Promoters of Latteys Industries Limited Company are: Mr. Kapoor Chand Garg Mr. Pawan Garg

(i)First, the company procures raw material and pump parts from Gujarat. (ii) Then, they manufacture pumps and motors from them at Naroda, GIDC Gujarat. Presently, the manufacturing facility operates at an efficiency of 80% of the installed capacity. (iii) Then the finished products i.e Pumps and Motors are transported through third-party vendor to different parts of the country. (iv) The 98.25% of their finished goods sold in Gujarat, Bihar and UP only. (v) The 60% of the Revenue comes from single customer i.e. V-Guard Industries. Loosing of this customer means a big loss to the business. (vi) The business of the company is highly competitive as there are big players in the market like Kirloskar and Shakti Pumps who enjoy the benefits of brand image and many small-medium players which cater to customers requirement at an affordable price. So the business environment is really tough for the company.

 

1. Assets and Liabilities Key Parameter
Year	Asset(Lacs)	Liabilities(Lacs)	Net Worth(Lacs)	Book Value	D/E	RONW	Receiveable days
FY14	1255.35	1164.76	90.59	11.84	12.9	15.60%	73
FY15	1466.07	1332.57	133.5	13.40	10.0	10.47%	56
FY16	2014.35	1764.77	249.58	16.18	7.1	12.46%	77
FY17	2611.95	2306.75	305.2	19.79	7.6	18.22%	68
6MFY18	2628.76	2283.10	345.66	21.79	6.6	8.81%	76
Post Issue			1203.38	26	1.9

2. Profit n Loss Key Parameter (i) The Revenue of the company in last 5 years ( FY14 to 6MFY18) is 18.55 Cr, 21.53 Cr, 26.05 Cr, 35.77 Cr and 15.27 Cr respectively. The Company is growing at a CAGR of 24.47%. The Company has shown decent Growth in the last 5 years. (ii) The PAT of the company in last 5 years ( FY14 to 6MFY18) is 14.09 Lacs, 13.98 Lacs, 31.09 Lacs, 55.62 Lacs, and 30.46 Lacs respectively. The Company is growing at a CAGR of 58.36%. (iii) The EBITDA Margins of the company for FY14( 4.8%), FY15(5.55%), FY16(6.06%) ,FY17(6.79%) and 6MF18(8%) . The Company margins have almost doubled in last 5 years. (iv) P/B(post issue)= 2.53 (at cutoff price of 66) (v) Annualized EPS(post issue)= 1.32 (vi) Annualized P/E(post issue)= 50 at the cutoff price of 66

3. Cash Flow Statement(all figures in Lacs)
Particulars	FY17	FY16	FY15	FY14
(i) Net Cash Generated from Operation	118.51	28.9	43	-275.42
(ii) Net Cash Generated from Investment	-53.74	-132.42	-94.62	-300.53
(iii) Net Cash Generated from Financing Activity	2.07	116.75	54.23	583.49
(iv) Total[ (i)+(ii)+(iii) ]	66.84	13.23	2.61	7.54

Key Observations 1. Continuous pile of inventory needs to be look upon. As on 6MFY18 , the company has inventory of 12 Cr which is roughly 80% of the revenue. This high inventory if not converted into sales may affect cash flows in future. 2. The Company has borrowed loan between 2013 to 2017 to increase capacity expansion of their manufacturing unit. 3. The Company's margins has almost doubled in 5 years which is big positive for the company. 4. The issue is priced at P/E of 50 which is quite high as compared to the established player in the market such as Shakti Pump, Kirloskar Brothers and Roto Pumps which are trading at 41,33 and 19.85. For an SME company, the asking price is very high. 5. The Company in the month of Jan 2018 has issued 1,02,400  shares to the Jwala Prasad Garg and Kapoor Garg at Rs. 50 against the unsecured loans availed by the company in the past.

Review and Recommendation of

Latteys Industries Limited IPO

from our side is: The Company valuations are very high. Rating: 3/10. 1-5: Fair 5-7: Good 7-10: Excellent .

Latteys Industries Limited Plot No. 16, Phase 1/2, GIDC Estate, Naroda, Ahmedabad-382330, (Guj.) India. E-mail：info@latteysindustries.com Phone No. +91 79 22822894, 22823354