Scarnose International Limited IPO

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i. Scarnose International is mainly engaged in Trading of diverse range of raw cotton, cotton bales & yarn. Currently, the company has started manufacturing of readymade garments through different job workers. These garments are made using printed fabric and solid dyed fabrics. Most of the garments are supplied with extensive value addition involving embroidery, hand embroidery and hand work including beads, sequences.

ii. The Company procures cotton bales from different ginners (A person who operates a Cotton gin i.e., a Cotton engine which quickly and easily separates cotton fibers from their seeds enabling much greater productivity than manual cotton separation) where-by they provide the cotton in the form of bales. The promoters had an existing relationships with many mills and factories and tied up with them, wherein the Company sales cotton bales to them. Most of the clients of the Companies are ginners and cotton factories. The compnay provide Cotton Bales of varied specifications and at economical prices.

iii. Having gained experience in this industry, now they have started manufacturing ladies dress materials particularly Kurtis from the financial year 2021 through outsourcing model and selling in its own domestic brand “Scarnose”. Their product sourcing of best quality at economical prices results in fine variety of raw cotton, bales and yarn and manufactures Kurtis at best possible prices thus keeping its costs low.

iv. The company procure best quality cotton yarn for its business. These are purchased keeping its customers in mind in order to provide them quality products. The yarn is sold to handloom weavers and power loom operators, to use in the production of fabrics. Yarns are usually thin, smooth, and lustrous; Yarn may be undyed, or may be coloured with natural or artificial dyes. Most yarns have a single uniform hue, but there is also a wide selection of variegated yarns.

v. Competitive Strengths:

  1. Rich management experience and skilled team
  2. Smooth flow of operations
  3. Well-defined organizational structure
  4. Existing Supplier Relationship
  5. Quality Policy
  6. Customer Centric Business Model

Objects of the Scarnose International Limited IPO:

The Objects of the Issue are: a. To meet the working capital requirements b To make the repayment of Unsecured Loan c. To meet the Issue Expenses d. General Corporate Purposes

Scarnose International Limited IPO Details:

Open Date: Jun 14 2022
Close Date: Jun 17 2022
Total Shares: 1,200,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue
Issue Size: 6.6 Cr.
Lot Size: 2000 Shares
Issue Price: ₹ 55 Per Equity Share
Listing At: BSE SME
Listing Date: Jun 27 2022

Promoters And Management:

i. Mr. Shah Vimalkumar Mishrilal, aged 34 years, is the Chairman and Managing Director of the Company and has been associated with the Company since its incorporation. He holds a Bachelor Degree of Commerce from Gujarat University and having professional degree of Chartered Accountants and Cost Management Accountant and has an experience of more than a decade. He is one of the founder members of the Company and was appointed as Director on September 25, 2018 and re designated as Chairman and Managing Director with effect from September 08, 2021. He is responsible for the purchase division of the Company, administrative affairs, expansion activities, heads the marketing and sales team and takes overall care of the functional attributes of the Company. He was holding certificate of practice since 2009 for his own practice as a chartered accountant but surrender his certificate of practice to become the managing director of the company and take on the business mantle. ii. Ms. Dakshita Dadhich, aged 26 years, is a Non-Executive Director of the Company since October 12, 2021. She holds a Master's Degree in Commerce from Mohan Lal Sukhadiya University and also cleared CA Intermediate level (IPCC), and she has knowledge in the field of Accounts & Finance. iii. Mr. Kunjal Jayantkumar Soni, aged about 30 years is an Independent Director of the Company. He holds a bachelor’s degree in Commerce and Law from Gujarat University and also having professional degree of Company Secretary from ICSI and currently working as Company Secretary in Shri Jagdamba Polymers Limited. He is having overall experience of more than 4 years in the field of legal and compliance. He was appointed as an Additional Director of the company with effect from May 06, 2021 and his appointment was regularized on June 07, 2021.

Financials of Scarnose International Limited IPO:

Particulars (in lakhs) March-22 March 21 March 20
Revenue from operations 9564 3254 1204
Cost of Material Consumed 114 0 0
Purchase of Traded Goods 9137 3015 1199
Change in Inventories -20 0 0
Employee benefits expense 43 18 0
Other Expenses 261 191 0
Operating Profit 29 30 5
OPM% 0% 1% 0%
Finance Cost 10 0 0
Depreciation 2 0 0
Other Income 28 0 0
Profit (Loss) before tax 56.00 30 3
Tax expense 11 7 0
Profit (Loss) for the period 33.00 22 2
No.of shares 31 31 31
Earnings per share 1.06 0.70 0.06

Comparison With Peers:

As per DRHP there is no company which has business line same as that of company

Recommendation on Scarnose International Limited IPO:

Review and Recommendation of Scarnose International Limited IPO by InvestorZone is 3/10 1. The company has shown a very good growth in the last 3 years. The revenue has gone from 12 Crores in FY20 to 95 Crores in FY22. However, if you see the Cash Flow from Operations in the last 3 years, it is negative. It means company is not able to generate any cash from the business. 2. Scarnose International is mainly into trading of Yarn related items, so that is why they have wafer thin margins. So, nothing in the business to entice. Though, lately they have entered into manufacturing of clothes which in future might increase the margins but that is also on outsourcing model as of now. 3. They have ROE of just 3%. 4. Asking P/E of 50x. We don't know on what basis they are asking this much valuation.

Lead Manager of Scarnose International Limited IPO:

  1. Finshore Management Services Limited

Registrar of Scarnose International Limited IPO:

  1. Cameo Corporate Services Limited

Company Address:

Scarnose International Limited 503, Sun Square, Nr Hotel Nest, Off C. G. Road, Navrangpura, Ahmedabad - 380006, Phone: 079 – 4897 5503 Email: Website

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