- November 24, 2022
- Posted by: Santosh Singh
- Category: IPO
Aprameya Engineering Limited has filed Draft Red Herring Prospectus with market regulator SEBI on 8th Sep, 2022.
The IPO consists of Fresh Issue of up to 50,00,000 equity shares of face value of Rs. 10 each.
Business Model of Company
The Company is engaged in the business of installation, set up & maintenance of Intensive Care Units (ICU), Neonatal Intensive Care Units (NICU), Pediatric Intensive Care Units (PICU), Operation Theatre and prefabricated structure ward in the hospitals and medical care centers on turnkey basis along with supply of high value healthcare equipment and diagnostic equipment to private hospitals, Government hospitals and medical practitioners.
Over the years, on the basis of knowledge and understanding of the requirements of medical practitioners, industry standards and utility of the medical equipment, the Company has evolved itself and developed the capabilities in offering end to end solutions in the field of healthcare services relating to ICU setup, operation theater setup and providing medical equipment for easing operation related to patient treatment, monitoring and diagnosis by hospitals, medical practitioners and diagnostic service providers.
The portfolio of products and services of the Company can be classified into two different segments i.e. setting up of healthcare infrastructure within the hospitals and medical care centers and dealing in high value medical equipment. The Company provides need-based medical equipment to hospitals, medical practitioners, and diagnostic service providers, including patient monitoring systems, cardiology devices, respiratory management systems and radiology/ imaging systems. Some of the major critical care products as supplied by the Company include Harmonic ultrasonic surgical instruments, patient monitoring systems, ventilator, ventilator (NIV), ABG machine, integrated electro-surgical units and anesthesia delivery systems etc.
The Company has over the years worked on maintaining a healthy relationship with its customers through timely delivery of the medical equipment at a reasonable cost. These relationships have enabled the Company to create a wide customer base of doctors, medical practitioners, private and government hospitals, medical colleges including AIIMS (All India Institute Medical Science) and diagnostic service providers across the country.
Who is the Management of the Company?
As on the date of this Draft Red Herring Prospectus, the following is the management of the company:
(i) Saurabh Kishorbhai Bhatt is the Chairman and Joint Managing Director of the Company. He is also one of the Promoters of the Company and has been associated with the Company since its incorporation. He holds a Bachelor’s degree in electronics (industrial electronics) from Amravati University. He has experience of over 18 years in the field of medical and healthcare equipment industry, including as one of the partners of the erstwhile partnership firm under the name ‘M/s. Aprameya Engineering’.
(i) Chetan Mohan Joshi is the Managing Director of the Company. He is also one of the Promoters of the Company and has been associated with the Company since its incorporation. He has completed a Bachelor’s in engineering (Second Year) in industrial electronics from Amravati University and Diploma in Electrical engineering from the Board of Technical Examinations, Maharashtra State. He has a work experience of over 18 years in the field of medical and healthcare equipment industry.
Why is the company raising funds via IPO?
The Company proposes to utilize the Net Proceeds towards funding the following objects-
1. To meet incremental working capital requirements.
2. General corporate purpose.
3. To meet issue expenses.
In addition, the Company expects to receive the benefits of listing of the Equity Shares on the Stock Exchanges, including among other things, enhancement of Company’s brand name and creation of a public market for the Equity Shares in India.
Is there any OFS in the IPO?
The IPO of Aprameya Engineering Limited consists of Fresh Issue of up to 50,00,000 equity shares of face value of Rs. 10 each. There is no Offer for Sale in the IPO.
Financials of the company?
As per the financial statements, the Company has shown sharp recovery post Covid. In FY22, the total revenue of the Company reported an astounding growth in its total revenue which increased 670% to 200 crore as against Rs. 26 crore in the previous financial year ended March 31, 2021. The total expenses of the Company in FY22, have increased The total expenses of the Company have also increased in the same proportion to 176 crore as against Rs. 24 crore in the previous financial year ended March 31, 2021. The Profit After Tax of the Company increased 2300% to 24 crore as against Rs. 1 crore in the previous financial year ended March 31, 2021. The net profit of the Company has increased 1760% to Rs. 16 crore as against Rs. 86 lakhs in the previous financial year.
In FY22, the net assets of the Company have increased 380% to Rs. 48 crore as compared to Rs. 10 crore in the previous financial year ended March 31, 2021. The total equity and liabilities of the Company have also increased 380% to Rs. 48 crore as compared to Rs. 10 crore in the previous financial year ended March 31, 2021.
In FY22, the net cash generated from operating activities of the Company was Rs. 20 lakhs as against Rs. 3 crore in the previous financial year ended March 31, 2021. In FY22, the net cash used in investing activities of the Company was Rs. 2.6 crore as against Rs. 0.03 crore cash generated in the previous financial year ended March 31, 2021. The net cash generated from financial activities of the Company was Rs. 5 crore as against Rs. 3 crore in the previous financial year ended March 31, 2021. The cash and cash equivalents at the end of the year of the Company was Rs. 2 crore as against Rs. 0.76 lakhs in the previous financial year ended March 31, 2021.
Risk in The IPO
Dependent on Certain Customers
The top 10 customers accounted for approximately 91%, 80% and 50% of the revenue from operations in Fiscals 2022, 2021 and 2020, respectively of the Company. Sales to the Company’s top five customers represented 80%, 73% and 36% of its revenue from operations in Fiscals 2022, 2021 and 2020, respectively. The key customers majorly include medical practitioners, Government and private hospitals, medical colleges and diagnostic centers. Loss of any of the key customers or significant reduction in demand from, the significant customers may materially and adversely affect business and financial performance of the Company.
Competitive Bidding Process
The Company is dependent on State governments in India and related agencies for a part of the business, which are awarded primarily through competitive bidding processes. There is no assurance that future contracts will be awarded to the Company by these customers. Also, the tenders floated by the government agencies have terms that are suitable to such agencies. This may result in an adverse effect on the business growth, financial and results of operations of.
Risks Relating to Sourcing Medical Equipment
The Company deals in a variety of medical equipment used by the medical practitioners, hospital and diagnostic service providers. The Company has entered into distributorship agreements with medical equipment suppliers such as Johnson & Johnson Private Limited, Philips India Limited, Alan Electronic Systems Pvt. Ltd and Stryker India Private Limited. Although the Company has not encountered any significant disruptions in the sourcing of any medical equipment, it cannot assure that such disruptions will not occur and/or it shall continue to be able to source the equipment in a cost effective manner. The Company faces risks relating to sourcing medical equipment from third parties. Failure of such third parties to meet their obligations could adversely affect business and results of operations of the Company.
Delays in the Completion of the Current and Future Projects
The customers generally provide for a timeline for the completion of the projects within a specified days from the site handover. The Company provides the customers security deposits for completion of the projects within a specified timeframe. Any delays in the completion of the current and future projects could lead to termination of work orders or cost overruns, which could have an adverse effect on the cash flows, business, results of operations and financial condition of the Company.
The Company Operates in a Highly Competitive Industry
The Company operates in a highly competitive industry and increased competition may lead to a reduction in revenues, reduced profit margins or a loss of market share. The success depends on the ability to anticipate, understand and address the preferences of the existing and prospective customers as well as to understand evolving industry trends and the failure to adequately do so could adversely affect the business. Further, if the quality of the services deteriorates, the reputation and business may suffer. The competitors may successfully attract the Company’s customers by matching or exceeding what the Company offers.