Pearl Green Clubs And Resorts coming with an IPO to raise upto Rs 11.72 crore

Pearl Green Clubs And Resorts

• Pearl Green Clubs And Resorts is coming out with an initial public offering (IPO) of 630000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 186 per equity share.
  
• The issue will open on June 27, 2022 and will close on June 29, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 18.60 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Fast Track Finsec.
  
• Compliance Officer for the issue is Kanika Wasson. 
  

Profile of the company

Pearl Green Clubs and Resorts (PGCRL) is currently in the business of agricultural and allied activities. It is engaged in trading of Agricultural Products such as of Wheat Corn, Rice, Seeds Cotton, Gram, Pulses, Cereals Peas etc. The company strive to provide a seamless bond between the Farmers, Private players and consumers to ensure that the Indian markets for agricultural products continue to flourish. The company’s services facilitate solutions at each step in the agricultural product life cycle, from strategic procurement on account of the purchaser, PGCRL’s experience has accorded it the understanding of how the agricultural commodity markets operate, and today PGCRL is proud to be an integral part of the agricultural business.

The company is proposing to enter into the business of Tourism And Hospitality. It has proposed to open a resort in the name of Pearl Green Clubs and Resort in Gandhinagar, Gujarat. The property is located at Gandhinagar which is approximately 20 kms away from Ahmedabad. It is connected to NH-8 highway. It has a pleasant location with fruit bearing trees and greenery of natural surroundings and ideal for getting and is away from the city’s hustle and bustle. One of the point of interest is that the location is proximate to the dream project of its Prime Minister, the Gujarat International Financial Tec (GIFT) City, which is the major customer segment of the hotel.

Proceed is being used for:

• Meeting out the capital expenditure requirements.
  
• General corporate purposes.
  
• Meeting out the issue expenses.
  

Industry overview

Agriculture is the primary source of livelihood for about 58% of India’s population. Gross Value Added by agriculture, forestry, and fishing was estimated at Rs. 19.48 lakh crore (US$ 276.37 billion) in FY20. Share of agriculture and allied sectors in gross value added (GVA) of India at current prices stood at 17.8 % in FY20. Consumer spending in India will return to growth in 2021 post the pandemic-led contraction, expanding by as much as 6.6%. The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to its immense potential for value addition, particularly within the food processing industry. Indian food and grocery market is the world’s sixth largest, with retail contributing 70% of the sales. The Indian food processing industry accounts for 32% of the country’s total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

The Economic Survey of India 2020-21 report stated that in FY20, the total food grain production in the country was recorded at 296.65 million tonnes-up by 11.44 million tonnes compared with 285.21 million tonnes in FY19. The government has set a target to buy 42.74 million tonnes from the central pool in FY21; this is 10% more than the quantity purchased in FY20. For FY22, the government has set a record target for farmers to raise food grain production by 2% with 307.31 million tonnes of food grains. In FY21, production was recorded at 303.34 million tonnes against a target of 301 million tonne. India is among the 15 leading exporters of agricultural products in the world. Agricultural export from India reached $38.54 billion in FY19 and $35.09 billion in FY20 India is the world's second-largest producer of rice, wheat, sugarcane, cotton, groundnuts and fruits & vegetables. It also produced 25% of the world's pulses, as of last decade, until 2019. The organic food segment in India is expected to grow at a CAGR of 10% during 2015--25 and is estimated to reach Rs 75,000 crore ($10.73 billion) by 2025 from Rs. 2,700 crore ($386.32 million) in 2015.

Pros and strengths

Cordial Relationship with Customers: The company’s success lies in the strength of its relationship with customers who have been associated with it for a long period. Its team through their vast experience and good rapport with clients owing to timely and quality delivery of service plays an instrumental role in creating and expanding a work platform for the Company. To retain its customers, its team regularly interacts with them and focuses on gaining an insight into the additional needs of such customers.

Focused on trading in various Agricultural products: The company’s Agricultural Commodities business is focused on trading in various Agricultural products in India. The company has been trading merchandising Cotton, Oilseeds, Grains, Pulses, Spices, Seeds and various agricultural based products in domestic markets and to the end users in major consumption markets Capitalizing on India's vast geographical spread and range of reasons. PGCRL has successfully provided quality range of products, to its buyers all over the India. The company is present in every aspect of trade of bulk agricultural commodities from selling domestically, to doing third party trade. Driven by the consumption and production disparity in the agricultural sector, PGCRL has made efforts to tap the opportunities in the said sector. The Company has been successful in grabbing an increasing market share in domestic markets.

Experienced & skill management team: The company has experienced & skill management team to motivate the sub-ordinates & staff to step towards their achievements & organizational goals. With their efficient management skills & co-ordination with sub-ordinate, they are always working as a catalyst to encourage the entire team for the development & nourishment of the organization.

Risks and concerns

High working capital requirements: The company’s business requires substantial amount of working capital for business operations. Major Portion of working capital is utilized towards debtors. To effectively manage trade receivables, it must be able to accurately evaluate the credit worthiness of its customers and dealers and ensure that suitable terms and conditions are given to them in order to ensure its continued relationship with them. However, if it management fails to accurately evaluate the credit worthiness of its customers, it may lead to bad debts, delays in recoveries and / or write-offs which could lead to a liquidity crunch, thereby adversely affecting its business and results of operations. A liquidity crunch may also result in increased working capital borrowings and, consequently, higher finance cost which will adversely impact its profitability.

Operate in highly competitive market segments: The company operates in highly competitive market segments that are highly fragmented among several market participants. In the general it compete with numerous unregulated as well as regulated Indian vendors with sizeable market shares as well as the broader industry comprising numerous small competitors. Moreover, barriers to entry for the market segments in which it operate are generally low. It anticipate these low barriers to entry, combined with forecast growth potential in the scrap trading industry, will lead to increased competition both from established players as well as from new entrants in the industry. This could include attrition of its staff to its competitors or its staff establishing competitive enterprises.

Dependent on third party transportation service providers: The company is significantly dependent on third party transportation providers for the delivery of agricultural produce or commodities to it and delivery of the same to its customers. Uncertainties and risks such as transportation strikes, failure to book vessels or delay in supply of raw materials and products due to port congestions, vessel / vehicle breakdown could have an adverse effect on supplies and deliveries to and from its customers and suppliers. Additionally, agricultural produce or commodities may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. A failure to procure or transport the agricultural produce and commodities or to deliver the same to its distribution intermediaries in a timely, efficient and reliable manner could adversely affect its business, results of operations and financial condition.

Outlook

Pearl Green Clubs and Resorts is engaged in the business of agricultural and allied activities. The company’s Agricultural Commodities business is focused on trading in various Agricultural products in India. The company has been trading merchandising Cotton, Oilseeds, Grains, Pulses, Spices, Seeds and various agricultural based products in domestic markets and to the end users in major consumption markets Capitalizing on India's vast geographical spread and range of reasons. The company’s team, is managed by highly experienced professionals who possess sound experience of industry and undertake all assignments to carry out on time. The company has proposed to open a resort in the name of Pearl Green Clubs and Resort in Gandhinagar, Gujarat. On the concern side, the company relies on its network of distributors to safely and efficiently distribute or supply of its products to its vendor’s, distribution centers and various points of sale. Besides, its industry being labour intensive is dependent on labour force for carrying out farming and agricultural activities. Since it is into trading business, it is not directly dependent on labour force. At present, the company has not taken any insurance policy for its assets including stock, and transport insurance for protecting it against any material hazards.

The company is coming out with a maiden IPO of 630000 equity shares of Rs 10 each at a fixed price of Rs 186 per share to mobilize around Rs 11.72 crore. On performance front, total Income for the FY 2020-2021 is Rs. 375.74 lakh and for the Financial Year 2019-2020, stood at Rs 56.97 lakh representing an increase of 559.56%.The restated profit after tax for the FY 2020-2021 is Rs 6.54 lakh and for the Financial Year 2019-2020, stood at Rs 3.91 lakh representing an increase of 67.04%. Meanwhile, the company intends to expand its business by increasing more acres of crops. It is a horizontal form of expansion as opposed to a vertical expansion which moves up or down the supply chain. It aim to enhance the growth by leveraging its relationships and further enhancing customer satisfaction. It plan to increase its customers by increasing the product & geographical base, maintaining its client relationship and renewing its relationship with existing buyers.