Interiors and More
- Interiors and More is coming out with initial public offering (IPO) of 18,50,400 shares of Rs 10 each in a price band Rs 216-227 per equity share.
- The issue will open for subscription on February 15, 2024 and will close on February 20, 2024.
- The shares will be listed on NSE SME Platform.
- The face value of the share is Rs 10 and is priced 21.60 times of its face value on the lower side and 22.70 times on the higher side.
- Book running lead manager to the issue is Gretex Corporate Services.
- Compliance Officer for the issue is Kuntal Pankaj Sharma.
Profile of the company
Interiors and More was founded in 2012. Initially, it focused on trading artificial flowers, importing them and selling them domestically. An artificial flower resembles a real flower but is non-perishable in nature, hence it is commonly utilized in Indian marketplaces. Artificial flowers are commonly utilized in weddings, celebrations, corporate settings, and home decor. It has been serving businesses of all sizes for over a decade. With more time and expertise, the company began to adapt to the market and comprehend the needs of its clients. Following its success with artificial flowers, the company expanded into decorative items such as vases, plants, planters, wedding props, lights, furniture, fabric, chandeliers, candles, fragrance, and other related decor items. Currently, the company is a manufacturer and trader of quality artificial flowers, plants, and other home and office décor items. It has an in-house manufacturing plant where it makes its items.
The company sources raw materials from both domestic and foreign markets. Its business has grown not only because of the application of multiple marketing models but also because of its creative and constantly reviewed marketing tactics. The business is supported by qualified management and a dynamic workforce.
The primary revenue of the company is generated from the sales of artificial flowers, plants & leaves. Artificial flowers, plants & leaves have been a core focus of its business, and it has established ourselves as a reputable provider in this particular market segment. Its expertise in sourcing high-quality materials, manufacturing realistic-looking flowers, and meeting customer demands has contributed to its success in this area. It continues to invest in the development and expansion of its other product categories. This allows it to offer a comprehensive range of complementary products to its customers and diversify its revenue streams.
Proceed is being used for:
- Repayment/Prepayment of certain debt facilities.
- Working capital requirements.
- General corporate purposes.
Industry overview
India Artificial Flower Market registered a growth of 57.26% in value shipments in 2022 as compared to 2021 and an increase of 8.21% CAGR in 2022 over a period of 2017. In Artificial Flower Market India is becoming more competitive as the HHI index in 2022 was 8531 while in 2017 it was 9439. Herfindahl Index measures the competitiveness of exporting countries. The range lies from 0 to 10000, where a lower index number represents a larger number of players or exporting countries in the market while a large index number means less numbers of players or countries exporting in the market. India has reportedly relied more on imports to meet its growing demand in Artificial Flower Market. India Artificial Flower market currently, in 2023, has witnessed an HHI of 9010, Which has decreased substantially as compared to the HHI of 9518 in 2017. The market is moving towards Highly concentrated. Herfindahl index measures the competitiveness of exporting countries. The range lies from 0 to 10000, where a lower index number represents a larger number of players or exporting countries in the market while a large index number means fewer numbers of players or countries exporting in the market.
India is the second largest producer and exporter of artificial flowers in the world. It has been estimated that India accounted for around 25% of global market share in 2020. The artificial flower market in India is expected to grow at a CAGR of 8.3% between 2021-2027, with an increasing demand from interior decorators and florists, as well as rising disposable incomes among young urbanites leading to increased expenditure on home decor products. However, the availability of low-quality imitation or fake artificial flower products from unorganized players can lead customers away from buying genuine ones thus affecting overall sales revenue adversely. Moreover, presence these cheap imitations also affects brand image negatively which could be detrimental for any business entity operating within this domain.
Increasing popularity of Artificial Flowers - Artificial flowers are gaining traction because they provide a cost effective alternative to natural flowers while providing a similar aesthetic appeal. Consumers are using them for decorative purposes due to their low maintenance requirements and longer shelf life compared to fresh cut flowers. Growing Urbanization & Expansion of Retail Chains - Increase in urban population supported by expansion of retail chains such as Big Bazaar, Lifestyle etc., have created more avenues for selling artificial flower products across various regions which has contributed significantly towards driving growth in this market. With the advancement of technology like 3D printing, manufacturers are able to create intricate designs at lower costs and offer customized product offerings with superior quality & durability compared to traditional manufacturing processes resulting into further fuelling the demand for these items. Going forward, there is an increasing focus shift towards ecofriendly alternatives such synthetic materials made through sustainable production methods over conventional plastic-based ones owing growing environmental concerns amongst consumers. This trend is likely continued during forecast period making way for new opportunities within industry’s landscape.
Pros and strengths
Scalable business model: Because of its digital strategy, which puts it in a unique position to attract clients quickly and keep them with its customer centric approach while making the best use of the resources it already has, it thinks it has a scalable business model. This will ensure quality supply and lead to economies of scale. The development of new products and markets through the investigation of consumer demands, marketing know-how, and reliable product quality is primarily responsible for the creation of corporate scale.
Large & diverse product portfolio: Artificial flowers, plants, wedding props, and other decorative things including lights, furniture, fabric, chandeliers, candles, and fragrances are all produced and sold by the company. In order to meet customer demand, the company manufactures items depending on specifications and needs. It has the network, experience, and resources needed to introduce more items.
Well-developed distribution network: In order to increase the scope of identifying core customer base and establishing appropriate marketing strategies for procurement and project liaising to deliver tailored solutions for clients, the company has created and executed a wide range of networking channels throughout the industry and society. Its marketing and distribution network guarantees that its products are available to its clients, which translates into a productive supply chain, customer support that is targeted, and quick product delivery times.
Risks and concerns
Maximum revenue comes from top 5 customers: The company’s top 5 customers represented 37.32% and 43.53% of its revenue from operation for the period ended December 31, 2023 and Fiscal 2023, respectively. It has not entered into long terms agreements with its customers and the success of its business is accordingly significantly dependent on customers’ loyalty towards its products and brand. The actual sales by the company may differ from the estimates of its management due to the absence of long term agreements. The loss of one or more of these significant or key customers or a reduction in the amount of business it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows. The company cannot assure that it will be able to maintain historic levels of business and / or negotiate and execute long term contracts on terms that are commercially viable with its significant customers or that it will be able to significantly reduce customer concentration in the future.
Geographical constrain: The major portion of the company’s revenue for the period ended December 31, 2023, March 31, 2023, March 31, 2022, and March 31, 2021 is from the city of Mumbai i.e. 88.31%, 68.12%, 94.52% and 97.60% respectively of the total revenue from operations. Such geographical concentration of its business heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in these regions which may adversely affect its business prospects, financial conditions, and results of operations. Factors such as competition, culture, regulatory regimes, business practices and customs, industry needs, transportation, in other markets where it may expand, its operations may differ from those in which it is currently offering. In addition, as it enters new markets and geographical areas, it is likely to compete not only with national players, but also local players who might have an established local presence, are more familiar with local regulations, business practices and industry needs, have stronger relationships with local distributors, dealers, relevant government authorities, and are in a stronger financial position than us, all of which may give them a competitive advantage over it. Its inability to expand more into areas outside Mumbai market may adversely affect its business prospects, financial conditions, and results of operations.
Significant portion of its supply comes from top 5 supplier: The company’s top 5 suppliers represented 47.88% and 59.15% of its cost of purchases for the period ended December 31, 2023 and Fiscal 2023, respectively. It has not entered into long terms agreements with its suppliers and the success of its business is accordingly dependent significantly on business terms and conditions with them, which may be affected in future based on its relationship with them. The actual purchases by the company may differ from the estimates of its management due to the absence of long-term agreements. The loss of one or more of these significant or key suppliers or a reduction in the amount of supplies it obtains from them could have an adverse effect on its business, results of operations, financial condition and cash flows. It cannot assure that it will be able to maintain historic levels of business and / or negotiate and execute long term contracts on terms that are commercially viable with its significant suppliers or that it will be able to significantly reduce supplier concentration in the future.
Outlook
Interiors & More trades, imports, and sells artificial flowers. The company manufactures and trades quality artificial flowers, plants, and decor items for homes and offices. The manufacturing facility, which is fully furnished with all the necessary tools for production, test equipment for quality control, and additional handling supplies to enable efficient assembly and simple logistics, is located in Gujarat. The company has expanded to various locations over the years, including Mumbai and Delhi, with the factory operating from Umbergaon. On the concern side, the company has historically derived and may continue to derive, a significant portion of its income from its top 5 customers and it cannot assure that it will be able to maintain historic levels of business and / or negotiate and execute long term contracts on terms that are commercially viable with its significant customers or that it will be able to significantly reduce customer concentration in the future. Also, the company historically derived a significant portion of its supply from top 5 Suppliers.
The company is coming out with an IPO of 18,50,400 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 216-227 per equity share. The aggregate size of the offer is around Rs 39.97 crore to Rs 42 crore based on lower and upper price band respectively. On performance front, the company’s total revenue increased by Rs 1,528.64 lakh or 153.09% to Rs 2,527.17 lakh for the financial year 2022-23 from Rs 998.53 lakh for the financial year 2021-22 due to increase in revenue from operations and other income. Moreover, the company’s profit after tax increased by 467.64% to Rs 592.84 lakh for the financial year 2022-23 from Rs 104.44 lakh for the financial year 2021-22, reflecting a net increase of Rs 488.40 lakh due increase in revenue and scale of operations.
The company concentrates on increasing operational effectiveness in order to cut costs and gain a competitive advantage. It constantly works to improve operational output through technological development, quality assurance, and ongoing process improvements. Its staff members receive frequent motivation to work more productively and efficiently while wasting less. Economies of scale are also significant. For complete process control, it thinks that strong internal management is essential. It reduces expenses by doing away with needless middlemen and obtaining materials in an economical way through labor efficiency optimization and logistics optimization. Going forward, the company’s focus is on increasing sales volume through expansion, diversification and spread in geographical outreach. Its growth in local market can fetch it new business expansion and opportunities.
