Epack Durable IPO Review | Apply Or Not? | मैनेजमेंट ने बताए Future Plans & Business Model
कल से EPACK Durable का IPO खुलने वाला है. आप 19 जनवरी से 23 जनवरी तक अप्लाई कर सकते हैं. EPACK Durable का फ्यूचर प्लान, बिजनेस मॉडल क्या है? कहां होगा IPO से जुटाई रकम का इस्तेमाल? #EpackDurable के चेयरमैन & WTD बजरंग बोथरा और MD & CEO अजय डीडी सिंघानिया से GoodReturns की खास बातचीत
#epackdurable #epackdurableipo #ipoalert
~HT.99~PR.147~CA.144~ED.148~
#epackdurable #epackdurableipo #ipoalert
~HT.99~PR.147~CA.144~ED.148~
Transcript
00:00 Hi, this is Bhavna and you are watching GoodReturns. Uttar Pradesh's company, E-PAC Durables'
00:05 IPO is opening from 19th January. You can apply for it till 23rd January. For anchor
00:12 investors, the IPO has been open from 18th January. The company's target is to raise
00:18 Rs. 640.05 crores through this IPO. Out of this, Rs. 400 crores will be fresh shares
00:24 and Rs. 240.05 crores will be offered through sale. The minimum price band is Rs. 218-230.
00:41 Retail investors can buy 65 shares at a time and the limit is 13 lots i.e. 845 shares.
00:50 In this IPO, retail investors can invest from Rs. 14,250 to Rs. 1,94,350.
01:00 The company's second largest room air conditioner is an original design manufacturer in India.
01:07 They manufacture ACs, induction cooktops, mixer grinders, and water dispensers.
01:18 We will discuss the company's future plans and its IPO in detail.
01:31 We have with us Mr. Bajrang Botra, Chairman, and Mr. Ajay D.D. Singhania, MD and CEO.
01:39 Welcome to the show. We would like to know the company's operations and what it does.
02:00 IPEC is a manufacturing of larger appliances like air conditioners, induction cooktops, mixer grinders, and water dispensers.
02:11 We started this company in 2003. It is jointly promoted by two families, Botra and Singhania,
02:18 who own 50% equity each in this business. It was started as a partnership business and then converted into a private limited company in 2019.
02:26 We have been in the business of manufacturing appliances for the last 21 years.
02:35 We started as an OEM and brought our own ODM product in 2012.
02:42 ODM means we design, manufacture, and then sell it to another brand.
02:49 We do not have our own brand. We manufacture for 7 of the top 10 brands for AC.
02:58 We have 3 manufacturing facilities. We started in Dehradun, up north.
03:11 We started in Central India, Bihari. We recently started in Andhra Pradesh.
03:22 These 3 manufacturing locations are almost completely backward integrated.
03:29 Backward integration means we make the parts in the AC.
03:33 We make all the parts, except the compressor. We make 65-70% of the parts by ourselves.
03:44 We make the complete product and give it to the customer.
03:47 All the parts are made in these 3 facilities and the final product is made there.
03:52 Whether it is plastic, steel, motors, controllers, PCB, electronic controllers, we make everything ourselves.
04:00 This is the highest amount of backward integration in the industry.
04:07 This is the biggest company in the industry that makes parts under a single roof.
04:15 In the ODM space, our market share is 24%.
04:22 We are the 2nd largest AC manufacturer in India with a market share of 24%.
04:27 We also make mixer grinders, induction cooktops, bottled water dispensers.
04:35 We make all these for the top brands in India.
04:38 Some of our customers are Volta, Blue Star, Hebel, Panasonic, Dicon.
04:45 We have Bajaj, Bosch, Husha. All the top tier customers are what we cater to.
04:56 We work with all these customers and the average is +8.5 years.
05:00 Mr. Bodra, I would like to know where the money that the company is bringing in with the IPO will be used?
05:08 The total IPO will be of 640 crores.
05:12 400 crores is the primary and 240 crores is the offer for sale.
05:17 The 400 crores that we are infusing into the business, 230 crores will go to further capacity enhancement.
05:24 The capacity that we have today is sufficient for FY25.
05:30 But even after FY25, the market is growing so we need to do more capacity enhancement.
05:37 For capacity enhancement, we need capex so we are investing 230 crores in it.
05:42 We will invest 80 crores in long term debt reduction.
05:48 The remaining 90 crores will be used for general expenses.
05:52 So this is the total primary infusion of 400 crores.
05:56 The 240 crores offer for sale, our two private equity investors,
06:03 Affarma Capital and ICICI Venture, which invested in September 2021,
06:08 will offload only one third of their holding and sell the rest of the equity.
06:13 We will offer the remaining of the same size.
06:17 So the total of 240 crores is the OFS and the total is 640 crores.
06:22 You said that 80 crores will be used to pay off the debt.
06:28 How much debt does the company have?
06:30 Have you set a timeline for the debt to be paid off?
06:36 We have a term loan of 170 crores.
06:40 If we take 80 crores, we will have 90 crores left.
06:44 Another thing is that we need to improve ROE and ROCE.
06:52 We don't want to bring it to zero debt.
06:56 If we bring it to zero debt, the interest rate increases.
07:00 But our ROE and ROC hit.
07:04 We will have a lot of internal accrual in the business.
07:08 We are covering ourselves for the next 3-4 years.
07:14 The rest will be with internal accrual.
07:18 What are your plans ahead of the expansion?
07:24 The company has recently started expansion in Srisriti.
07:28 Before this, our capacity was 2.45 million units.
07:32 With the recent expansion, we have increased the capacity by 1.25 million units.
07:38 We have increased the capacity by 50% this year.
07:44 We feel it is sufficient to meet our target of 25 million units.
07:48 The fundraising we are doing will be used for incremental capacity.
07:54 The market is growing exponentially.
07:58 The luxury product was a necessity.
08:02 The market will double in 5-6 years.
08:06 To meet the double requirement, we need double capacity.
08:10 We have increased the capacity by 50%.
08:14 We want to increase the capacity by 6 million units.
08:20 Which will be sufficient for us till FY28.
08:24 The company is profitable. What are your plans for it?
08:30 The company is dependent on AC.
08:34 AC is our main business.
08:38 The rest is non-AC.
08:42 AC is highly seasonal.
08:46 The manufacturing takes place from January to May.
08:50 It is consumed in the next 7 months.
08:54 To balance the 7 months, we started small domestic appliances.
09:00 The company is trying to increase the 20% revenue.
09:06 To better utilize the capacity in non-AC season.
09:10 We are bringing new products.
09:14 We are developing appliances.
09:20 We are increasing our portfolio.
09:24 We want to capitalize on the trust of our customers.
09:34 We will increase our value share.
09:38 We will offer them innovative products.
09:42 We will increase our asset turn.
09:46 We will increase our revenue.
09:50 That will help us improve our top and bottom line.
09:54 What is the order book of the company?
09:58 What are the big projects and clients?
10:02 We are catering 7 brands in the top 10 brands in AC.
10:08 Voltas, Blue Star, Godrej, Whirlpool, Lloyd, Dykin.
10:14 We are also catering 7 brands in induction cooktop, mixer grinder, and water dispenser.
10:24 We had less capacity before September 21.
10:28 After the private equity investment, we raised funds and invested in CapEx.
10:38 Our capacity increased.
10:40 Our average stickiness is more than 8.5 years.
10:44 Customers know us, our quality, system, and delivery capability.
10:50 They were ready to support us.
10:54 In the last 2-3 years, our growth was great.
11:00 Our CAGR revenue was more than 45%.
11:04 Our EBITDA growth was more than 55%.
11:08 Our PET was doubled.
11:10 We will focus on component manufacturing.
11:16 We were in Dehradun, now we are in Vivadi, Srishti.
11:20 We are in a hub, so our component sales will increase.
11:24 Along with that, our small appliances will increase.
11:28 We will also start air coolers.
11:35 How are you different from your competitors?
11:45 The peer group is defined in the RHP.
11:51 In listed entities, there is a number, PG Lactoplast, small appliances, and L&D.
11:59 This is our peer group.
12:03 Our strategy is to consolidate in 3 big locations.
12:16 We have created large capacity in 3 places.
12:23 We have spread ourselves to cater to pan India.
12:33 We have created unique locations in central India.
12:39 We have strategically located south India so that we can look at the export market.
12:48 Our facility is only 60 km from the port.
12:53 If we bring everything to central India, we will have a 2.5% to 3% charge.
13:00 It gives us strength to take on export.
13:04 This is how we have defined ourselves.
13:07 We have also created a diversified portfolio.
13:10 We are not just doing AC, we are doing small appliances and medium appliances.
13:15 We have spread our portfolio to do business for a year and create an asset trend.
13:21 Do you plan to export abroad?
13:26 We export to some customers in the Middle East, Africa, and Sri Lanka.
13:36 Export is negligible in our country.
13:42 China is the lowest cost manufacturer when it comes to export.
13:46 Export is a big market.
13:48 To fill this gap, the government has introduced a PLI scheme.
13:55 This PLI was done for air-conditioned L&D.
14:01 The government wanted to support India in manufacturing.
14:05 The government said that they had to buy 60-70% of the components from China.
14:12 The government gave a subsidy to the company to make the components.
14:18 We will give you a reimbursement in terms of PLI.
14:21 Our valuation has increased from 40% to 65% in the last 2 years.
14:26 The 25% we had to make was being imported.
14:30 We are making it ourselves.
14:32 This is increasing our strength.
14:34 As the scale of the economy is increasing, we have increased our capacity.
14:41 As the scale of the economy increases, our bill of metal costs will be reduced.
14:44 Over the next 2-3 years, we will become as competitive as China.
14:49 India's export market is 10 million, but export is 150 million.
14:54 It is a 15 times bigger market.
14:56 If we pick up a small bucket from that, it will be as big as the current market.
15:01 That is the kind of opportunity we are looking at.
15:04 I will add something to this.
15:08 We are a R&D-focused company.
15:12 We are a design-focused company.
15:14 As of 30th September, we have around 56 design engineers.
15:20 They are continuously increasing.
15:22 We think that without cost-effectiveness and cost-control,
15:26 market leadership cannot come.
15:28 Through R&D efforts, we are developing new products and value engineering
15:34 to reduce our cost continuously.
15:37 As an ODM, how we can add value to our esteemed customers.
15:41 We got a big advantage from that.
15:44 When we imported near-next, it made a difference.
15:48 Overall, new products are being developed.
15:51 Asset return is increasing.
15:53 We have reached strategic location.
15:55 This will all add to cost-effectiveness.
15:58 When it comes to cost-effectiveness, we will get business increase from our customers.
16:04 Definitely.
16:05 Sir, I would like to ask you.
16:07 You have kept the price band very minimal.
16:11 What are your expectations from IPO?
16:14 What are you hoping to reach?
16:17 We don't have that in our hands.
16:21 We have decided to create value for shareholders and stakeholders.
16:28 We have been associated with Botra family for 47 years.
16:32 We have an association for 47 years.
16:35 In the association, we discussed how we can add value to our investors,
16:40 stakeholders, and associates who are working with us.
16:44 We didn't think about what we will get and what will be available in the market.
16:49 At present, investors should get money at a reasonable price.
16:55 We don't know how the market will behave and how investors will think.
17:01 We will do our duty to create investor wealth.
17:05 We will put our best foot forward to protect and grow their wealth.
17:15 Our DNA is that we want to be associated with the best.
17:19 Our vendors, customers, and suppliers are all Mark Yu.
17:27 Our bankers are good, our merchant bankers are good, and Deloitte is our statutory auditor.
17:32 We don't compromise in terms of corporate governance or being environment-friendly.
17:40 We do everything possible to build trust in each other.
17:46 We have other businesses in the group, but they are all growing well.
17:52 If the IPO goes well and investors are happy, we will get help in other IPOs as well.
17:58 Sir, what message would you like to give to the investors who are applying for the IPO?
18:08 We have only one message for our prospective investors.
18:11 If you believe in our journey and vision, please become part of our journey and let us grow together.
18:19 The management's intention is very clear.
18:22 We have been associated with the company for 47 years.
18:24 47 years means a lot of trust, corporate governance, ethics, value systems, DNA of alignment, and long-term thinking.
18:35 We have worked with the best customers and are working hard.
18:41 Luckily for us, we are in an industry which is declared as a sunrise sector by the government of India.
18:47 Air conditioning is a sunrise sector.
18:49 Today, the government is supporting us so much that we are able to grow.
18:57 Every month, we get requests from DPI, IT, MCF about where to reduce imports, where is the duty on imports, how to grow components, what support do we need.
19:09 So, the government is so friendly and the manufacturing traction is amazing, a manufacturing ecosystem has developed.
19:17 We proudly say that we are a true manufacturer.
19:20 We are pure ODM.
19:22 We manufacture design-led.
19:24 We are not OEMs, we are not just a gas charging business or a screw-driving technology.
19:32 We control vendors, develop them, design them.
19:36 So, we are a true ODM, a true manufacturer.
19:39 A true manufacturer, right.
19:41 Thank you so much for giving your time. All the best.
19:44 Thank you so much, it was a pleasure connecting with you.
19:47 Thank you, thank you, pleasure meeting you.
19:50 So, if we look at it in a way, there is growth in the company's revenue.
19:54 If we look at it in 2021, it was 749 crores, in 2022 it was 927 crores and in 2023 it is 616 crores.
20:01 So, there is growth in revenue, the company is a profitable company.
20:04 The negative point is that the company has a debt of 170 crores.
20:11 But the company's vision is clear that how to move forward.
20:16 And if we talk about this sector, then the demand for this sector is also very high.
20:20 So, if you want to invest in it, then you can take the advice of your financial advisor and invest in it.
20:26 You can apply for this.
20:28 That's all in this video.
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