Marco Cables & Conductors Limited IPO

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i. Marco Cables was incorporated on April 13, 1989 and is engaged in the business of manufacturing and selling of wires, cables wires and conductors in India, with an operating history of over 34 years in power cable industry in India. They commenced their operations with manufacturing of wires (with aluminium / corAerial Bunched Cables, subsequently we included AAAC (All Aluminium Alloy Conductor) and ACSR (Aluminium Conductor Steel Reinforced) Conductors and had made their presence in the industry.

ii. They have been manufacturing XLPE, PVC & Aerial Bunched Cables for last 3 decades. Recently, they have started ACSR – Aluminium Conductor Steel Reinforced, AAAC – All Aluminium Alloy Conductor, ABC – (Aerial Bunched Cable) for distribution & transmission power lines.

iii. Majority of the products are supplied to electricity boards of different states like Maharashtra, Gujarat, Tamil Nadu, Telangana, Haryana, Chhattisgarh, Madhya Pradesh etc. and turnkey contractors of India. Their products cover entire range of voltage & transmission lines suitable up to 1.1 KV. The products are also certified as compliant with various quality standards including Bureau of Indian Standards (“BIS”) and International Organization for Standardization (“ISO”). Their manufacturing facilities are equipped with in-house testing laboratory to ensure that the finished products match the quality standards and certifications as specified.

iv. They sell their products through a diversified sales & distribution mix, majorly by
1) securing government tenders for supply to government projects
2) supply to EPC contractors for turnkey projects and
3) direct sales to few private companies.

v. Over the years, they have made continuous investments in our manufacturing infrastructure to support the product portfolio requirements and reach. Their capabilities as a Company includes strict quality assurance system, in-depth production designing experience and established marketing and distribution relationships. We strive to deliver customized products and provide quality services.

Competitive Strengths

i. Qualifying in BQR of Government tenders
ii. Assured Quality and High Standard Service
iii. Strong Customer Base

Objects of the Marco Cables & Conductors Limited IPO:

The company proposes to utilize the Net Proceeds from the Offer towards funding the following objects: i. Funding of capital expenditure requirements of the company towards the purchase of Solar Power System and 1+12 Rigid Stranding Machine. ii. Funding Incremental Working Capital Requirements; and iii. General corporate purposes. The total number of shares issues is: - a. Fresh issue of 2,601,000 shares. b. Offer for sale of 2,601,000 shares.
DRHP of Marco Cables & Conductors Limited IPO
RHP of Marco Cables & Conductors Limited IPO

Marco Cables & Conductors Limited IPO Details:

Open Date: Sep 21 2023
Close Date: Sep 25 2023
Total Shares: 5,202,000
Face Value: ₹ 10 Per Equity Share
Issue Size: 18.73 Cr.
Lot Size: 3000 Shares
Issue Price: ₹ 36 Per Equity Share
Listing At: NSE Emerge
Listing Date: Oct 04 2023

Promoters And Management:

Mr. Sumit Sugnomal Kukreja, aged 36 years, is one of the Promoters, Chairman and Managing Director of the Company. He has completed his Bachelor of Commerce from University of Mumbai in 2008. He has over 18 years of experience in the wire and cable industry. In his previous stint, he was associated with M/s. Laxmi Power Cables Private Limited as Director for around 9 years handling Marketing division. He joined the Company as Director in the year 2014. He oversees the operations of the Company's marketing, quality control, and purchases, production, compliance departments etc. By taking part in the tenders of new/additional State Electricity Boards, he expanded the Company's client base. Additionally, he began buying raw materials, such as aluminium, from primary manufacturers which increased the company's profitability. He gives directions to the company and is responsible for planning and executing the expansions and diversification of the Company. He is result oriented, focused, hardworking person and provides strategic advice and guidance to the members of the Board of Directors, to keep them aware of developments to ensure that appropriate policies are developed. Mr. Sugnomal Mangandas Kukreja, aged 63 years, is one of the Promoters and Wholetime Director of the Company and has been on Board of the company since inception of the Company, i.e., April 13, 1989. He has over 34 years of working experience in the Company. He has completed his SSC from Maharashtra State Board of Secondary Education in the year 1976. He manages the company's accounts, finance, human resources functions etc. He has a practical approach to achieving the necessary goals. His extensive experience helps staff members to achieve goals in a dynamic and challenging corporate environment. He realized the importance of quality of products to meet competition and mentored the Company for ISOs Certification. He is responsible for the entire administration of the Company and brings about innovation through creation of new capacities, development of products, exploring and evaluating ways of penetrating existing markets and developing new markets in India Ms. Komal Sumit Kukreja, aged 33 years, is one of the Promoters and Non-Executive Director of the Company. She has completed matriculate education. She has been appointed as Non-Executive Director of the Company with effect from April 25, 2023. She does not hold valid experience in the industry.

Financials of Marco Cables & Conductors Limited IPO:

P&L (in cr) 2014 2015 2016 2017 2018 2019 2020 2021 2021 2022 2023
Revenue 47 49 54 50 86 129 103 50 42 56 56
Cost of Materials Consumed 35 36 38 34 62 100 78 36 34 46 43
Employee Benefit Expense 2.09 2.29 2.60 3.25 3.91 3.98 4.50 3.14 0.91 0.8 0.94
Other Expenses 7 7 8 7 13 17 14 5 2.27 3.34 3.87
Total Operating Cost 44 45 48 45 80 121 96 45 37.18 50.14 47.81
EBITDA 3 5 5 5 7 8 7 5 4.82 5.86 8.19
Other Income 0.15 0.14 0.28 0.33 0.28 0.24 0.05 0.09 0.44 0.24 0.17
D&A 0.2 0.22 0.21 0.2 0.24 0.27 0.44 0.45 0.54 0.49 0.48
Finance Costs 3.25 3.84 4.71 4.83 5.51 6.61 5.52 4.8 5.03 5.29 5.29
PBT -0.51 0.59 0.61 0.68 1.1 1.84 0.93 0.3 0.13 0.48 3.76
PAT -0.62 0.42 0.46 0.48 0.85 1.39 0.73 0.25 0.13 0.33 2.8

Comparison With Peers:

Name of the Companies Revenue (cr) Profit (cr) EPS P/E CMP MCap (in cr)
Marco Cables & Conductors Limited 58 2.8 1.50 24 36 67.28
V-Marc India Limited 245 10 4.59 26.6 122 278
Ultracab (India) Limited 107 6 0.61 26.4 16 153
Relicab Cable Manufacturing Limited 35 1.5 1.49 63 94 94.6
Dynamic Cables Limited 669 31 14.09 30 486 1070
*All the data as per FY23

Recommendation on Marco Cables & Conductors Limited IPO:

Review And Recommendation of Macro Cables and Conductors SME IPO by IZ team is 2/10

Financial Stability and Revenue Growth

The financial records reveal significant inconsistencies in Marco Cables & Conductors Limited's revenue growth. Revenue peaked in 2019 but declined sharply thereafter, showing no signs of notable growth. Although there's some stabilization in revenue figures, the absence of consistent growth is a significant concern for potential investors. This stagnation in revenue growth raises questions about the company's long-term profitability and growth prospects, which are key indicators for any investment decision.

Anomaly in Employee Benefit Expense

A concerning observation is the drastic reduction in Employee Benefit Expense from ₹3.14 crores in 2021 to ₹0.91 crores in the subsequent year, with only a marginal increase to ₹0.94 crores in 2023. Such a sharp reduction in employee benefits could be indicative of various underlying issues such as layoffs, reduced employee benefits, or potentially, a reclassification of this expense. This warrants a deeper investigation as it could have a significant impact on employee morale and productivity, which in turn could affect the company's performance and growth.

Financial Integrity

The timing and nature of these financial fluctuations raise concerns about the integrity of the financial statements, particularly as they appear just before the IPO. These anomalies could be interpreted as a potential red flag that the financials have been manipulated to present the company in a more favorable light for the IPO. Investors should exercise extreme caution and perhaps await third-party audits or investigations.

Debt Levels

The company's financials reveal high finance costs, indicating a substantial level of debt. High debt levels add financial risk, limit the company's flexibility to take on new opportunities, and could potentially affect its profitability.

Business Growth

Finally, the lack of growth in the business is evident not just in the revenue figures but also in the comparison with peers and market trends. Despite its long-standing presence in the market and a diversified product portfolio, the company has failed to capitalize on these strengths to drive growth.

Summary

In light of these observations, extreme caution is advised for potential investors considering participation in the IPO of Marco Cables & Conductors Limited. The lack of consistent growth, potential manipulation of financial records, high levels of debt, and questions surrounding employee benefit expenses make it a high-risk investment. A thorough due diligence, including an in-depth investigation of the company's financials and operational practices, is strongly recommended before making any investment decisions in this IPO.

Lead Manager of Marco Cables & Conductors Limited IPO:

  1. SHRENI SHARES PRIVATE LIMITED

Registrar of Marco Cables & Conductors Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Marco Cables & Conductors Limited Shop No 100, Opposite Bhai Gangaram Market, Main Road, Ulhasnagar, Thane - 421005, Phone: 0251 2530332 Email: investors@hmtcable.com Website: https://www.marcocables.com/index

Discussion on Marco Cables & Conductors Limited IPO:

1 Comment

    Link of Financials :

    https://d2un9pqbzgw43g.cloudfront.net/main/WhatsApp-Image-2023-09-17-at-18.47.32.jpeg

    1. The revenue growth has been inconsistent, peaking in 2019 and declining thereafter, but shows signs of stabilization. There is no growth in the company.

    2. The anomaly that stands out is the drastic reduction in Employee Benefit Expense from 2021. It dropped from 3.14 crores in 2021 to 0.91 crores and marginally increased to 0.94 crores in 2023. This could raise red flags for potential investors. Such a drastic reduction might be due to layoffs, reduced benefits, or perhaps a reclassification of this expense under a different head. This warrants a deeper investigation to assess the impact on employee morale and productivity.

    3. looks like financials are cooked up just before IPO.

    4. High debt on books.

    5. No growth in the business.

    Reply

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