Master Components coming with an IPO to raise Rs 15.42 crore

Master Components 

• Master Components is coming out with an initial public offering (IPO) of 11,02,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 140 per equity share. 
• The issue will open for subscription on September 18, 2023 and will close on September 21, 2023.
• The shares will be listed on NSE Emerge.
• The share is priced 14.00 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Aryaman Financial Services.
• Compliance Officer for the issue is Akshada Bhase.

Profile of the company

The company is engaged in manufacturing plastic engineering components and subassemblies. Its product is an industrial capital goods and it undergoes stringent quality tests to meet industry standards before they are delivered to its clients. It considers that the proximity of its Nashik facility to Mumbai- Pune Highway, and ability to produce a comprehensive range of plastic components provides it significant competitive advantages. Due to its ability to produce multiple kinds of moulded products at a single location, it is able to cater to various sector MNC’s and its smaller business associates who generally require components of different size and shapes. It endeavors to promptly address any concerns of its business associates through significant senior management engagement.  

Its manufacturing facility is equipped with the new technology machinery which is situated at Nashik, Maharashtra. It is an International Automotive Task Force (IATF) and also ISO 9001:2015 certified for Quality Management. Its specialization and primary activity is moulding the materials to produce its components all the moulding takes place at its facility on machines which has a capacity ranging from 60-450 tonnes and it mould products ranging from 1gm to 1500gms.

Proceed is being used for:

• Funding working capital requirements
• General corporate purpose

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 sector and represents 63% of the overall foreign collaborations. Demand for engineering sector services is being driven by capacity expansion in industries like infrastructure, electricity, mining, oil and gas, refinery, steel, automobiles, and consumer durables. India has a competitive advantage in terms of manufacturing costs, market knowledge, technology, and innovation in various engineering sub-sectors. 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 huge strategic importance to India’s economy. The development of the engineering sector of the economy is also significantly aided by the policies and initiatives of the Indian government. The engineering industry has been de-licensed and allows 100% foreign direct investment (FDI). Additionally, it has grown to be the biggest contributor to the nation's overall merchandise exports. 

The global molded plastics market was valued at $573.3 billion in 2021, and is projected to reach $869.2 billion by 2031, growing at a CAGR of 4.3% from 2022 to 2031. The molded plastics market is segmented on the basis of product, technology, application, and region. On the basis of product, the market is categorized into polyvinyl chloride, polypropylene, polystyrene, low density polyethylene, high density polyethylene, polyethylene terephthalate, and engineering plastics. On the basis of technology, it is divided into injection molding, blow molding, extrusion, and others. By application, it is classified into building & construction, electrical & electronics, automotive and packaging. Region-wise, the market is studied across North America, Europe, Asia-Pacific, and LAMEA.

Pros and strengths

Strategic location of unit: Its manufacturing hub is located at M.I.D.C which is well developed industrial area of Nashik. M.I.D.C of Nashik has been growing in terms of industry set up. Its facility has proper infrastructure with good conditions of road and transport facility and availability of Water and Power supply. Raw materials are sources easily from nearby area as MNC’s has their authorized dealer set up. Labours are sourced easily from nearby area as these facilitate it to fetch them as per its work load in factory. Location of its factory is near to Mumbai-Pune Highway which makes its factory attractive hub. It being outside the main city limits helps the heavy vehicles and large quantities being transported to it without traffic hassles and in a single shift, thus saving time and cost. 

Long standing relation with customers: It has been able to build trust and establish relations with its major customer for a long time now. It deals with world class level companies which are mostly MNC’s and been able to deliver them with consistent products all these years. It produces components which act as an input for MNC’s and therefore each customer has their own stringent condition relating to quality, time and use of components. The raw material used in production is selected by its customer and it mould on those specific raw materials. It needs to supply the goods in their mentioned schedule, lots and boxes as per their given list. It has been able to cater their requirement timely and as specified and therefore over years trust have been built. It even install new machines, additional capacity and new range of products as per changing times and needs of its customer.

Experienced promoters and teams: The Company is being managed by promoters and team with efforts to achieve efficiency in its work each day. It as a team follow Kaizen theory to learn and improve by taking small steps every day and contributing to company in all way possible. Its Promoters Mudduraj Kulkarni and Shrikant Joshi have studied tool engineer from institute of NTTF and has experience of planning, tool design and manufacturing the engineered goods. With their knowledge and involvement in day to day activity they help the company to troubleshoot problems with applicable solution. It has a team of professionals starting from production head, plant head, manager, accounts and overseeing the activity who is engaged with it from a long time, thereby they have understanding of the Company in and out. With the joint efforts of each one, it performs as one unit and achieve its goals strategically.

Risks and concerns

Dependent on third party transportation providers: It uses third party transportation providers for the delivery of its raw material and products. Even though majority of its customer arrange their own transportation and have a separate agreement with them, but sometimes it need to arrange such services. Vehicle strikes could have an adverse effect on its receipt of raw materials and its ability to deliver its products to its customers. In addition, transportation costs in India have been steadily increasing over the past several years. Continuing increases in transportation costs or unavailability of transportation services for its products may have an adverse effect on its business, financial condition, results of operations and prospects.

Face competition: It may has to confront pressures in respect of pricing; product quality etc. from the clients and such pressures may put strain on its profit margins which may consequently affect the financial position of the Company. Competition emerges not only from the organized sector but also from the unorganized sector and from both small and big players. Its Competitiveness is also measured by the technology it adopts as the industry is rapidly growing in India. Its inability to compete with this intense competition; will have material adverse impact on the company's financial position. 

Depends upon key personnel: Its success depends upon the continued services of its promoters and Key Managerial Persons and its ability to retain them. They are actively involved in marketing of the company, timely execution of the orders and ensures the quality control standards. Its Promoters, along with the group key managerial personnel, have over the years build relations with clients, government agencies and other persons who are connected with it. The loss of their services could impair its ability to implement its strategy and its business, financial condition, results of operations and prospects may be materially and adversely affected. 

Outlook

Master Components is engaged in manufacturing plastic engineering components and subassemblies. Its product is an industrial capital goods and it undergoes stringent quality tests to meet industry standards before they are delivered to its clients. On the concern side, it may has to confront pressures in respect of pricing; product quality etc. from the clients and such pressures may put strain on its profit margins which may consequently affect the financial position of the Company

The company is coming out with an IPO of 11,02,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 140 per equity share to mobilize Rs 15.42 crore. On performance front, in fiscal 2023, its total income increased by 13.43%, from Rs 1,842.50 lakh in fiscal 2022 to Rs 2,090.03 lakh in fiscal 2023. Profit after Tax increased by 81.94%, from Rs 93.73 lakh in fiscal 2022 to Rs 170.54 lakh in fiscal 2023. Going forward, it seeks to leverage its R&D capabilities to expand further into different domestic and international markets, where it primarily aims to become the preferred supplier of moulded components. it has diversified customer range from Electrical, Medical, Automotive and Industrial Sector.