Greenhitech Ventures coming with IPO to raise Rs 6.30 crore

Greenhitech Ventures 

• Greenhitech Ventures is coming out with an initial public offering (IPO) of 12,60,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 50 per equity share. 
• The issue will open for subscription on April 12, 2024 and will close on April 16, 2024.
• The shares will be listed on BSE SME Platform.
• The share is priced at 5.00 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Beeline Capital Advisors.
• Compliance Officer for the issue is Sneha Jain.

Profile of the company

The company is engaged in trading of various petroleum-based products for the different categories of industries based on their requirement. This includes supply of biofuels, bitumen, light density oils, furnace oils etc. The company is also engaged in Operation & Maintenance as Job worker for Ethanol manufacturing in Government owned distilleries. It understands the market needs and upgrades its team constantly with growing technology and market trends. It provides business solutions and services to consumers of Fuels and other alternative materials across India.

The company is engaged in Operation & Maintenance as Job worker for Ethanol manufacturing in Government owned distilleries. Company is not having its owned manufacturing unit. The Company bids for tender of Government owned distillery for Operation & Maintenance as Job worker for Ethanol manufacturing. After receipt of tender, the company runs the ethanol plant in government owned distillery and manufacture ethanol and transfer all ethanol manufactured to the respective distillery. Hence there is no procurement and selling of Product for ethanol manufacturing as the Company manufacturer ethanol in government owned distillery for transferring to them only.

Driven by experience in agriculture, innovation and investment in Research & Development, as bio fuel is substitute for the traditional fossil fuels and with the indiscriminate exploitation of all fossil fuels. It started with an aim ‘Effective, Efficient and Economical’ the 3 E's form the base of its commitment be it any segment of services or supply that it provides. The company has compiled an extensive list of customers/potential customers and vendors. The Company is a well-known itself in Purvanchal belt of Uttar Pradesh, India for supply of bio-diesel. In Addition, the Ministry of Petroleum and Natural Gas vide its notification dated August 10, 2015 permit the sale of bio-diesel (B-100) for blending with high speed diesel to bulk consumers, in accordance with the standards specified by Bureau of Indian Standards. With the experience of its Promoter, technological drive, continuous research, supplier tie-ups, customer relationships, government support and industry demand for bio-fuel the company is one of key player for supplying of biofuels. 

Proceed is being used for:

• Meet working capital requirement 
• General corporate purpose

Industry overview

The oil and gas sector is among the eight core industries in India and plays a major role in influencing the decision-making for all the other important sections of the economy. India’s economic growth is closely related to its energy demand, therefore, the need for oil and gas is projected to increase, thereby making the sector quite conducive for investment. India retained its spot as the third-largest consumer of oil in the world as of 2022. India ethanol market size was estimated at $2.27 billion in 2022. During the forecast period between 2023 and 2029, India ethanol market size is projected to grow at a CAGR of 9.16% reaching a value of $4.15 billion by 2029. The rising demand for biofuels is expected to lead to growth in the India ethanol market.

India is expected to be one of the largest contributors to non-OECD petroleum consumption growth globally. India’s consumption of petrol products stood at 222.3 MMT in FY23. High-Speed Diesel was the most consumed oil product in India and accounted for 38.6% of petroleum product consumption in FY23. India’s consumption of petroleum products stood at almost 4.44 million barrels per day (BPD) in FY23, up from 4.05 million BPD in FY22. India’s LNG import stood at 20.1 million metric tonnes (MMT) in FY23. Gross production of LNG was 2,883 MMSCM in January, 2023. According to the International Energy Agency (IEA), consumption of natural gas in India is expected to grow by 25 BCM, registering an average annual growth of 9% until 2024.

Rapid economic growth is leading to greater outputs, which in turn is increasing the demand of oil for production and transportation. Crude oil consumption is expected to grow at a CAGR of 5.14% to 500 million tonnes by FY40 from 202.7 million tonnes in FY22. In terms of barrels, India’s oil consumption is forecast to rise from 4.05 MBPD in FY22 to 7.2 MBPD in 2030 and 9.2 MBPD in 2050. Diesel demand in India is expected to double to 163 MT by 2029-30, with diesel and petrol covering 58% 90 of India’s oil demand by 2045. Demand is not likely to simmer down anytime soon, given strong economic growth and rising urbanisation.

Pros and strengths

Timely fulfilment of orders: Timely fulfilment of the orders is a prerequisite in its industry. The company has taken various steps in order to ensure adherence to timely fulfilment and also to achieve greater cost efficiency at its existing unit. The Company constantly endeavors to implement an efficient business process so as to ensure cost efficiency in procurement. 

Eco-friendly products: Unlike fossil fuel, bio-fuel and ethanol does not contribute to greenhouse gases and are renewable source of energy. The company is serving towards renewable green energy and sustainable development of renewable natural resources (Biofuels) through the adoption of environmental-friendly technologies that favour the net reduction of greenhouse gas emission.

Quality assurance and standards: The Company is providing its customers the best possible quality. Quality standards followed right from the beginning were very stringent, and are adhered during the process of manufacturing. It is very particular from usage of right quality of material to following the right procedure for manufacturing. Its dedicated efforts towards the quality of products, processes and inputs have helped it gains a competitive advantage over others. There are quality checks in place that prevent any defective material from reaching the customer.

Risks and concerns

Depend on top ten customers: Its top ten customers contribute around 100%, 100%, 99.96%, 99.97% of its revenues for the period ended July 31, 2023, March 31, 2023, March 31, 2022 and March 31, 2021. Any decline in its Quality standards, growing competition and any change in the demand for its products by these customers may adversely affect its ability to retain them. It cannot assure that it shall generates the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability. However, the composition and revenue generated from these clients might change as it continues to add new clients in normal course of business. This helps the company in providing better value to each customer thereby increasing its engagement with its new and existing customer base that presents a substantial opportunity for growth.

Failure to adapt to technological developments: As its operations grow in scope and size, whether through expansion into new markets, it must continuously improve, upgrade, adapt and expand its systems and infrastructure to offer its customers enhanced products, features and functionality ahead of rapidly evolving customer demands, while maintaining the reliability and integrity of its systems and infrastructure in a cost-efficient and competitive manner. The systems, infrastructure and technologies it currently employs may become obsolete or be unable to support its increased size and scale. Even if it is able to maintain, upgrade or replace its existing systems or innovate or customize and develop new technologies and systems, it may not be as quick or efficient as its competitors in upgrading or replacing its systems. It may be unable to devote adequate financial resources or obtain sufficient financing on commercially acceptable terms in time, or at all, which may have a material adverse effect on its business, prospects, results of operation and financial condition.

Ethanol manufacturing business is slightly seasonal: The ethanol manufacturing business is slightly seasonal in country. This is due to the fact that distillery is shut down for period of rainy season, the timing and seasonality of weather impacts the business of the company. The company is engaged in two business i.e., ethanol manufacturing business as Job worker and trading of biofuels. The company undertakes trading in biofuels as a regular business during the year. Thus, it is subject to seasonal factors for ethanol manufacturing business, which make its operating results unpredictable. 

Outlook

Greenhitech Ventures is engaged in trading of various petroleum-based products for the different categories of industries based on their requirement. This includes supply of biodiesel and light density oils. The company is also engaged in Operation & Maintenance as Job worker for Ethanol manufacturing in Government owned distilleries. It understands the market needs and upgrades its team constantly with growing technology and market trends. It provides business solutions and services to consumers of Fuels and other alternative materials across India. On the concern side, its industry faces moderate competition from scattered unorganized players in the domestic market. It has a number of competitors who manufacture and trade products, which are similar to the company. Besides, the ethanol manufacturing business is slightly seasonal in country. This is due to the fact that distillery is shut down for period of rainy season, the timing and seasonality of weather impacts the business of the company.

The company is coming out with an IPO of 12,60,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 50 per equity share to mobilize Rs 6.30 crore. On performance front, the revenue from operations had decreased by 62.12% from Rs 6611.58 lakh in Fiscal 2022 to Rs 2504.35 lakh in Fiscal 2023. The change was primarily due to decrease in sales of products. The company reported a net profit of Rs 57.23 lakh in Fiscal 2023 as compared to a net profit of Rs 135.14 lakh in Fiscal 2022. Meanwhile, the company constantly endeavors to improve its business process, and will increase service activities to optimize the utilization of resources. It has invested significant resources, and intends to further invest in its activities to develop customized systems and processes to ensure effective management control. It regularly analyzes its existing policies to be carried out for providing its products which enables it to identify the areas of bottlenecks and correct the same.