Ishan International
Ishan International is coming out with an initial public offering (IPO) of 22,80,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 80 per equity share.
The issue will open on September 9, 2022 and will close on September 14, 2022.
The shares will be listed on the Emerge platform of NSE.
The share is priced 8 times higher to its face value of Rs 10.
Book running lead manager to the issue is First Overseas Capital.
Compliance Officer for the issue is Khushboo Soumik Shah.
Profile of the company
The company is an ISO 9001: 2015 certified Company, GoI certified Star Export House and a diversified heavy engineering company with an history of over 26 years of experience in selling heavy engineering equipment in international markets. It is engaged in contracting and building projects that focus on supplying machines, erection/installation, commissioning and operational training for sugar plants, jaggery plants, pharmaceutical plants, hydro power plants and pollution control systems. It also provide high end engineering services and solutions for all types of activities in Hydro Power, Sugar and Jaggery, Pharmaceuticals, Pollution Control Systems. It provides customized heavy equipment’s including the entire range of machinery for sugar, jaggery, pharmaceuticals, hydro power and pollution control.
Established in 1995, its initial business was of pharmaceutical machinery and raw materials for pharmaceuticals ingredients and the company later diversified into heavy engineering. Its business is largely focused in international markets. In 1999, it established its 1st overseas office in Vietnam. Between 1999 and 2021, it has set up its overseas offices in Philippines, Indonesia, Hanoi (Vietnam), Ho Chi Minh City (Vietnam) and Kenya (in process). Its core strength Quality Management System in place under ISO 9001 : 2015.
Proceed is being used for:
Funding proposed joint venture and/or acquisition.
Meeting working capital requirements.
General corporate expenses.
Industry Overview
The engineering sector is the largest of the industrial sectors in India. It accounts for 27% of the total factories in the industrial sectors and represents 63% of the overall foreign collaborations. India’s engineering sector has witnessed a remarkable growth over the last few years driven by increased investment in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of strategic importance to India’s economy. India on its quest to become a global superpower, has made significant stride towards developing its engineering sector. The Government has appointed Engineering Export Promotion Council (EEPC) as the apex body in charge of promotion of engineering goods, products, and services from India. India export transport equipment, capital goods, other machinery/equipment, and light engineering products such as castings, forgings, and fasteners to various countries of the world. The Indian semiconductor industry offers a high growth potential area as industries which source semiconductors as inputs are themselves witnessing high demand. India became a permanent member of the Washington Accord (WA) in June 2014. The country is now a part of an exclusive group of 17 countries who are permanent signatories of the WA, an elite international agreement on engineering studies and mobility of engineers.
Engineering is one of the largest industrial sectors in India. It accounts for 27% of the total factories in the industrial sectors and represents 63% of the overall foreign collaborations. Increasing industrialisation and economic development drives growth in the capital goods market. Turnover of the capital goods industry was estimated at $92 billion in 2019 and is forecast to reach $115.17 billion 2025. Growth in the power industry is expected to drive growth in the electrical equipment industry. Electrical equipment market production is forecast to reach Rs. 500,000 crore ($100 billion) by 2022 from Rs 175 ,000 crore. The Index of Industrial Production (IIP) for the electrical equipment industry stood at 92.0 in FY21. Engineering R&D (ER&D) revenues are projected to reach $42 billion by FY22F from $36 billion in FY19. According to the National Association of Software and Service Companies (Nasscom), India’s share in the global engineering and research and development (ER& market is likely to expand at a CAGR of 12 -13 % to reach $63 billion by 2025.
Pros and strengths
Strong brand presence in South-East Asia: Ishan has a very strong name that has emerged as one of the leading players in Sugar Industry, Hydro Power, Pharmaceutical Industry and Pollution Control segments in in several ASEAN countries, especially in Vietnam, Philippines and Indonesia. Its policy of being present at the customers’ door steps has paid rich dividends. The quality heavy engineering machineries sold along with the services offered at competitive prices, immaculate execution capabilities and a good track record has provided it with strong brand recognition and credibility. The recognition and acceptance of Ishan as a brand has significantly contributed to the success of its business. The company's venturing, trading and catering into new industrial heavy engineering machineries in existing as well as new markets will further enhance its brand in the engineering service provider space.
Diversification in various sectors: Ishan has a dynamic presence across various sectors and geographies. The company caters to Sugar and Jaggery Plants and Machinery, Pharmaceuticals Plants and Machinery, Hydro Power Plants and Pollution Control Equipment. It has also received a number of orders for export and the Company is striving to become a leader in this business in the next few years. The Company has successfully commissioned its largest 66 mega watts for the 1st time during FY 2019-20 and also secured further orders. The company’s presence across different verticals provides it the benefit of a broad product portfolio and a strong order book, making the company financially viable. With a strong order going forward and on successfully commissioning it, it expects repeat order.
Combination of experience and expertise: It pays to have a highly experienced set of directors on board with proven expertise and versatility. The board and Key Managerial Team comprises of engineers and management experts with decades of experience in their chosen fields. It is their accumulated wisdom and insight that guides the organization today. Its capable management and the thrust to continuously improve its competencies in the heavy engineering area should enable it to bag large orders and thereby give it visibility in the coming years. Its ISO 9001:2015 certification from TUV (Nord) has made its Quality Management System comparable with the best in the world.
Risks and concerns
Dependent upon third parties: To a major extent, the logistics of the company’s exports are relied on third parties such as custom house agents and on external manufacturers, suppliers for its products in which it trade. It follows a low regulatory business model and do not have any long-term agreements or commitments with each other which leaves it at high risk relating to the timely logistic and increase in pricing of its products. Further, the third party delivery companies are either an independent logistic company or are part of the company’s supplier network. It cannot assure that such third parties will be able to continue with their services in a timely manner, or will be successful in ensuring the delivery of its products. Further, the delivery cost is generally included as part of the purchase invoice from its supplier, it cannot assure that such third parties will be able to fulfill their obligations entirely, in a manner acceptable to us, or at all.
Strong competition: The company operates in a highly competitive business, i.e. import-export of agro based products and various scarps, especially in the International market. Also, in the other countries that it sell or intend to sell its products are already penetrated by many other local and international brands. With the high level of competition, its results of operations are sensitive to, and may be materially and adversely affected by, competitive pricing, services offered, brand recognition and other factors. Competition may result in pricing pressure, reduced profit margin or a failure to increase its market share, any of which could substantially harm its business and results of its operations. It compete directly against the local manufacturers, distributors, traders and other sellers of agro based products and various scarp products, who are companies with substantial market share, established companies selling internationally renowned brands as well as domestic retailers and regional competitors in the region of its trade.
Require high working capital: The company’s business demands substantial funds towards working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favorable terms, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse affect on its operations, profitability and growth prospects.
Outlook
Ishan International is a Government of India Certified Star Export House, and professionally managed Company with over 26 years of experience in supplying international quality products and services for diverse markets and industries across globe. The company is managed by highly qualified and experienced professionals with notable achievements in the field of Engineering, Production, Marketing, EPC projects, Finance and Information Technology. Ishan has a broad product portfolio which includes Hydro Power Plants (Electro-Mechanical), Wind Power, Transformers/Sub-stations, Generators, Sugar Machinery, Boilers, equipment for Cement Plants, Water Treatment and Bottling Plants, Pollution Control Equipment, Pharmaceutical Machinery, APIs & Chemicals. Being in the industry of import export since 27 years, it has established a strong supply chain for smooth, easy process and timely delivery of its goods internationally. Besides due to reputation gained and maintaining of the long term relationships, it has been easily able to procure its products domestically. On the concern side, the company may encounter problems in executing the orders in relation to its imported and exported products, or executing it on a timely basis. Moreover, factors beyond its control or the control of its customers, including delays or failure to obtain necessary permits, authorizations, permissions and other types of difficulties or obstructions, may result in the postponement of the delivery of products or cause its cancellation.
The company is coming out with a maiden IPO of 22,80,000 equity shares of Rs 10 each at a fixed price of Rs 80 per share to mobilize around Rs 18.24 crore. On performance front, during the Financial Year 2021-22, the total revenue accumulated is Rs 2174.31 lakh, it is slightly lower than the previous year for a number of reasons. Profit after tax (PAT) for Financial Year 2021-22 has increased from Rs15 lakh to Rs 127.16 lakh from the previous year. Meanwhile, the company intends to adopt a very calculative and aggressive marketing strategy which is essential in expanding Export Business in newer markets. Its management intends to support this marketing effort with the activities that are done at the grass root level, including opening of new foreign offices, and through field works thereby maintaining regular communications and meetings. Besides, it intends to grow its business through strategic marketing partnerships. This will assist it in translating its current business into strong clientele and provide competitive advantage in the existing market.
