Kritika Wires Limited IPO

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(i) Kritika Wires Private Limited Company was originally incorporated as on May 31, 2004, The Company has been in the business of manufacturing high quality galvanized steel wires and wire products and have been meeting the requirement of various clients in the government and private sectors like power, infrastructure, railway, and many more industries. The products manufactured by the Company are used for transmission and distribution of Electricity, manufacturing of concrete slippers, poles, bridges, and other infrastructure facilities. The Company manufacturing facilities are situated at the following two units located at Dhulagarh Industrial Park, Kolkata, West Bengal

(ii) The plants are equipped with the latest machinery and equipment, In-house testing facilities and qualified engineers, which help in maintaining quality standards as well as an efficient delivery record with appropriate warranty. All raw‐ materials and consumables are tested at various stages in the manufacturing process as per stipulated standards to ensure good quality products which are test certified. The Company products are type tested & approved by various NABL Accredited laboratories like IDTL, NSIC & NTH Corporation and are supplied as per the Indian Market Specification.

(iii) Products of the Company

a) MILD STEEL WIRE- Application: Electricity Board distribution and general
engineering purpose.

b) GI STAY WIRE- 
Application: Electricity Board distribution purpose.


c) GALVANISED STRAND FOR EARTHING- Application: Electricity board
transmission purpose.


d) A.C.S.R CORE WIRE- Application: Core wire for the aluminum conductor.


e) COTTON BALING WIRE- Application: Cotton baling industry. and many more such products which are used in different industries.

Kritika Wires Limited IPO Stock Quote & Charts

38.50

+1.05%

  • Open: 38.50
  • High - Low: 38.50 - 38.50
  • Previous Close: 38.10
  • Total Traded Volume: 8000
  • Updated On: 14-Dec-2018

Objects of the Kritika Wires Limited IPO:

Objective of

Kritika Wires Limited IPO

are: 1. To Meet Working Capital requirements 2. To Meet General Corporate Expenses 3. To Meet Issue Expenses

Kritika Wires Limited IPO Details:

Open Date: Sep 26 2018
Close Date: Oct 01 2018
Total Shares: 48,12,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 15.39 Cr.
Lot Size: 4000 Shares
Issue Price: ₹ 32 Per Equity Share
Listing At: NSE Emerge
Listing Date: Oct 10 2018

Promoters And Management:

Promoters of Kritika Wires Limited Company are: (i) Mr. Naresh Kumar Agarwal Mr. Naresh Kumar Agarwal is the Chairman and Whole Time Director of our company. He is Bachelor of Commerce and has around 35 years of experience in the field of trading and manufacturing of welding electrodes and steel wire manufacturing. (ii) Mr. Hanuman Prasad Agarwal- Mr. Hanuman Prasad Agarwal is the Managing Director of our company. He is Bachelor of Commerce. He has a vast work experience of 30 years in the field of welding electrodes and accessories manufacturing. He has been guiding the Company to achieve operational efficiencies and has good administrative power.

Financials of Kritika Wires Limited IPO:

Particulars For the year/period ended (in Rs. Lacs)
31-Jan-2018 31-Mar-17 31-Mar-16 31-Mar-15 31-Mar-14
Total Assets 13039.56 11376.69 11572.92 9428.75 9762.51
Total Revenue 19797.43 20705.52 21730.19 18339.74 14911.27
Profit After Tax 430.99 266.65 104.85 42.98 101.19

Comparison With Peers:

The valuation at P/E of 8.64 looks fairly priced as compared to its peers Geekay Wires Ltd and Ram Ratna Wires Ltd which are trading at P/E of 33 and 13 respectively.

Recommendation on Kritika Wires Limited IPO:

Review and Recommendation of Kritika Wires Limited IPO from IZ team is = 4/10 [The valuation looks cheap as compared to its peers. However, the debt ~44 Cr on Equity of ~38 Cr as per FY18 financials is a sign of worry. The Company is having a very high capital working requirement and the two liquidity ratio i.e Current ratio and Quick Ratio not giving a comfortable picture. The Listing gain may happen depending if company receives healthy subscription figure]

Lead Manager of Kritika Wires Limited IPO:

  1. Hem Securities Limited

Registrar of Kritika Wires Limited IPO:

  1. Link Intime India Private Limited

Company Address:

Kritika Wires Limited 1A, Bonfield Lane Mezanine Floor, Kolkata- 700001, West Bengal, India Phone No: +91-33-40037817 E-mail: compliance@kritikawires.com Website: www.kritikawires.com

Bid Details of Kritika Wires Limited IPO as on
01-Oct-2018 17:00:00 IST

Category No.of shares offered No. of shares bid
2,280,000 7,900,000
2,280,000 1,180,000
252,000 252,000
4,812,000 9,332,000
QIBs Yes
QIBs+HNIs Subscription 3.46X
Retail Subscription 0.52X
Total Subscription 1.99X

Discussion on Kritika Wires Limited IPO:

    I find DP wires which is already listed and available below issue price much better than this company .also DP wires debt is too low compared to this one. It is avoid for me as already a listed company iin secondary market and which have utilized public money is available at good prices.

    Year Revenue(Cr) PAT(Cr) EBITDA Margins Profit Margins EPS ROE
    FY14 149.11 1.01 5.00% 0.70% 1.66 3.74%
    FY15 183.39 0.429 5.40% 0.20% 0.71 1.53%
    FY16 217.3 1.0485 5.20% 0.50% 1.73 3.62%
    FY17 207.5 2.66 6.50% 1.30% 4.11 7.82%
    FY18 257.89 4.93 7.30% 1.90% 3.81 12.64%
    5 Year CAGR Growth 14.60% 48.64% 25.98% NA 23.08% NA

    The company is labour intensive and working capital requirement is always high in this kind of business and same was mentioned by the company in the RHP. So let us see how the company fairs up in the two most important Liquidity parameter ( Quick ratio and Current ratio). Ideally, Current Ratio >1.5 and Quick ratio >1 is desirable to meet short-term liability.

    Year Current Asset(cr) Current Liability(cr) Inventory Current ratio Current Asset-Inventory Quick ratio
    FY16 97.88 75.96 22.81 1.28 75.07 0.99
    FY17 90.78 72.23 20.81 1.25 69.97 0.97
    FY18 112.13 86.26 27.2 1.3 84.93 0.98

    Conclusion: In the last 3 years the company is not maintaining a healthy liquidity ratio. It is vital that a company have enough cash on hand to meet accounts payable, interest expenses and other bills when they become due.The higher the ratio, the more financially secure a company is in the short term.

    The Location of the two manufacturing units are in West Bengal and the company is a labor intensive and working depend on the availability of labor. We all know that West-Bengal state is always remains a politically and union/association driven. The chances of labor unrest are always high in this state.

    (i) Any company which takes the benefits of customs duty on import of items have to fulfill export obligation else Govt may impose fine.

    (ii) The Kritika Wires in the year  2013-2015 availed the benefit of non payment of custom duty without fulfilling the Export obligation against the import of “Hot-rolled alloy steel wires rods in colls” because of which the Settlement commission has also imposed a fine of Rs. 12,00,000/- on the company, Rs 25,000/- each on the directors,Mr. Naresh Kumar Agarwal, Mr. Sanjeev Binani and Rs 1,20,000 on Mr. Hanuman Prasad Agarwal, for alleged violation of law.

    (iii) Further, based on order of the settlement commission, Joint Director of Foreign Trade in a separate proceedings vide its Adjudication Order dated February 27, 2018 has imposed penalty of Rs. 20,00,000/- against the company. The Joint Director of Foreign Trade has held that the company had diverted the imported goods into the local market with consuming the same and also sold the imported goods in convention of the Foreign Trade policy

    (i) Steel Rods used for manufacturing steel wire and Zinc bars used for galvanizing the steel wires are the main raw material used by the company in the manufacturing process.

    (ii) These raw materials are subject to supply disruptions and are very volatile due to price fluctuations resulting from, domestic and foreign trade policies, shifts in supply and demand, competition and other factors beyond company control.

    (iii) Prices of Steel are connected with commodity markets globally and steel index which is quoted in U.S. Dollars.

    ROE based on FY18 Financials :
    1. Pre Issue= 12%
    2. Post Issue= 9%

    EPS story (Pre-Issue) based on FY18 Financials
    (i) PAT= 4.93 Cr
    (ii) Outstanding Shares= 1.294 Cr
    (iii) EPS= 3.80
    (iv) P/E= 8.421

    EPS story (Post-Issue) based on FY18 Financials
    (i) PAT= 4.93 Cr
    (ii) Outstanding Shares=1.334 Cr
    (iii) EPS= 3.69
    (iv) P/E= 8.672

    Conclusion: The valuation is fairly priced as compared to its peers.

    Top 10 customers of Kritika Wires are:

    1. BMW Industries Limited = 11.40%
    2. Gupta Power Infrastructure Limited = 10.71%
    3. Cabcon India Limited = 7.71%
    4. Anvil Cables Pvt. Limited =5.58%
    5. BRB Cable Industries Limited = 4.80%
    6. Lumino Industries Limited =4.64%
    7. B AND T Cables Limited =3.94%
    8. Sesa International Limited = 3.25%
    9. Laser Power & Infra Pvt Limited = 2.30%
    10 Larsen & Toubro Limited = 2.18%