Osel Devices
- Osel Devices is coming out with an initial public offering (IPO) of 44,16,000 equity shares in a price band Rs 155-160 per equity share.
- The issue will open on September 16, 2024 and will close on September 19, 2024.
- The shares will be listed on SME Platform of NSE.
- The face value of the share is Rs 10 and is priced 15.50 times of its face value on the lower side and 16.00 times on the higher side.
- Book running lead manager to the issue is Horizon Management.
- Compliance Officer for the issue is Sandeep Kumar.
Profile of the company
Osel Devices is driven by a passion for innovation and a commitment to excellence. As a provider of technology solutions, the company specializes in creating transformative products that empower individuals, businesses, and communities to thrive in a rapidly evolving digital world. The company manufactures a comprehensive range of LED display systems and the latest hearing aids, including all major components, at its ultra-modern plant. The company’s manufacturing plant in Greater Noida was inaugurated by Ex-Union Minister Shri Pratap Sarangi.
The company manufactures comprehensive range of LED display systems. It is equipped with software and hardware capabilities. The company’s LED display systems are enabled with content management system which allows it to connect to phone or computer and display on screen. Equipped with the latest technology and adhering to rigorous quality control standards, it produces a wide range of high-performance components and systems. This vertical integration ensures consistency and excellence in every product it delivers. The LED display systems manufactured by it has been used by corporate for commercial usage such as advertising media, billboards, corporate meeting rooms, presentations, display promotions, command control centre and front sign boards.
The company also manufactures latest hearing aids commonly known as assisted healthcare devices. Its hearing aids are designed to support individuals with disabilities, elderly person and chronic patients, who are having low hearing level, in performing everyday activities more effectively to enhance quality of life. Its major customer for hearing aids is Artificial Limbs Manufacturing Corporation of India. It manufactures Digital Programable and Non-Programmable Hearing Aids.
Proceed is being used for:
- Prepayment or repayment of certain loans availed by the company
- Funding of working capital requirements of the company
- General corporate purposes
Industry Overview
Curative medicine has historically taken precedence over preventive treatment in India. However, as a result of the COVID-19 epidemic, preventive care has become increasingly crucial in India. A recent poll of more than 1,000 people revealed that at least 40% of respondents strongly preferred preventative health. NCDs have been the primary cause of mortality and suffering during the last three decades, accounting for 71% of global deaths. In 2019, India was responsible for 66% of all deaths. Furthermore, more than half of these deaths are caused by heart disease, cancer, chronic respiratory disorders, and diabetes. The economic burden of NCDs on India is anticipated to be over Rs 511 lakh crore ($6.2 trillion) by 2030. Overweight and obesity alone affect over 17% of its population, costing the country Rs 2.8 lakh crore ($35 billion) every year, or more than 1% of its GDP. India is undergoing a rapid health shift. The transition from curative to preventative care is also predicted to benefit the Indian consumer, with improved health outcomes and cheaper healthcare expenses.
Meanwhile, the Electronics System Design & Manufacturing (ESDM) industry includes electronic hardware products and components relating to information technology (IT), office automation, telecom, consumer electronics, aviation, aerospace, defence, solar photovoltaic, nano electronics and medical electronics. The industry also includes design-related activities such as product designing, chip designing, Very Large-Scale Integration (VLSI), board designing and embedded systems. The Electronics System Design & Manufacturing (ESDM) market in India is anticipated to increase at a CAGR of 16.1% between 2019 and 2025, owing to strong demand, supportive government policies and increased digitalisation.
The ESDM sector plays a key role in the government’s goal of generating US$ 1 trillion of economic value from the digital economy by 2025. India's digital media and entertainment industry, worth US$ 12 billion, is set to triple by 2030, as forecasted by Redseer. During April-January (2024), the exports of electronic goods were recorded at $22.64 billion as compared to $18.78 billion during same period. The demand for electronic products will rise to $400 billion by 2025 from $33 billion in FY20. India has a goal of producing 1 billion mobile handsets worth $190 billion (Rs 13,00,000 crore) by 2025, with 600 million handsets worth $110 billion (Rs 7 lakh crore) targeted for exports.
Pros and strengths
LED display system and hearing aids manufacturer with long standing market presence: The company is well known through its brand named - ‘OSEL’ in the LED display and Hearing Aids industry. The brands and the company’s experience has helped by the company earn the trust and goodwill of its clients which further has an influence on the prospective client’s decision. Its well established and recognizable brand and the reputation built by it has and will enable it to increase its clientele list in the future. With a rich history spanning over a decade, the company has emerged as a pioneering force in the tailored made LED display systems and hearing aids industry. Its sustained market presence has not only facilitated nationwide expansion but has also positioned it as a reliable partner for system integrators and other hearing aid manufacturers.
Quality Assurance and Quality Control of its products: At the core of its operations is an unwavering commitment to quality assurance and control. Its customers demand rigorous quality checks at various stages before dispatch, and it has established dedicated quality assurance and control teams to meet these demands. Led by experienced technicians, production teams ensure that its LED display systems and hearing aids undergo meticulous inspections to prevent rejections and maintain highest quality standard as specified by its clients. The company’s quality control measures extend from thorough checks of raw materials to the final inspection of finished goods. An in-house laboratory equipped with automatic/mechanical machines, operated by skilled personnel, supplements these efforts.
Cost effective production and timely fulfilment of orders: Timely fulfilment of the work orders is a prerequisite in its industry. It has taken various steps in order to ensure adherence to timely fulfilment of orders and to achieve greater cost efficiency at its existing manufacturing and assembling unit. These steps include sourcing of quality raw materials, quality control, smooth labour relations, use of an efficient production system and strong relationship with raw material suppliers. These steps enable it to meet large and varied orders.
Risks and concerns
Maximum revenue comes from limited customers: The company is engaged in manufacturing of LED display and Hearing Aids. It is dependent upon its relationship with its key customers. For the financial years ended March 31, 2024, financial years ended March 31, 2023 and March 31, 2022 its top ten customers accounted for around 90.76%, 93.89% and 97.96% of its total revenue from operations. Its business operations are highly dependent on its customers, which it caters to and the loss of any of its customers from any industry which it caters to may adversely affect its sales and consequently on its business and results of operations.
Geographical constrain: The company generates major sales from its customers situated at select geographical regions. Such geographical concentration of its business in these regions 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. The revenue from Delhi is 51.67%, 54.68% and 52.50% in FY24, FY23 and FY22 respectively. Moreover, the revenue from Uttar Pradesh is 27.08%, 38.94% and 32.33% in FY24, FY23 and FY22 respectively. While it strives to geographically diversify its product portfolio and reduce its concentration risk, it cannot assure that adverse developments associated with the region will not impact on its business. If it is unable to mitigate the concentration risk, it may not be able to develop its business as planned and its business, financial condition and results of operation could be adversely affected.
Limited operating history in respect of its products: In the year 2019, the company had started manufacturing, marketing and selling of LED Displays and hearing aids. The company has a limited operating history of manufacturing and selling of LED Displays and hearing aids. Due to its limited operating history, the investors may not be able to evaluate its business, future prospects and viability. Further, on account of its operating history, it may not have sufficient experience to address the risks relating to providing the aforementioned services. Additionally, the company may face challenges in planning and forecasting accurately as a result of its limited historical data and inexperience in implementing and evaluating its business strategies. Its inability to successfully address these risks, difficulties and challenges as a result of its inexperience and limited operating history may have a negative impact on its ability to implement its strategic initiatives, which may have an adverse effect on its business, prospects, financial condition and results of operations.
Outlook
Osel Devices was founded in 2006 and manufactures a comprehensive range of LED display systems and hearing aids. The company manufactures a comprehensive range of LED display systems including all major components for commercial use such as advertising media, billboards, corporate boardrooms, presentations, display promotions, command centers, and front signs. The company’s manufacturing facility in Greater Noida was inaugurated by former Union Minister Shri Pratap Sarangi. The plant has a production capacity of 15,000 square feet of LED display per year and 4,00,000 units of hearing aids per year. On the concern side, the company depends on a few customers of its products, for a significant portion of its revenue, and any decrease in revenues or sales from any one of its key customers may adversely affect its business and results of operations. The company generates its major portion of sales from its operations in certain geographical regions. Any adverse developments affecting its operations in these regions could have an adverse impact on its revenue and results of operations.
The company is coming out with a maiden IPO of 44,16,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 155-160 per equity share. The aggregate size of the offer is around Rs 68.45 crore to Rs 70.66 crore based on lower and upper price band respectively. On performance front, total revenue has in terms of value and percentage increased by Rs 5,034.67 lakh and 61.48%, from Rs 8,188.68 lakh in the fiscal year ended March 31, 2023 to Rs 13,223.35 lakh in the fiscal year ended March 31, 2024. Net Profit has in terms of value and percentage increased by Rs 839.21 lakh and 180.09 % from Rs 466.00 lakh in the fiscal year ended March 31, 2023 to Rs 1305.21 lakh in the fiscal year ended March 31, 2024. Profit after Tax was increased due to increase volume of its business operations and higher volume of sales.
The company is engaged in designing, manufacturing, assembling and post-sale services of its products for sale to its customers domestically and internationally. It is focussed on enhancing its presence in the geographies where it already operates by strengthening relationships with current channel partners. The domestic market offers various opportunities in term of sub-geographic penetration and product/ market diversification which it intends to seize and increase its market reach domestically to explore untapped markets and segments as part of its strategy to mitigate market risk and widen growth prospects. Further, it also enters new markets internationally. The company is also targeting metropolitan areas with high demand for LED displays, such as emerging markets in the Middle East and North America.
