billion by FY27, driven by the surging demand from travelers and sustained efforts of travel agents to boost the market.

Pros and strengths

Strong value proposition: The company strive to provide its customers a superior experience during their events. It provide various amenities required by its customers at prices which are relatively lower than its competitors. This is achieved by identifying facilities which would enhance services to its customers and allocating its financial resources accordingly. This approach ensures efficient allocation of its financial resources and gives it an advantage in terms of cost of servicing its customers.

Established brand and reputation: The company’s Group brand ‘BIKA’ is a recognizable brand in Kolkata, when it comes to banquets hall and food outlets and is a differentiating factor for its customers. Its vast experience and proven track record helps it to establish customer confidence. Its established brand and reputation has enabled and will enable it to obtain future business opportunities. It has gained significant experience and have established track record and reputation for efficient management of events.

Progressive employer: The company is continuously focused on creating an engaging atmosphere for its Employees to learn, contribute and grow. It nurture a sense of equality among its team members and offer them ample opportunities to pursue their passion and grow. There is an active FUN team that creates opportunities for enjoyment even while working. The company ensures a safe environment, dignity and respect for all employees irrespective of gender, religion, caste.

Risks and concerns

Face competition: The market in which the company is doing business is highly competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes. 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 offers their products at highly competitive prices which may not be matched by it and consequently affect its volume of sales 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.

Require several approvals, NOCs, licenses, registrations: The company require several approvals, licenses, registrations and permits in ordinary course of its business. Additionally, it need to apply for renewal of approvals which expire, from time to time, as and when required in the ordinary course. Also, it was a private limited company in the name of ‘Goel Food Products Private Limited’ which was carrying business. After complying with the relevant procedure of Companies Act, 2013, the said private limited company was converted into a public limited company in the year 2022. After conversion there was change of name of the company from ‘Goel Food Products Private Limited’ to ‘Goel Food Products Limited’. It shall be taking necessary steps for transferring the approvals in new name of the Company. In case it fail to transfer/obtain the same in name of the Company the same may adversely affect its business or it may not be able to carry its business.

Faces cyber threats: The company may also face cyber threats such as: (i) Phishing and Trojans- targeting its customers, wherein fraudsters send unsolicited codes or mails to its customers seeking account sensitive information or to infect customer machines to search and attempt ex-filtration of account sensitive information; (ii) Hacking - wherein attackers seek to hack into its infrastructure with the primary intention of causing reputational damage to it by disrupting services; (iii) Data theft -This can be internal i.e. by someone who has access to data of the company or external wherein unconnected cyber criminals may attempt to intrude into its network with the intention of stealing its data or information; and (iv) Advanced persistent threat - a network attack in which an unauthorized person gains access to its network and remains undetected for a long period of time In the event of a significant decline in the demand for its products, its business, results of operations and financial condition may be materially and adversely affected.

Outlook

Goel Food Products engages in the business of manufacturing Indian Snacks and Sweets. The company provide services such as organizing events like Marriages, Sangeet, Ring Ceremony, Birthday Parties, Anniversary Parties, Kitty Parties, Corporate Events, Kirtans (Devotional Singing), Thread Ceremony at the banquets hall and serves Indian snack and Sweets at the company retail shop. The company operate and manage the banquet and Indian snacks and sweets shop business under the name ‘BIKA’ at various locations in Kolkata. Hilltop Healthcare Centre, the company's holding company, owns 64.60 percent of the company. On the concern side, the company has not taken any insurance policy related to its registered office and the properties that it operate its operations of the company. Any unforeseen situation or any liability will not compensate due to absence of Insurance policy. Further, its business involves risks which may adversely affect its profitability, including failure of systems and employee frauds.

The company is coming out with a maiden IPO of 1001600 equity shares of Rs 10 each at a fixed price of Rs 72 per share to mobilize around Rs 7.21 crore. On performance front, the company’s total revenue increased by Rs 446.83 lakh or 59.27% to Rs 1200.68 lakh for the period ended December 2021 from Rs 753.85 lakh for the financial year 2020-21. The company’s profit after tax increased by many folds to Rs 187.65 lakh for the period ended December 2021 from Rs (0.76) lakh for the financial year 2020-21, reflecting a net increase of Rs 188.41 lakh. The company also intend to maintain a high standard of quality for its guest facilities and services with regular renovation and refurbishment of its existing properties. It intend to establish its presence with opening up banquet hall and food outlets and hotels key travel and business destinations in India. As destination wedding is a new trend and people are opting for the same, it want to be open hotels at various places across the country.