Ameya Precision Engineers
Ameya Precision Engineers has come out with an initial public offering (IPO) of 21,00,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 34 per equity share.
The issue will open for subscription on August 25, 2022 and will close on August 30, 2022.
The shares will be listed on NSE Emerge Platform.
The share is priced 3.40 times higher to its face value of Rs 10.
Book running lead manager to the issue is Shreni Shares.
Compliance Officer for the issue is Aakanksha Rajeev Kelkar.
Profile of the company
Ameya Precision Engineers is engaged in manufacturing of high-end precision components (shafts, and other trim components) for the general engineering industry, but in particular valve and pump manufacturing. It also offers specialised processes like hard-facing and overlay of wear and corrosion-resistant alloys in line with ASME procedures. It offers an end-to-end solution from procurement of raw material to final despatch of hard-facing and overlay components. All the company’s hard-facing and overlay is done to ASME IX qualifications, an international stipulation for doing this kind of work in the high-pressure valve and pump industry (high pressure here is different from low pressure valve and pump side, which does not always need hard-facing and overlay). Its major customers are valve and pump manufacturers. Though currently, its customer base in these sectors, the set-up of machinery is flexible to can cater to any engineering industry that needs high precision components.
The company has a manufacturing facility situated at Pune Satara Road, Village Kasurdi (KB), Village Kasurdi (KB), Bhor, Pune, Maharashtra, India. The unit exports to the United States of America, United Kingdom, Germany, Singapore, Slovenija, Austria, and Brazil. The company has purchased the said business vide Slump Sale agreement dated April 01, 2013. The seller, Ameya Engineers, has been carrying on the business of manufacturing of engineering, valve components and shafts and thereby exporting the same. Whereas, the company has purchased the entire running business as going concern, it was essentially a partnership with the same ownership being converted to a private limited company. Its manufacturing facility is well equipped with the required facilities including machinery, other handling equipment’s to facilitate smooth manufacturing process and easy logistics. It endeavours to maintain safety in its premises by adhering to key safety norms, established through its internal health and safety manual, accompanied by regular safety meetings.
Proceed is being used for:
Meeting capital expenditure requirements.
Funding working capital requirements.
General corporate purposes.
Industry overview
India is a leading country in both manufacturing and exporting bearing products. Bearing production in India has been increasing steadily over the years due to the increasing need for bearings in industries - such as automotive, water pumps, fans, etc. India has always been the largest importer of bearings and has a huge import of ball bearings, roller bearings, etc. Every year, a large number of bearing products are imported by India, and many of these are exported to other countries. The bearings are important parts of a machine as they allow them to function without friction. Bearings can also make the machine more efficient by reducing energy loss and are vital in the production process. And are also used in a wide range of applications such as devices, machines, and engines. With all the different types of bearings, there’s no wonder that bearing manufacturers in India are in high demand.
India bearings market size was valued at $1,772.6 milion in 2021 and is projected to expand up to $3,374.4 million by the end of 2027. The market is registering growth at a CAGR of 10.9% during the forecast period 2022- 2027. Bearings are highly engineered, precisely made components that enable machinery to move at extremely high speed and carry remarkable loads with ease and efficiency. It is a part of a machine that allows one part to rotate in contact with another part with less friction. Bearings are used in every kind of equipment or machinery, ranging from automobile parts, farm equipment, and household appliances to defence and aerospace equipment. In India, the market for bearing has gained an impressive impetus owing to the rising utilization of bearing in motors and increasing demand for automotive electrification. Moreover, the Indian government’s initiatives such as ‘Make in India’ and ‘Aatmanirbhar Bharat’, aimed at reviving the manufacturing sector in turn increases the demand for bearings. However, the low-cost, and easy availability of counterfeit products are major threats to the India-bearing market.
Pros and strengths
Presence in international markets: The company caters to international markets and majorly exports its products to countries like United States of America, United Kingdom, Germany, Singapore, Slovenija, Austria, Brazil. For the financial year ending 2022, 2021 and 2020 and 2019 its revenue from exports contributed 94.07%, 96.22% and 95.72% respectively of its revenue from operations.
Quality assurance: The company has been accredited with ISO 9001: 2015, certified by TUV Nord Daks (European body certification, which has a wider global recognition). It is also certified BB+ by CRISIL, a credit rating agency approved by National Small Industries Corporation. The company has a culture of the above quality systems, which is not only visible throughout the entire organisation, but also verified through periodic customer audits, TUV re-certification and surveillance audits, and also quarterly internal quality audits. It use a PMI machine (Positive Material Identification) at its manufacturing facility to verify chemical composition of its raw materials and finished goods. However, it outsources the mechanical testing of its raw material to third party NABL approved laboratory.
Repeat orders: The company has made efforts to ensure customer satisfaction by taking steps for meeting customer specific requirements, timely delivery of orders to its customers as well as maintaining consistency in quality and this has yielded results in the form of repeat orders from its customers. The repeat orders reflect the confidence reposed in it by its customers. All its customers have a long term relation with it that shows its ability to react across all situations and be able to ride the wave.
Risks and concerns
Face fair competition: The industry in which the company operates is fairly competitive and its results of operations and financial condition are sensitive to, and may be materially adversely affected by competitive pricing and other factors. Competition may result in pricing pressures, reduced profit margins, lost market share or a failure to grow its market share, any of which could substantially harm its business and results of operations. The domestic segment which it caters to is fragmented and fairly competitive. It competes primarily on the basis of quality of its services, customer satisfaction and marketing. Thus some of its competitors may have certain other advantages over it, including established track record, superior service offerings, larger portfolio of services, technology and greater market penetration, which may allow its competitors to better respond to market trends.
Dependent on third party transportation providers: The company uses third party transportation providers for delivery of its goods. Though its business has not experienced any disruptions due to transportation strikes in the past, any future transportation strikes may have an adverse effect on its business. In addition, goods may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of products which may also affect its business and results of operation negatively. An increase in the freight costs or unavailability of freight for transportation of its raw materials may have an adverse effect on its business and results of operations. Further, disruptions of transportation services due to weather-related problems, strikes, lock-outs, inadequacies in the road infrastructure, or other events could impair ability to procure raw materials on time. Any such disruptions could materially and adversely affect its business, financial condition and results of operations.
Depend on skilled personnel: The company’s services are skilled and creative manpower intensive and it engage a considerable number of skilled personnel every year to sustain its growth. Further, it spend significant time and resources in training the manpower it hire. Its success is substantially dependent on its ability to recruit, train and retain skilled manpower. High attrition and competition for manpower may limit its ability to attract and retain the skilled manpower necessary for its future growth requirements. It cannot assure that skilled manpower will continue to be available in sufficient numbers suitable to its requirements or that it will be able to grow its workforce in a manner consistent with its growth objectives, which may affect its business, financial condition, results of operations and prospects.
Outlook
Established in 1987, Ameya Precision Engineers is a Engineering component manufacturer, supplying high quality, cost effective products to a range of leading local and international valve and pump manufacturers. The company caters to international markets and majorly exports its products to countries like United States of America, United Kingdom, Germany, Singapore, Slovenija, Austria, Brazi. The company maintains a base of reliable material suppliers, foundries and casting suppliers who consistently provide high quality, independently certified materials of appropriate dimensions. It has procured NITON XL2 100G alloy analyzer, to have further control over material traceability within the organization. It has established suppliers in Europe & North America, through which it can import material, if such is the requirement from the customer, with regards to restriction on origin of raw material. On the concern side, the company requires several statutory and regulatory permits, licenses and approvals to operate its business. Many of these approvals are granted for fixed periods of time and need renewal from time to time. Besides, the company is exposed to foreign currency exchange fluctuations as Ccompany is engaged in manufacturing of propeller shafts and its components which are mainly exported to the United States of America United Kingdom, Germany, Singapore, Slovenija, Austria, and Brazil.
The company is coming out with an IPO of 21,00,000 equity shares of Rs 10 each at a fixed price of Rs 34 per equity share to mobilize Rs 7.14 crore. On the performance front, the company’s total income for FY 2021-22 has decreased by 3.71% from Rs 2,488.58 lakh for FY 2020-21 to Rs 2,396.36 lakh for FY 2021-22. Profit after tax decreased by 44.26% from Rs 272.64 lakh for FY 2020-21 to Rs 151.97 lakh for FY 2021-22. Meanwhile, the company intends to invest significantly in Research and Development in order to meet and adapt to the latest technologies. The company intends to invest in the same so to meet the ongoing demand of increasing and diversifying the product portfolio and meeting the quality standards as required. It intends to continue to invest in its in-house technology capabilities to develop customized systems and processes to ensure effective management control. It continues to focus on further strengthening its operational and fiscal controls.
