SVJ Enterprises coming with an IPO to raise upto Rs 6.12 crore

SVJ Enterprises

• SVJ Enterprises is coming out with an initial public offering (IPO) of 17,01,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 36 per equity share.
• The issue will open on February 23, 2023 and will close on February 28, 2023.
• The shares will be listed on SME Platform of BSE.
• The share is priced 3.60 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 Akshita Agrawal.

Profile of the company

Initially the company was engaged in the production and trading of honey. Further, the company switched in the manufacturing of disposable paper plates. Since then, it has earned high recognition in the markets of disposable products by providing best quality to customers. It is now engaged in the manufacturing of Disposable Silver Laminated Plates, Aluminium Foil Food Container, Aluminium Laminated Bag & Pouches, Packaging Pouches etc. Aluminium is 100% recyclable without any loss of its intrinsic properties. The recycling of aluminium products saves energy because the products being recycled usually require much less processing to turn them into usable materials than raw resources. The consequence is a significant reduction in emission of greenhouse gases. Domestically many states are banning plastic, the best replacement to that is the company’s products.

The company’s products are recyclable, eco-friendly, aesthetically appealing, safe, convenient and comparatively cheaper. A further boost to the product demand comes from changing lifestyle from 2 and 3 tier cities. The success of the system has also resulted in improvements in workplace health and safety at all levels of the company. It has developed advanced technology for design, development and manufacture in its factory at Darbhanga in Bihar. With the setup of manufacturing and honey processing plants also, it has also acquired certifications for Honey and other FMCG products, based on quality managements systems. In its quality control laboratory, extensive tests are carried out to determine the quality of product during purchasing, processing and packaging.

Proceed is being used for:

• Meeting the working capital requirements of the company
• Meeting the issue expenses
• General corporate purpose

Industry Overview

All major industries create wealth but if there is one industry that plays a unique role by way of both creation of wealth through a wide range of manufacturing activities and also by way of preserving the wealth or value created by many other industries, it is packaging. Apart from the huge value addition and employment involved in these activities, packaging serves the economy by helping preservation of the quality and lengthening the shelf life of innumerable products ?ranging from milk and biscuits, to drugs and medicines, processed and semi?processed foods, fruits and vegetables, edible oils, electronic goods etc., besides domestic appliances and industrial machinery and other hardware needing transportation.

Packaging is the science, art and technology of protecting products from the overt and inherent adverse effects of the environment. Packaging is the integration of elements of materials, machinery and people to erect and maintain barriers between the product and those external forces inexorably seeking to revert the contents back to their essential components. The package is the physical entity that functions as the wall between the contents and the exterior.

The packaging industry witnessed decent volume growth due to high demand from the food products, pharma and e-commerce industries in fiscal 2021. Further, the packaging industry is expected to witness a strong 7-9% CAGR from fiscal 2022 to 2026 on the back of a complete recovery and continuous demand across all segments. The share of metal packaging (currently at 8-10% of the total packaging market) is expected to remain unchanged over the next three years, owing to the continuous healthy demand from the F&B and pharma industry. Besides, there are no major and cheaper substitutes (of other packaging materials) for aluminium foil, primarily used in strips, blisters, and pilfer-proof caps. Moreover, aluminium foil has special properties such as protection from light, moisture, oxygen, odour, and, most importantly, bacteria. These features make it almost irreplaceable. Over the past seven years, the demand for secondary aluminium from packaging segment registered a CAGR of 19-20%, driven by low base. It is expected to record moderate CAGR of 5.5-6.5% between fiscals 2022 and 2027 to reach 0.18-0.20 million tonnes in fiscal 2027.

Pros and strengths

Customer centric business model: The company focuses on attaining the highest level of customer satisfaction. Understanding the consumer is one of the most important skills required to be successful in this business. The progress to be achieved by the company will be largely due to its ability to address and exceed customer satisfaction. The company has always assessed the changing customer preferences from time to time and redesigning its products accordingly by continuously exploring new types of trends.

Relationship with suppliers: The company’s existing supplier relationship protects the business with terms of supply, pricing of the products and services, the quality of the products and services offered etc. The ocmpany, being a small and medium sized organization, rely on personal relationships with its suppliers. Further, the company also leverage the past experience of its management in maintaining effective supplier relationship ensuring uninterrupted supply chain management.

Quality assurance: Total customer satisfaction is always the guiding principle in providing product excellence. The company ensures this by Implementing and continually improving its quality management system, adhere to time line and schedules, being cost competitive, enabling teamwork with the organisation, doing things right the first time and every time etc.

Risks and concerns 

Limited operational experience for disposable paper plates: In order to synergize the operations and attaining higher business efficiencies. Initially the company was engaged in the production of honey. Further, the company switched in the manufacturing of Disposable Silver Laminated Plates etc. Since then, it has earned high recognition in the markets of disposable products by providing best quality to customers. Though it does wish to take a step forward in this segment more and proceed with the business operations but there can be no assurance that such idea will be materialized. The company’s inability to implement this strategy may hamper its growth plans in future.

No long term agreements with most of its customers: The company’s business is dependent on its continuing relationships with its customers. The company neither has any long-term contract with any of customers nor has any marketing tie up for its products. Further, the company has not appointed any exclusive agents for handling its operations. Any change in the buying pattern of its end users or disassociation of major customers can adversely affect the business of the company. The loss of or interruption of work by, a significant customer or a number of significant customers or the inability to procure new orders on a regular basis or at all may have an adverse effect on its revenues, cash flows and operations. It has not entered in any agreement with its customers, it works on the basis of purchase order basis.

Maximum revenue comes from top 5 and top 10 customers: The company’s top five and top ten customers contribute to a substantial portion of its revenues for the year ended September 30, 2022. Any decline in its quality standards, growing competition and any change in the demand for its service by these customers may adversely affect its ability to retain them. It has maintained good and long-term relationships with its customers. However, there can be no assurance that it will continue to have such long-term relationship with them, also any delay or default in payment by these customers may adversely affect its business, financial condition and results of operations. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability.

Outlook

SVJ Enterprises is engaged in the manufacturing of Disposable Paper Plates. Earlier, they were in the production and trading of honey. The company carries business in India and abroad for manufacturing, buying, supplying, importing, exporting and selling honey products, food product, grains etc. It has a well-equipped infrastructure to carry out all types of jobs tailor-made to customer requirements as per international standards. The company offers high-quality materials, scheduled delivery time, cost-effective products, efficient sales and services, and competitive prices at all times. On the concern side, the company’s manufacturing operations are critical to its business and any shutdown of its manufacturing facility may have an adverse effect on its business, results of operations and financial condition. Moreover, the business of manufacturing of disposable paper plates has been newly operated as of now for the company.

The company is coming out with a IPO of 17,01,000 equity shares of Rs 10 each at a fixed price of Rs 36 per share to mobilize Rs 6.12 crore. On performance front, total revenue for the financial year 2021-22 stood at Rs 503.15 lakh whereas in Financial Year 2020-21 the same stood at Rs 152.38 lakh representing an increase of 236.72%. Moreover, the company reported restated profit after tax for the financial year 2021-22 of Rs 71.52 lakh in comparison to Rs 22.94 lakh in the financial year 2020-21. Going forward, developing and maintaining long term sustainable relationships with its suppliers, customers, job workers and employees will help it in achieving the organizational goals, increasing sales and entering into new markets. This is a continuous process in its organization and the skills that it imparts in its people gives benefit to its customers. It aims to do this by leveraging its marketing skills and relationships and further enhancing customer satisfaction. It plans to increase its customers by meeting contracts in hand on time, maintaining its customer relationship and renewing its relationship with existing clients.