Jiwanram Sheoduttrai Industries coming with an IPO to raise Rs 17.07 crore

Jiwanram Sheoduttrai Industries 

• Jiwanram Sheoduttrai Industries is coming out with an initial public offering (IPO) of 74,22,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 23 per equity share. 
• The issue will open for subscription on September 8, 2023 and will close on September 12, 2023.
• The shares will be listed on NSE Emerge Platform.
• The share is priced 2.30 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Affinity Global Capital Market.
• Compliance Officer for the issue is Sweta Agarwal.

Profile of the company

The company is engaged in the manufacturing and export of the Industrial Safety Gloves and Garments which provides customized solutions in the field of Industrial Safety. The endeavour is complimented with the manufacturing facilities at Baruipur, Nandankanan and Falta SEZ West Bengal. Its Products are well accepted for its quality which covers all its manufacturing range of Gloves, Industrial Garments and other protective PPEs and solution basket for the Industrial Safety. It is majorly engaged in the business of manufacturing and exporting for various brands. 

Jiwanram Sheoduttrai Industries (JSIL) began manufacturing PPEs in 1997 and has since grown to establish manufacturing facilities and export to countries such as the United States of America, Spain, Germany and Belgium. The company has differentiated its business lines to make the most of its in-house potential. Over the past two decades, JSIL has made its presence known around the world, particularly in Europe, America and the Middle East and has expanded to over twenty countries. JSIL is a globally renowned manufacturer of Industrial Garments and Gloves and exporter of head-to-toe safety wear, workwear and more. The company is initially started manufacturing industrial safety gloves and gradually expanded its presence in the industrial garment sector. The company's commitment to producing quality products has helped it maintain its position in the market and establish sustainable relationships with overseas buyers.

Proceed is being used for:

• Meeting the working capital requirements.
• Prepayment and repayment of all or a portion of certain unsecured loan availed by the company.
• General corporate purpose.
• Meeting the offer expenses.

Industry overview

Personal protective equipment (PPE) or personal protective kit refers to equipment that is designed to protect the body from injury or infection. PPE has wide applications from industries to healthcare. These include eyewear, helmets, fall protection products, face masks, etc. These work as a shield in hazards such as physical harm, unfavorable temperatures, chemicals, airborne particles, biohazards etc. While the PPE industry at a global level has been in play, the COVID-19 crisis brought it to a center stage. Due to a worsening healthcare crisis across the globe and a shortage of PPE kits, the PPE manufacturing market saw unprecedented growth. India became the second largest country to export PPEs to the world, punching a production of around 4 lakh PPEs per day. With increased demand from both the domestic and overseas markets, the industry grew to cross Rs 7000 crore mark and is anticipated to grow steadily.

The PPE market in India has emerged as a lucrative sector owing to the cost-effective production, ease of availability of raw materials and border restrictions in other trade countries. This has opened favorable avenues for the export of protective equipment for workers. Industries like automotive, chemicals, oil & gas, etc. in India and overseas are also majority stakeholders in the demand for PPE. 

India will be the world's second-largest footwear and leather clothing producer, exporter, and fifth-largest exporter of leather goods and accessories (as of 2022). With 2.58 billion pairs produced annually, India is the Second largest footwear producer after China and with 2.60 billion pairs, India is also the second largest consumer of footwear after China.

Pros and strengths

Cost effective production and timely fulfilment of orders: The timely fulfilment of orders is a prerequisite in its industry. The company has implemented various measures to ensure adherence to timely fulfilment and achieve greater cost efficiency at its existing unit. Its constantly strive to implement an efficient procurement policy for the inputs required for production, which ensures cost efficiency in procurement and, in turn, leads to cost-effective production.

Products with national & international certifications: The whole essence of innovation does not stop at only providing products and services but requires validation in terms of certifications, whether National or International. Since all the products manufactured by it is lifesaving products, customers must have the confidence that they are certified by the law of the land and are internationally acceptable. This is especially important now that all global companies have set up their shops in India and would not compromise in terms of products in this segment. It has obtained certifications for most products manufactured by it and only trade in products that are certified by competent bodies like BIS, ISO, etc.

International presence and wide distribution network: It has established a significant presence in international markets, particularly in the US market for Industrial Leather Gloves. Its customer base spans across North America, South America, Europe, Oceania and Asia. It exports a substantial portion of its products to cater to the needs of the international market. Its strong sales and distribution network, built on long-standing relationships with distributors worldwide, has played a crucial role in its growth. It primarily follows a business-to-business or a business-to-business-to-consumer model and collaborate with well-known retail brands.

Risks and concerns

Highly competitive industry: The Company operates in a highly competitive industry and faces competition from both domestic and international competitors in the markets in which it operates. The Company's competitors include foreign brands, emerging Indian brands, as well as several small brands. While company will able to remain competitive across the product categories that it offers, it is possible that some of its existing and potential competitors may have greater brand recognition in India or globally, longer operating histories, greater financial, research, distribution and technological resources, product development, sales and marketing, more experienced management, access to a cheaper cost of capital, and other resources than the Company does.

Dependent on exports for sale of product: The Company's revenue from operations is largely denominated in Indian Rupees, but it is exposed to foreign exchange rate risk due to its export sales, which account for a significant portion of its revenue. For the fiscal years 2023, 2022, and 2021, the Company's export sales amounted to Rs 2,41,109.44 Thousands, Rs 2,35,889.70 Thousands and Rs 2,42,115.03 Thousands respectively which represent 56.98%, 69.22%, and 79.34% of its revenue from operations which is Rs 4,23,166.56 Thousands, Rs 3,40,762.91 Thousands and Rs 3,05,164.11 Thousands respectively. The Company's overdependence on exports may adversely affect its profitability if trade relations between India and any of the export countries get strained in the future or if these countries face internal issues.

Working capital requirement: Its business requires significant amount of working capital primarily as a considerable amount of time passes between purchase raw materials and sale of its finished products and the subsequent collection process viz. its customers. As a result, it is required to maintain sufficient stock at all times in order to meet manufacturing requirements, thus increasing its storage and working capital requirements. 

Outlook

Incorporated in 1997, the company is engaged in the manufacturing and export of the Industrial Safety Gloves and Garments which provides customized solutions in the field of Industrial Safety. The endeavour is complimented with the manufacturing facilities at Baruipur, Nandankanan and Falta SEZ West Bengal. On the concern side, the company operates in a highly competitive industry and faces competition from both domestic and international competitors in the markets in which it operates. The company's competitors include foreign brands, emerging Indian brands, as well as several small brands.

The company is coming out with an IPO of 74,22,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 23 per equity share to mobilize Rs 17.07 crore. On performance front, the company’s total Income for the Financial Year ended 2022-23 stood at Rs 4,59,841.41 thousand whereas the same stood at Rs 3,41,489.45 thousand in Financial year 2021-22, representing an Increase by 34.66%. The company has reported net profit after tax of Rs 40,264.91 thousand, in financial year 2022-23, as compared to Rs.14,969.42 thousand in financial year 2021-22. There is an increase in PAT by 168.98%. Meanwhile, its strategy is to explore and create positive alliances in different countries and set up a global base to achieve longstanding relationships globally and become an international brand. This will also help it improve its outlook and bring in more technologically innovative products and production methods to ensure high-quality returns to the organization.