ICL Multitrading India Limited IPO

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ICL Multitrading India Limited IPO

ICL Group was established in Bareilly, by Mr. R.K. Gola, a young entrepreneur with an exceptional foresight, in 2008. Over the years, the group has undertaken many arduous projects and accumulated skills, know-how. The group has gathered hands-on experience by participating rigorously in every challenge faced while building the ICL Group. During this time, the group has accumulated vision, pragmatism and has emerged as a butterfly out of its cocoon.

The group is serving & providing their services not only in terms of earning revenue but discharging their social obligations through Image Sewa Sansthan. The group instills corporate social responsibility in their employees by providing help to the poor section as well as physically disabled persons. Today under the ICL Group umbrella, there are multiple domains such as Finance, Insurance, Multi-Product Trading, High Tech Dairy Products, and Online Marketplace. The ambitious cold chain project is also in the fray. These domains serve to show the variety of work undertaken by the group as it has laboriously climbed the ladder to corporate success.

The group works relentlessly to provide utmost client/customer satisfaction. This is enunciated in the motto- “As We Make Our Customers the Hero of Our Story”.

Initially, the group started their functioning with a small capital of Rs. 2 lakhs and a single-room office. Today, the Company has a huge marketing network, a solid capital base and sound infrastructure in a span of a decade. The company has been thriving and has now established ICL as a brand particularly in North India.

The company is striving to reach the zenith in the field of suiting & shirting and FMCG products like ICL Fabrics, ICL Tea, ICL spices. The company is about to add a few more products to their already impressive roster. The major revenue comes from fabric which is almost 50% of the total revenue & rest revenue comes from other products. ICL Brand is very popular particularly in the mid towns of North India.

Presently all multinational companies who are dealing in FMCG & Fabric are looking towards the mid-town of the country which is an untouched huge market. But the promoter of the ICL Group anticipated this fact that the future market is in the mid towns, much before anyone else. That is why they targeted only mid-towns instead of entering in metropolitan cities. As a result, the growth rate of ICL in comparison to others is much higher. Forward planning and circumspection resulted in a favorable result for the company, which speaks volumes about the potential of the group.

Objects of the ICL Multitrading India Limited IPO:

Objective of ICL Multitrading India Limited IPO are: 1. Meeting Additional Working Capital Requirements 2. Marketing and Brand Building 3. Expansion of business activities by setting up of new branch office at Mumbai 4. General Corporate Purposes

ICL Multitrading India Limited IPO Details:

Open Date: Nov 19 2018
Close Date: Dec 03 2018
Total Shares: 2,100,800
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 17.86 Cr.
Lot Size: 1600 Shares
Issue Price: ₹ 85 Per Equity Share
Listing At: NSE Emerge
Listing Date: Dec 11 2018

Promoters And Management:

Promoters of ICL Multitrading India Limited Company are: (i) Roop Kishore Gola, aged 43 years, is the Promoter, Chairman and Managing Director of our Company. He is a resident Indian national. He holds a Master’s Degree in Business Administration (Marketing) and a Bachelor’s degree in Business Administration from Monad University, Uttar Pradesh, India. He has experience of over 9 years in business development and strategizing. He is responsible for the overall strategic decision making of our Company and provides leadership to all operations. He has been on our Board since the incorporation of our Company. (ii) Avadhesh Kumar Gola, aged 30 years, is a Promoter, Whole-time Director and Chief Financial Officer of our Company. He is a resident Indian national. He holds a Master’s Degree in Arts and a Bachelor’s Degree in Arts from Mahatma Jyotiba Phule Rohilkhand University, Bareilly. He has experience of over 6 years in the field of finance and administration, accountancy, sales and computer operations. He is responsible for all the financial and administrative activities of our Company. He has been on our Board since the incorporation of our Company. (iii) Rajni Gupta, aged 35 years, is a Promoter of our Company. She holds a Bachelor’s degree in Science from the Dr. Bhimrao Ambedkar University, Agra. She has experience of about 9 years in Finance and Administration.

Capital Structure:

(i) Authorized Share Capital (7,000,000 shares at FV@10) 7 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (4,863,885  Shares at FV@10) 4.8639 Cr
(iii) Present Issue (  2,100,800 Shares at FV@10) 2.1008 Cr
(iv) Reservation for Market Maker  ( 1,07,200 Shares at FV@10) 10.72 lakh
(v) Net Issue to Public (2,100,800-1,07,200=  19,93,600 Shares) 1.9936 Cr
(vi) QIB & HNI quota-9,96,800 50.0%
(vii) Retail Quota - 9,96,800 50.00%
(viii) Paid Up Share Capital after the issue 6.9647 Cr

Financials of ICL Multitrading India Limited IPO:

Year Revenue(Cr) PAT(Cr) OPM NPM
2016 26.48 0.38 2.37% 1.4%
2017 50.58 1.725 6.1% 3.4%
2018 57.31 3.05 9.67% 5.3%
IZ Financial Review 1. The company has shown excellent growth in Revenue and PAT in the last 3 years. 2. The Company has improved its EBITDA margins significantly in the last 3 years. 3. The Employee Expense going down YoY basis is a cause of concern. As per DRHP company has 89 Employees on board, the total Employee benefits expense in FY17 was 2.38 Cr which was reduced to 80 Lakhs in FY18. Out of that 80 lakhs, the two Directors are drawing a salary of 18 Lakh and 12 lakh respectively, which leaves meager Rs.5000 p/m as salaries for other 87 employees. In our point of view, the company may have reduced salaries of all the employees including the Board of Directors in the last 3 years to improve OPM and NPM. 4. The company is virtually debt free. 5. The company is generating positive cash flows in the last 3 years.

Recommendation on ICL Multitrading India Limited IPO:

Review and Recommendation of ICL Multitrading India Limited IPO from our side is: 4/10 [The issue looks fully priced at P/E of 19 on FY18 PAT.]

Lead Manager of ICL Multitrading India Limited IPO:

  1. Corporate Capital Ventures Private Limited

Registrar of ICL Multitrading India Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

ICL Multitrading India Limited A-105, Sector 63 Noida, Gautam Buddha Nagar, Uttar Pradesh – 201 307, India. Phone No. +91 0120 4544 143 Fax No. +91 0120 4544 143 Website: www.iclmultitrading.com E-mail: info@iclmultitrading.com

Bid Details of ICL Multitrading India Limited IPO as on
03-Dec-2018 18:00:00 IST

Category No.of shares offered No. of shares bid
996,800 113,600
996,800 96,000
107,200 107,200
2,100,800 316,800
QIBs No
QIBs+HNIs Subscription 0.11X
Retail Subscription 0.10X
Total Subscription 0.11X

Discussion on ICL Multitrading India Limited IPO:

    SME IPO of ICL Multitrading at Emerge has finally been withdrawn.

    It failed to catch the eye of investors inspite of extension.

    SME IPO of ICL Multitrading at Emerge has been extended up to 3rd December 2018 due to poor response.

    The business of the Company

    1. They are a multi-product branding and distribution Company.

    2. They sell their products under the Brand “ICL”.

    3. They do not manufacture their products but they hire third party to manufacture for the same and after manufacturing they sell the products under the brand name ” ICL”.

    4. Their major category of products includes consumer products such as spices, tea, suiting-shirting & related accessories, incense sticks (Dhoop), gifting products and other products.

    5.They focus on distribution through their network of warehouses, super stockiest and distributors with the presence primarily in Uttar Pradesh, Uttarakhand and Jharkhand.

    Risk in the business:

    1. They are traders not a manufactures, so availability of third-party manufacturer, quality of the products they made, will they not sell same products to other traders are the biggest risk associated with the company.

    2. Major Revenue is concentrated in UP only.

    3. They deal in High Volume low margins.

    Latest Developments in the company

    1. The company has signed an agreement dated May 19, 2018 for mutual co-operation with Greenbay Biotech International Private Limited for co-producing compost at Bareily, which will be exclusively marketed by ICL Multitrading Limited. Greenbay Biotech International Limited will help ICL with their technology and knowhow to produce the best quality compost with greater cost efficiency.

    2. The Company has signed agreements in the month June 2018, for supply various food items with National Federation of Farmers’ Procurement, Processing and Retailing Cooperatives of India Limited (NACOF). This will give them a big platform to scale up our food and beverages segment in a big way in the near term. They have already started supplying to NACOF.

    Conclusion: Business looks promising, a lot of joint ventures company has done recently which will boost the revenues, and the company has shown decent growth in the last 3 years. However, the issue looks fully priced, so better to buy after listing.

    ICL IPO Financial Review Analysis:

    Pros:

    1. The Revenue of the company is growing at a CAGR of 47%( Excellent).
    2. The PAT of the company is growing at a CAGR of 183%( Excellent).
    3. The D/E of the company is 0.22( Reasonable ratio).
    4. The company is generating positive cash-flows from operations.

    Cons:

    1. The Current Ratio of 0.91 and Quick Ratio of 0.52 are below the prescribed level.
    2. The Employee Expense has come down from 2.16 Cr in FY16 to 80 Lakhs in FY18 which is worrisome and not a usual trait of growth companies.
    3. The company has below average OPM of 9.6% and NPM of 5.32% in FY18.
    4. The Valuation in terms of P/E of 19 and Mcap/Sales of 1.02 looks reasonable. However, as market condition are poor it would have been better had they come up with the valuation in a single digit.