KCK Industries Limited IPO

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i. KCK Industries is engaged in the business of trading and distribution of high-quality combed and carded cotton yarns ranging from Ne 4 to Ne 40 in single and multifold and knitted fabrics. These yarns are suitable for applications such as apparel, undergarments, Terry Towels, Denims, Medical Fabrics, Furnishing Fabrics, and Industrial Fabrics.

ii. Company supply to customers, who are in fields like the apparel and garment industry, industrial fabrics, furnishing fabrics, towels, Denim etc. We have a dedicated team for testing and quality control which undertakes rigorous testing and Quality Management.

iii. The business segment of the Company also includes trading and distribution of high quality chemicals and dyes for textiles industry, leather, and paper industries. Company also deal in Construction Chemicals. Its supply has a diverse product portfolio in the chemicals and dyes segment.

iv. The company offers a gamut of products in our chemicals and dyes product portfolio, which includes as below:

  1. Combed yarn and Carded yarn
  2. Auxiliaries: dyeing
  3. Auxiliaries: Easy Care Finishing
  4. Auxiliaries: Finishing
  5. Auxiliaries Flame Retardant
  6. Auxiliaries: optical Brightener
  7. Auxiliaries: Pigment printing
  8. Auxiliaries: Pre-treatment
  9. Auxiliaries: Printing(other)
  10. Auxiliaries Softener
  11. Auxiliaries: Antifoaming/Deaerating
  12. Auxiliaries: Detergent(pre-Treatment)
  13. Basic chemicals

v. The Company also acquired a Rice Shellar Plant of M/s. Shiv Shakti Rice Mills from Punjab National Bank situated at Distt Sangrur in the year 2020-21. The manufacturing plant is fully integrated and automatic and started its operations since April, 2021. The Capacity of plant is 12 Ton/ hour and current utilization is 7 Ton/ Hour. At the processing plant, it process the non-basmati and basmati rice.

vi. Competitive Strengths

  1. Diversified Product Portfolio
  2. Focus on Quality and Innovation
  3. Quality Assurance
  4. Improving functional efficiency

Objects of the KCK Industries Limited IPO:

Company proposes to utilize the net proceeds: 1. To part finance the requirement of Working Capital; 2. To meet General corporate purposes; 3. To meet the expenses of the Issue.

KCK Industries Limited IPO Details:

Open Date: Jun 27 2022
Close Date: Jun 30 2022
Total Shares: 15,00,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Type Issue
Issue Size: 4.5 Cr.
Lot Size: 4000 Shares
Issue Price: ₹ 30 Per Equity Share
Listing At: NSE Emerge
Listing Date: Jul 08 2022

Promoters And Management:

i. Mr. Jagdish Prasad Arya aged 56 years is the One of the promoters and Directors of the Company. He is Commerce Graduate from Rajasthan University in the year 1988. He looks after day to day business activity of the Company. He is having more than 30 years of experience in the various field including Textile Material Trading (yarn and Dyes and Chemicals). He has been key instrumental in developing the brand creation of the Company through his multifield expertise in various industries. He has been instrument routine operational activities of the Company and formulation of business policies, strategies etc. He has been associated with the Company since incorporation. ii. Mrs. Reena Sharma aged 48 years is the One of the promoters and Directors of the Company. She is Under Graduate and having more than 20 years of experience in the field of Textile Trading Business. She is also having experience in Human resource Management. She has been associated with the Company since October, 2014. iii. Mr. Satyaveer Singh Dangi: aged 64 years, is a Managing Director of thePlot No 484b, Village Daria Khatauni No 95, Khasra 9/7 Chandigarh 160101 Company. He is Bachelors in Arts. He has more than 35 years of experience in the various fields. He looks after day-to-day routine operational activities of the Company and formulation of business policies, strategies etc. He guides company in its growth strategies. He has been on the board of Company since June, 2021.

Financials of KCK Industries Limited IPO:

Particulars (in Lakhs) Dec-21 Mar-21 Mar-20 Mar-19
Sales 4,409 3,912 5,149 4,094
Cost of Materials Consumed 5,106 3,848 5,065 4,037
Change in Inventories -1,227 0 0 0
Employee Benefits Expense 54 15 11 8
Other Expenses 308 13 24 21
Operating Profit 168 36 49 28
OPM % 3.81% 0.92% 0.95% 0.68%
Other Income 44.68 1.44 1.48 0.23
Finance Cost 24.21 8.51 5.60 0.02
Depreciation 30.24 2.87 1.51 0.65
Profit before tax 157 26 43 28
Total Tax Exps 57.15 7.18 11.12 7.36
Net Profit 100 19 32 21
NPM % 2.27% 0.49% 0.62% 0.51%
No. of shares 55 55 55 55
EPS 1.82 0.35 0.58 0.38

Comparison With Peers:

Name of the Company Sales (In Cr.) PAT (In Cr.) EPS PE RoCE Mcap (In Cr.) Returns 3Y Sales Growth (3Y)
Kck Industries Ltd 59 1.33 2.43 12.35 18.50% 17 - 44%
Shiva Texyarn Ltd. 477 20 15.44 9.23 16.60% 185 1% 30%
GRM Overseas Ltd 1,134 85 14.09 22.4 29.20% 1,896 2164% 2%

Recommendation on KCK Industries Limited IPO:

Reviews and Recommendations of KCK INDUSTRIES LIMITED IPO by IZ Team 3/10 1. KCK Industries Limited is engaged in the business of trading and distribution of high-quality combed and carded cotton yarns ranging from Ne 4 to Ne 40 in single and multifold and knitted fabrics. They have recently purchased basmati rice processing plant which has a capacity of 12 Ton/ hour and current utilisation is 7 Ton/ Hour. 2. These yarns are suitable for applications such as Apparels, Undergarments, Terry Towels, Denims, Medical Fabrics, Furnishing Fabrics and Industrial Fabrics. 3. Company is also engaged in trading and distribution of high quality chemicals and dyes for textiles industry, leather, and paper industries. 4. KCK Industries has clocked a revenue of 40 Crores in Fy19 and in Fy21 the revenue was 39 Crores. So, no growth in the business. 5. Current Ratio is less than 1. This is a worrisome sign for the business in the short term. 6. Average Profit Margin of the business in Fy19, Fy20, and Fy21 was 0.5%. However, in the first 9MFy22, the margins increased to 2.24%.(Whoa). The reason is, they have purchased 15 Crores of inventory in first 9MFy22 and the opening inventory was just 3.85 Crores, due to which change in inventory has contributed to 12 Crores of income in P&L. 7. If you see the balance Sheet carefully, the average trade receivables in Fy19, Fy20, and Fy21 was ~15 Crores and average inventory ~3 Crores. However, in first 9MFy22, i.e. just before IPO, the receivables are just ~5 Crores and Inventory is ~15 Crores. So, this looks like entry may have been reversed to fool investors before IPO. 8. Asking P/E based on 3 years average of Fy19, Fy20 and Fy21 is 70x (highly over-priced).

Lead Manager of KCK Industries Limited IPO:

  1. Navigant Corporate Advisors Limited

Company Address:

SCF 214, First Floor Motor Market, Manimajra Chandigarh 160101

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