Royal Sense coming with IPO to raise upto Rs 9.86 crore

Royal Sense

• Royal Sense is coming out with an initial public offering (IPO) of 14,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 68 per equity share. 
• The issue will open for subscription on March 12, 2024 and will close on March 14, 2024.
• The shares will be listed on BSE SME Platform.
• The share is priced at 6.80 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Expert Global Consultants.
• Compliance Officer for the issue is Priyanka Bhutani.

Profile of the company

Royal Sense is suppliers of high quality goods that meet international standards required for hospitals, laboratories, institutions and clinics to provide health services. It trades and offers a wide range of surgical accessories, tools, equipment and other things. The supplied assortment can be modified according to the requirements of the clients and is offered in a wide range of parameters. It works relentlessly with the right strategy, forward thinking and progressive ethos to position ourselves as the one-stop solution for customers looking to meet their complete needs for medical equipment, surgical instruments, surgical consumables, laboratory equipment, laboratory reagents, medical consumables, diagnostic equipment, sanitary napkins, pharmaceuticals, medicine and cosmetics.

Its promoter was appointed as the managing director of the company and has been taking care of the overall operation and key business decisions of the company since then. With its absolute commitment to quality, careful attention and level of services. Currently In addition, it works tirelessly, which positions it as a one-stop solution for customers to meet their complete requirements for medical equipment, surgical instruments, surgical consumables, laboratory equipment, laboratory reagents, disposable medical supplies and diagnostic kits. It has extended its supply chain to government e-procurement systems, i.e. tender systems, GEM Portal etc. It supplies its products to the Ministry of Health of Various states like Uttar Pradesh, Himachal Pradesh, Rajasthan, Jammu & Kashmir and in domestic by its self or through distributors/ sub-distributors. It also supply to both to Govt. Institutions and private hospitals in all over India.

Proceed is being used for:

• Working capital requirement 
• General corporate purposes
• Issue expenses

Industry overview

Healthcare has become one of India’s largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services, and increasing expenditure by public as well as private players. India's competitive advantage lies in its large pool of well-trained medical professionals. India is also cost-competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe. The low cost of medical services has resulted in a rise in the country’s medical tourism, attracting patients from across the world. Moreover, India has emerged as a hub for R&D activities for international players due to its relatively low cost of clinical research.

The Indian market for medical equipment is predicted to increase to $50 billion by 2025. As of 2020, the medical devices market is estimated to be at $12 billion in India. India is the 4th largest Asian medical devices market after Japan, China, and South Korea, and among the top 20 medical devices markets globally. India has an overall 75-80% import dependency on medical devices. Export of medical devices from India stood at $2.90 billion in FY22. The US, Germany, China, Brazil, Iran, etc. are a few key countries that import Indian medical devices. Gujarat, Maharashtra, Karnataka, Haryana, Andhra Pradesh, Telangana and Tamil Nadu are the manufacturing hubs for medical devices in India. In Bio Asia 2021, key stakeholders in the panel discussion on medical technologies stated that India would become self-sufficient in domestic medical devices manufacturing by 2025-26. 

The Government has allowed 100% FDI under the automatic route for both Brownfield and Greenfield setups in the sector is expected to boost the industry. Strong FDI inflows also reflect confidence among global players on the Indian medical devices market. Over the last five years (2015-20), India received $600 million, with key investments from countries such as Singapore, the US, Europe and Japan. Categories such as equipment and instruments, consumables and implants have attracted the most FDIs. From April 2000-September 2022, FDI inflow in the medical and surgical appliances sector stood at $2.74 billion.

Pros and strengths

Existing well established reputation and customer relationships: It focuses on maintaining long term cordial business relationship with most of its customers. Its key customers majorly include (i) hospitals and diagnostic centers; (ii) Distributors and dealers and (iii) independent doctors. It sells some of its products under registered brand name ‘STERGIC’ having exclusive Distributors right. 

Offers a diversified range of products: It has a diversified product portfolio of medical equipment’s and disposables catering to renal care solution, cardiovascular disease, respiratory disease, Critical Care and Radiology and surgical disposables. It deals in a wide range of products, which enables it to cater to a widespread customer base across India. The collaboration, agreements or authorizations awarded to the company for equipment’s or disposables has endowed with greater exposure and opportunity to benefit from large consumer market in India.

Quality assurance and safety of products: The quality is a pre-requisite for a positive consumer experience and long-term brand loyalty. This philosophy has formed the foundation of the expansion and diversification of its product portfolio since its inception. It has been in the business of supplying medical equipment’s and disposables since 2015 and has successfully ventured and supplied quality products to its customers. For products which are sourced by company from third party suppliers, it has a dedicated sourcing team and quality assurance team, which closely monitor the quality of such products.

Risks and concerns

Rely on suppliers for medical devices and equipment manufacturers: It relies on suppliers for traded goods like Medical Equipments, Surgical Instruments Surgical Consumables, Laboratory Equipment, Laboratory Reagents, Medical Disposables, Diagnostic equipment etc., with whom it generally do not enter into any long-term supply contact or agreements. The order for the goods placed on requirement basis. In the event that, there are any delays or disruptions in the supply of these goods from its suppliers, its ability to deliver the products may be affected. Any of its supplier’s failure to adhere to agreed timelines, whether due to their inability to comply with, or obtain, regulatory approvals, or otherwise, may result in delays and disruptions to its sales, increased costs, delayed payments for its products and damage to its reputation leading to an adverse effect on its results of operations.

Dependent on few numbers of customers and suppliers: Its top 10 customers contribute to 95.40% of its revenue from operations for the period ended June 30, 2023 and its top 10 suppliers contribute to 97.12% of its purchases for the period ended June 30, 2023. The loss of a significant client or supplier would have a material adverse effect on its financial results. Furthermore, major events affecting its clients, such as bankruptcy, change of management, mergers and acquisitions could adversely impact its business. If any of its major clients becomes bankrupt or insolvent, it may lose some or all of its business from that client and its receivable from that client would increase and may have to be written off, adversely impacting its income and financial condition.

Geographical constrain: Its business operated in one area i.e. Delhi NCR. As a result, any localized social unrest, natural calamities, distress or breakdown of services and utilities in and around this region, could have material adverse effect on its business, financial position and results of operations. Further, any continuous addition of similar industries/competitors in and around these areas, without commensurate growth of its infrastructural facilities may put pressure on the existing infrastructure and also increase competition in the area, which may affect its business and results of operation.

Outlook

Royal Sense is suppliers of high quality goods that meet international standards required for hospitals, laboratories, institutions and clinics to provide health services. It trades and offers a wide range of surgical accessories, tools, equipment and other things. The supplied assortment can be modified according to the requirements of the clients and is offered in a wide range of parameters. On the concern side, it operates in a competitive atmosphere with multiple few organized competitors and multiple unorganized customers. In organized peers Orion Sutures India. Some of its competitors may have greater resources than those available to the company. It faces fair competition from both organized and unorganized players in the market.

The company is coming out with an IPO of 14,50,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 68 per equity share to mobilize Rs 9.86 crore. On performance front, revenue from operations has increased by 71.36% to Rs 1,156.46 lakh for financial year 2022-23 from Rs 674.86 lakh for the financial year 2021-22. Profit after tax of the company jumped by 503.39% at Rs 131.78 lakh for financial year 2022-23 as compared Rs 21.84 lakh for the financial year 2021-22. Going forward, the company intends to focus on adhering to the quality standards of the products. Quality of the product is very important for the company from both customer point of view and regulatory point of view. Continuous quality review of products and timely corrective measures in case of quality diversion are keys for maintaining quality standards of the products. Providing the desired and good quality products help it in enhancing customer trust and maintaining long term relationships with customers. But the focus to meet quality standard is essential to obtain repeat orders.