Creative Graphics Solutions India coming with IPO to raise upto Rs 54.40 crore

Creative Graphics Solutions India 

• Creative Graphics Solutions India is coming out with initial public offering (IPO) of 6,400,000 shares of Rs 10 each in a price band Rs 80-85 per equity share.  
• The issue will open for subscription on March 28, 2024 and will close on April 4, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 8.00 times of its face value on the lower side and 8.50 times on the higher side.
• Book running lead manager to the issue is Corporate Capital Ventures.
• Compliance Officer for the issue is Puja Arora Mehrotra.

Profile of the company

Creative Graphics Solutions India is a pre-press company, engaged in the manufacturing of flexographic printing plates including Digital Flexo Plates, Conventional Flexo Printing Plates, Letter Press Plates, Metal Back Plates, and Coating Plates. The company is serving the customers across India as well as outside India namely African Countries, Thailand, Qatar, Kuwait and Nepal. Beyond its core business, it has expanded its horizons through its two wholly owned subsidiaries i.e. Creative Graphics Premedia Private Limited and Wahren India Private Limited.

The company Creative Graphics delivers quality flexo plates with its state-of-the-art technology and equipments which meet the requirements of modern day flexo printing processes. It has remained its constant endeavour to exceed its customers' expectations with timely deliveries of custom designed flexo plates, with quality assurance. Its manufacturing facility is certified in accordance with international standards of quality management systems, environmental management systems, occupational health and safety management systems including Certification for the Quality Management System as per ISO 9001:2015, ISO 14001:2015, ISO 45001:2018. These certifications are provided for the “designing, development & manufacturing of photo polymer plates, flexo graphic printing plates, printing blocks & cylinder”. These certifications reflect its commitment to excellence and quality.

A flexographic printing plate is a special surface that is used to print images on the substrate such as paper, plastics, cans or similar variety of materials. These flexo plates are small sheets of nylon polymer that hold the design and can be used to create multiple copies of the artwork. These are available in various sizes and thicknesses, so client can choose one that works best for their project or as per their requirements. These flexographic printing plates are made up of a rigid surface that can be coated with ink and coated with images that can be transferred from the plate to the substrate i.e plastic, paper, can etc... The plates react to the pressure of being pressed against the substrate by creating a negative image.

Proceed is being used for:

• Meeting out the working capital requirements of the company.
• Repayment/prepayment, in part or full, of certain of its borrowings.
• Meeting out the capital expenditure of the company.
• Meeting out inorganic growth through unidentified acquisition for company.
• General corporate expenses.

Industry overview

The India commercial printing market size reached $33.2 Billion in 2022. Looking forward, IMARC Group expects the market to reach $41.6 Billion by 2028, exhibiting a growth rate (CAGR) of 3.4% during 2023-2028. Commercial printing refers to a collection of services, such as layout designing, binding, composition and press productions, used to transfer the artwork and text onto paper and cards. The commercial printing process utilizes a variety of materials such as flyers, brochures, books, posters, magazines, newsletters, and transactional bills and statements. It plays an essential role in producing large displays, which aids in attracting consumers with attractive designs. Consequently, it is widely used in the packaging, food and beverage, pharmaceuticals, and publishing industries.

The Indian printing industry is increasingly being driven by growth in packaging and labels. The print media also continues to grow at a healthy annual pace of four percent. As its growth trends continue to be well over the world averages, in print volume terms, India is set to become the fifth largest market by 2018 moving up five notches from its present tenth slot. Therein lays a great opportunity for the Indian & International print suppliers. The market size of the package printing sector is expected to increase from Rs 53,374 crore in 2012 to Rs 77,714 crore in 2017, and will make up 43% of total print product sales in 2017.

In order to meet the increasing demand of printing seamless motives and high resistance to solvent, companies all over the world are focusing towards the development of sleeves types and rollers in order to expand their product portfolio and increase global footprint. The companies are also focusing on different strategies in order to maintain the market share in the global flexographic printing technology market.

Pros and strengths

Long-term supply agreements: The company's long-term agreements with global suppliers like Dupont, ESKO, Kodak which confer the significant competitive advantages. Such arrangements ensure price stability, bolster supply chain reliability, and drive cost efficiencies, thus enhancing the company's cost competitiveness. Additionally, it fosters strategic supplier relationships, potentially leading to collaborative innovations and preferential treatment. Moreover, these agreements serve as a risk mitigation strategy, guarding against market fluctuations and supply disruptions, thereby enabling the company to navigate uncertain times adeptly.

Futuristic infrastructure and Modern-Day technology: It has installed state of the art plate making system from DuPont, Germany, and has brilliant technical expertise in this field which enables it to manufacture highly sophisticated flexo plates for the printing industry. This in-house manufacturing facility helps the company to efficiently handle the whole manufacturing process and also, to minimize the processing cost. It delivers high quality flexo plates with its state-of-the-art technology and equipments to meet the requirements of modern day flexo producing processes.

Strong and long-standing customer relationships: Its existing client relationships help the company to get repeat business from its customers. Its client relationships also help the company to cross sell its other products and services to them. Further, it has been mutually value creating, stable and long-term association with its customers through product, operational process & technology excellence offered by the company. This has helped the company maintain a long-term working relationship with its customers and improve its customer retention strategy. Through these efforts, it aims to become the “first choice vendor” for all printing companies for the services it offers.

Risks and concerns

Dependent upon few key suppliers: One of its primary raw materials comprise polymer/ rubber sheet. The prices of polymer sheets may also fluctuate based on exchange rate, customs & duties levied on imports or changes in government policies with respect to these materials or the countries supplying the same. It may be unable to make adequate provisions for the price fluctuations and, consequently, any adverse fluctuations that it has not factored in or provided for may adversely affect the results of its operations and its financial conditions. At present, it purchases most of its raw material from limited number of suppliers.

Do not enter into long term contracts with customers: Its 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.

Require certain approvals, licenses, registrations and permits: It requires certain statutory and regulatory permits, licenses and approvals to operate its business. There are few certificates for which it has applied but not received the certificates and the certificate which it did not yet applied. However, it is in the process for the same. Further, some of these approvals are granted for fixed periods of time and need renewal from time to time. It is required to renew such permits, licenses and approvals. There can be no assurance that the relevant authorities will issue any of such permits or approvals in time or at all. Failure by the company to renew, maintain or obtain the required permits or approvals in time may result in the interruption of its operations and may have a material adverse effect on its business, financial condition and results of operations.

Outlook

Creative Graphics Solutions India is manufacturer of all types of Printing blocks (Photopolymer plates) for flexographic, letterpress & dry offset machines. Creative Graphics is a pre-press company, engaged in the manufacturing of flexographic printing plates including Digital Flexo Plates, Conventional Flexo Printing Plates, Letter Press Plates, Metal Back Plates and Coating Plates. The company is serving the customers across India as well as outside India namely African Countries, Thailand, Qatar, Kuwait and Nepal On the concern side, its success heavily depends upon the continued services of its Key Managerial Personnel, along with support of its Promoters. It also depends significantly on its Key Managerial Personnel for executing its day-to-day activities. The loss of any of its Promoters and Key Management Personnel, or failure to recruit suitable or comparable replacements, could have an adverse effect on the company. 

The company is coming out with an IPO of 64,00,000 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 80-85 per equity share. The aggregate size of the offer is around Rs 51.20 crore to Rs 54.40 crore based on lower and upper price band respectively. On performance front, total revenue has increased by 33.63% from Rs 6,86,833 thousands in the fiscal year ended March 31, 2022 to Rs 9,17,834 thousands in the fiscal year ended March 31, 2023. The increase in revenue is on account of increase in Sale of product and services and other income. Net Profit has increased by 85.82% from Rs 46,505 thousands in the fiscal year ended March 31, 2022 to profit of Rs 86,415 thousands in the fiscal year ended March 31, 2023.Meanwhile, the company started its manufacturing from one unit located at Noida, Uttar Pradesh and with the passage of time it has setup 6 additional manufacturing unit located at different cities i.e Ahmedabad (Gujrat), Baddi (Himachal Pradesh), Mumbai (Maharashtra), Hyderabad (Telangana), Chennai (Tamil Nadu), Pune (Maharashtra).