- November 8, 2022
- Posted by: Santosh Singh
- Category: IPO
Airox Technologies Limited has filed DRHP with SEBI on 3rd, October, 2022 to launch its IPO. The IPO comprises an Offer for Sale only.
Business Model of Company
Airox Technologies Limited is one of the leading players among the PSA oxygen generator providers in terms of operating income, as of Fiscal 2021. It is also a market leader with a market share of 50-55%, in terms of operational private hospital PSA medical oxygen market, as of Fiscal 2022. The Company is among the pioneers to facilitate the penetration of on-premise PSA oxygen generators in Indian hospitals with nearly 872 installed and operational PSA oxygen generators, as of March 31, 2022. The Company is an established player with an experience of more than one decade in the PSA oxygen generation market and has been able to capture and penetrate the Indian medical oxygen generation market to become a market leader with around 30-31% of market share as of Fiscal 2022, in terms of total installed operational PSA oxygen generators in India, which includes both government and public sector hospital PSA medical oxygen market. In India, the demand for medical oxygen is expected to grow at a CAGR of 7-7.5%, in terms of volume, from Fiscal 2020 to Fiscal 2027.
The Company commenced its operations as a manufacturer of PSA oxygen generators in 2012. Over the years, the Company has diversified its business by including other products in its portfolio such as AMOG-22 oxygen generators, oxygen analyser, auto change over system and container-based oxygen generators. It also provides after sales maintenance services by entering into annual maintenance contracts and comprehensive maintenance contracts with its customers.
Who is the Management of the Company?
According to DRHP filed with SEBI, Following is the list of management of Airox Technologies Limited-
(i) Sanjay Bharatkumar Jaiswal is the Managing Director of the Company and has been associated with the Company since its incorporation. He holds a degree in Bachelor of Engineering (Chemical) from Dr. Babasaheb Ambedkar Marathwada University, and a Masters in Management Studies from the K. J. Somaiya Institute of Management Studies and Research. He was previously associated with Siemens Limited through his proprietorship firm, M/s SA Medical.
(ii) Ashima Sanjay Jaiswal is the Non-Executive Director of our Company and has been associated with our Company since its incorporation. She has passed the Secondary School Certificate Examination.
Why is the company raising funds via IPO?
The Promoter Selling Shareholder will be entitled to the proceeds of the Offer for Sale after deducting his proportion of Issue expenses and relevant taxes thereon. The Company will not receive any proceeds from the Offer for Sale by the Promoter Selling Shareholder and the proceeds received from the Offer for Sale will not form part of the Net Proceeds.
The Company expects that listing of the Equity Shares will enhance its visibility and brand and provide liquidity to its existing Shareholders. Listing will also provide a public market for the Equity Shares in India.
Is there any OFS in the IPO?
The IPO comprises Offer for Sale. The OFS size is Rs. 750 crore . The Promoters Sanjay Bharatkumar Jaiswal is selling equity shares aggregating up to Rs. 525 crore and Aashim Sanjay Jaiswal will sell equity shares aggregating up to Rs. 225 crore.
Financials of the company?
As per the rested financial statements, in FY22, the revenue of the company has reported an astounding growth of 214% to Rs. 229 crore as against Rs. 73 crore in the previous financial year. The expenses of the company have also increased 111% to Rs. 109 crore as against Rs. 51 crore in the previous financial year. The Profit Before Tax of the company has shown an amazing increase of 460% to Rs. 120 crore as compared to Rs. 22 crore in the previous financial year. The Profit After Tax of the Company increased 500% to Rs. 90 crore compared to Rs. 16 crore in the previous financial year.
The total assets of the company increased 131% to Rs. 146 crore as against Rs. 63 crore in the previous financial year. The total equity and liabilities of the company also increased 131% to Rs. 146 crore as against Rs. 63 crore in the previous financial year.
The net cash generated from operating activities was Rs. 65 crore as against Rs. 6 crore in the previous financial year. The net cash used in investing activities was Rs. 59 crore as against Rs 3 crore in the previous financial year. The net cash used in financial activities was 8 crore as against Rs. 0.03 crore in the previous financial year. The net cash and cash equivalents used was Rs. 2 crore as against Rs. 3 crore cash used in the previous financial year.
Risk in The IPO
Inability to Manage Future Growth
The outbreak of COVID-19 led to an increase in awareness and demand of the company’s products and an increase in revenue. The Company cannot predict future demand for its products or the future impact of the COVID-19 pandemic on its business, operating results, cash flows and/or financial condition. The inability to manage the future growth may have an adverse impact on its business and financial condition.
Dependent on Strategic Partner
The Company is dependent on its strategic partner for the supply of molecular sieves and vessels. Any fluctuations in the price, availability and quality of the raw materials could cause delay and increase in the costs which may have an adverse effect on its business and operations. The Company has a long-standing strategic relationship with AirSep Corporation, an international provider of molecular sieves and vessels, pursuant to which the company imports vessels and sieves from AirSep Corporation. AirSep Corporation may allocate their resources to service other customers ahead of the company and it may also be adversely impacted by delays in arrival of shipments from them due to weather conditions at the loading or unloading port.
Subject to product liability claims
If the products of the company have manufacturing defects, it may lose its customers and may be subject to product liability claims and cause damage to its reputation, results of operations and financial condition. The business of the company depends on delivering PSA oxygen generators as well as other products such as oxygen analysers and auto change over systems of consistent quality to its Z, which is a key factor for its customers to purchase from the company.
Dependent on PSA Oxygen Majorly
A majority of the total revenue is attributable to the sale of PSA oxygen generators. Any decrease in volume of PSA oxygen generators sold by the company may have an adverse effect on its business, results of operations, financial condition and cash flows. For Fiscals 2022, 2021 and 2020, the sale of PSA oxygen generators amounted to Rs. 215 crore, Rs. 67 crore and Rs. 13 crore, accounting for 95.02%, 91.83% and 78.52%, respectively, of its total revenue. Its customers may use other manufacturers and suppliers of PSA oxygen generators as alternative sources for meeting their oxygen demand.
Company may not maintain its leadership
The Company may not be able to maintain its leadership in the medical oxygen manufacturing industry which may adversely affect its business prospects and results of operations. It is an established player with an experience of more than one decade in the PSA oxygen generation market and have been able to capture and penetrate the Indian medical oxygen generation market to become a market leader with around 30-31% of market share as of Fiscal 2022, in terms of total installed operational PSA oxygen generators in India.