Rajesh Dhirubhai Gondaliya is the Chairman & Managing Director of the Company. He has been on the Board since incorporation. He is a visionary entrepreneur and has played a pivotal role in expanding business operations of the Company. He has a work experience of over 22 years in the PVC profile industry and has completed his Secondary School education from Lunidhar Primary School, Amreli, Gujarat in the year 1987. He currently looks after the overall management of the Company. Under his guidance, the Company has witnessed continuous growth. Bhavin Rajeshbhai Gondaliya is the Whole-time Director of the Company. He has been on the Board since incorporation. He has completed his Senior Secondary education in 2019 from National Institute of Open Schooling and is pursuing bachelor of commerce from Sabarmati University through distance learning. He has an experience of around 3 years in the PVC profile industry. He is currently looking after the sales and marketing function of the Company. Prabhaben Rajeshbhai Gondaliya is the Non-Executive Director of the Company. She has an experience of around 8 years in the administration field. She has completed her Senior Secondary School from Smt RN Sheth Kanya Vidyalaya, Amreli, Gujarat in year 1991.

A. Balance Sheet

Particular (In Lakhs)	Mar-21	Mar-22	Mar-23
Equity Share Capital	250.00	250.00	1,000.00
Reserves	494	991	957
Borrowings	1,999	2,736	4,014
Trade Payables	645	455	433
Other Liabilities	181	183	363
Total Liabilities	2,824	3,373	4,810
Net Block	768	940	1,113
Capital Work in Progress	0	0	799
Investments	0.2	201	252
Other Assets	9	8	19
Total NC Assets	777	1,149	2,182
Receivables	1,452	1,408	1,862
Inventory	1,146	1,849	1,510
Cash & Bank	11	10	715
Other Assets	181	198	498
Face value	10	10	10

B. Profit & Loss Statement

Particular (In Lakhs)	Mar-21	Mar-22	Mar-23
Sales	7,875	11,696	15,850
Raw Material Cost	5,596	9,192	11,451
Change in Inventory	2	-561	366
Employee Cost	722	892	975
Other Expenses	917	1,201	1,704
Other Income	4	14	38
EBITDA	641	986	1,392
EBITDA Margin	8.13%	8.43%	8.78%
Depreciation	67	107	136
Interest	157	213	253
Profit before tax	417	666	1,004
Tax	-114	-169	-285
Net profit	303	498	719
NPM (%)	3.83%	4.24%	4.52%

C. Cash Flow Statement

Particular (In Lakhs)	Mar-21	Mar-22	Mar-23
Cash From Operating Activity
Profit From Operation	641	984	1,422
Receivable	-378	44	-488
Inventory	-188	-703	339
Payable	-419	-190	-21
Other WC Items	-71	30	-213
Working Capital Changes	-1,056	-819	-383
Direct Taxes	-82	-214	-199
Net Cash Inflow from Operating Activity	-497	-49	840
Cash from Investing Activity
Fixed assets purchased	-736	-354	-1,148
Fixed assets sold	1	75	30
Investment sold	0	-201	-51
Dividends received	0	0.02	0.04
Other investing items	0	4	9
Net cash inflow from investing activities	-735	-476	-1,160
Cash from Financing Activity
Proceeds from shares	299	0	0
Proceeds from borrowings	1,086	737	1,278
Intrest paid fin	-157	-213	-253
Net Cash Flow	-3	-2	705

Name of the Company	Revenue (In Crore)	PAT (In Crore)	EPS ( in Rs)	P/E	CMP	Mcap (In Crore)
Kaka Industries Limited	158	7.2	5.25	11.03	58	79
Dhabriya Polywood Limited	171	8	7.84	26.4	207	224
Sintex Plastics Technology Limited	3	-565	-8.88	N/A	1.5	95

* All the Data is as per FY23.

Review and Recommendation of Kaka Industries SME IPO by IZ team is 6/10

A) Strengths of Kaka Industries 

1. Diverse Product Portfolio: The company has a wide product range with over 1200 SKUs which includes PVC Profile, uPVC door & window profile, WPC Profile & sheet etc. This range caters to a broad spectrum of customer needs, increasing its potential market base. 2. Established Brand Names: The company's products are marketed under recognized brand names, which can instill trust in the consumer and positively influence buying decisions. 3. Sustainability: The company's non-wood based products are an eco-friendly alternative to traditional wood products, contributing to saving trees. This sustainability factor can appeal to environmentally conscious consumers and businesses. 4. Wide Distribution Network: The company has an extensive distribution network with 300 dealers spread across 20 states and Union Territories in India. This geographic reach enables the company to deliver its products to a wide customer base. 5. Accredited Quality Management: The company's manufacturing facilities have been accredited with various ISO certifications, ensuring the production of high-quality products. 6. Government Empanelment: Being an approved vendor for government organizations enhances the company's credibility and opens up opportunities for large scale, stable contracts. 7. Experienced Leadership: The company's founder has over 20 years of industry experience, providing strategic guidance based on in-depth knowledge of the market and product. 8. Steady Revenue Growth: The company's revenue has shown a consistent increase over the past few years, indicating a successful business model and stable financial health.

B) Weaknesses of Kaka Industries 

1. Geographic Concentration of Sales: A significant portion of the company's revenue (63.73%) comes from Gujarat, which exposes the company to geographic risk. Any local economic disruptions could have an outsized impact on the business. 2. Dependence on Promoter Director: The new manufacturing plant is leased from the Promoter Director, creating a potential conflict of interest and risk if the relationship sours or if the director's personal circumstances change. 3. Limited Manufacturing Capacity: Although the company is setting up a new manufacturing plant, its current production capacity might limit its ability to scale up quickly or meet unexpected increases in demand. 4. Late Entry into Manufacturing: Despite the founder's experience, the company only started manufacturing in 2012 and therefore may lack the established infrastructure and efficiencies of longer-established competitors. 5. Dependence on External Suppliers: The company's reliance on suppliers for raw materials could be a vulnerability if supply chain disruptions occur or if suppliers increase prices. 6. Unbalanced Revenue Concentration: Despite having a wide network of dealers, there is a disparity in revenue generation from various states, indicating a potential inefficiency in penetrating these markets.

C) Products of the Company

1. PVC Profile: These are versatile components used in furniture, panels, and frames. They come in different finishes and shapes, catering to a wide array of aesthetic and functional needs. 2. uPVC door and window profile: These products are energy-efficient, durable, and require low maintenance. The range of sizes accommodates different construction needs, making them a suitable choice for diverse settings. 3. WPC Profile & Sheet: Combining the benefits of wood and plastic, these profiles are durable and versatile. They are primarily used for doors and wall panels and come in various sizes and finishes. 4. Doors: The company manufactures PVC doors, which are durable, lightweight, and resistant to various weather conditions. They offer these doors in a range of sizes to suit different requirements

D) Object of the Issue

The company is using ~7 Cr to retire debt and ~7 Cr for working capital.

E) Financial Performance of Kaka Industries

1. The revenue has grown from 41 Cr in Fy20 to 153 Cr in Fy23 registering a CAGR growth of 55%. 2. Gross Margins have also improved from 10% in Fy20 to 28% in Fy23. 3. EBITDA Margins have also increased from 5.6% in Fy20 to 8.49% in Fy23. 4. PAT has increased from 1.43 Cr in Fy20 to 7.42 Cr in Fy23. 5. Kaka Industries has decent ROE of 17.5% post IPO in Fy23. 6. Kaka Industries has decent ROCE of 20% in Fy23. 7. Total Debt as on 31.03.2023 is 40 Cr and Net-worth is 19 Cr. D/E is 2x which is on higher side. 8. In the last 3 years, total cash generated from the operations is ~3 Cr and total capex done is ~23 Cr. That is why they have taken debt of ~19 Cr to fuel the capex. The results of capex are visible in the revenue growth.

F) Valuation of Kaka Industries

The IPO is coming at P/E 11x and M.cap of 75 Cr which looks decently priced as compared to competitors.

Kaka Industries Limited Plot No. 67, Bhagwati Nagar, Opp Nilkanth Arcade, Opp. Kathwada GIDC, Kuha-Kanbha Road Ahmedabad -382415 Phone: +91-80004-46524 Email: investors@kakaprofile.com Website: https://kakaprofile.com/