Sonam Clock Limited IPO

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Sonam Clock Limited IPO

(i) Sonam Clock Limited is a clock manufacturing Company situated in Morbi, Gujarat and established in 2001. Clocks are available at various price points across budget, mid-range of `100 to `1800 which includes LED digital clocks, LCD clocks, light sens rotating pendulum musical clocks, sweep clocks, office clocks, designer clocks, alarm clocks, table clocks and regular clocks also offer customized corporate clocks in bulk quantities for corporate gifting up.

(ii) The products are sold mainly to clock dealers, retailers, consumers. Their products are sold under the brand name of Sonam, and Lotus. In F.Y. 2016 operations comprised of Rs. 37.9285 Cr of which approximately 40% comprised of export sales to as Dubai and Iraq. .They are also engaged in clock parts which include clock movements, clock cases etc
.They  are ISO 9001:2008 accredited Company and  have grown many folds during the past decade under the leadership and guidance of their Promoter, Chairman and Managing Director, Mr. Jayeshbhai years in the field of clock industry. His expertise and experience have been instrumental in the growth of the business.
Company Products
1 Rotating Pendulum Musical Clock
2 Pendulum Musical Clock
3 Rotating Musical Clock
4 Pendulum Clock
5 Musical Clock
6 Divine Clock (with/ without tune)

(iii) Sonam Clock Limited First Ever Company to register unpredicted growth in chorological industry in sector of corporate Gifting. The company is well equipped with the world-class technology and state-of-the-art equipment which are strategically utilized by highly professional management team & the workforce from surrounding villages. (Most of them are female workers). With the values of dedication, commitment and hard work, the company as a team is climbing the ladder of success. At present, the company has a wide range of Clocks, LED clocks & Timepieces.

(iv)Since last Seven years “SONAM” has never looked back, and now become India’s one of the largest customized clock producing Company. In the field of Indian Clock Manufacturing industry “SONAM” is running “NECK to NECK” a winning track with its production capacity and strong marketing network.

Sonam Clock Limited IPO Stock Quote & Charts

38.30

+0.26%

Check History
  • Open: 38.30
  • High - Low: 38.30 - 38.30
  • Previous Close: 38.20
  • Total Traded Volume: 30000
  • Updated On: 20-Dec-2019

Objects of the Sonam Clock Limited IPO:

Objective of

Sonam Clock Limited IPO

are: 1. Funding the Working Capital Requirement 2. Repayment of Unsecured Loan availed by our Company 3. General Corporate Expenses 4. Issue Expenses
DRHP of Sonam Clock Limited IPO

Sonam Clock Limited IPO Details:

Open Date: Jun 01 2018
Close Date: Jun 06 2018
Total Shares: 28,08,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Price Issue IPO
Issue Size: 10.11 Cr.
Lot Size: 3000 Shares
Issue Price: ₹ 36 Per Equity Share
Listing At: NSE Emerge
Listing Date: Jun 14 2018

Promoters And Management:

Promoters of Sonam Clock Limited Company are: Mr. Jayeshbhai Chhabildas Shah Mrs. Deepaben Jayeshbhai Shah

Capital Structure:

(i) Authorized Share Capital (1,10,00,000 shares at FV@10) 11 Cr
(ii) Issued, Subscribed,& Paid-up Share Capital Before Issue (72,00,000 Shares at FV@10) 7.2 Cr
(iii) Present Issue (  28,08,000 Shares at FV@10) 2.808 Cr
(iv) Reservation for Market Maker  ( 1,44,000 Shares at FV@10) 6.2 Lacs
(v) Net Issue to Public (28,08,000 -1,44,000=  26,64,000 Shares) 2.664 Cr
(vi) QIB & HNI quota-13,32,000 50%
(vii) Retail Quota - 13,32,000 50%
(viii) Paid Up Share Capital after the issue 10.008 Cr

Financials of Sonam Clock Limited IPO:

1. Assets and Liabilities Key Parameter
Year Asset(Lacs) Liabilities(Lacs) Net Worth(Lacs) Book Value D/E RONW Receiveable days
FY13 2,713.59 2,226.21 487.38 27 4.56 9.34% 44
FY14 3,007.50 2,462.60 544.9 30 4.51 10.56% 30
FY15 2,852.49 2,266.60 585.89 33 3.86 7.00% 30
FY16 3,416.94 2,562.94 854 16 3.00 31.39% 29
FY17 3,493.92 2,559.22 934.7 17 2.73 8.63% 66
9MFY18 3,774.16 2,613.56 1,160.60 16 2.25 19.46% 71
Post Issue 2171.48 22 1.2
2. Profit n Loss Key Parameter (i) The Revenue of the company in last 5 years ( FY13to 9MFY18) is 33.71 Cr, 33.55Cr, 34.05Cr, 36.82, 39.03 Cr and 38.61 Cr respectively. (ii) The PAT of the company in last 5 years ( FY13 to 6MFY18) is 45.53 Lacs, 57.52Lacs, 40.99 Lacs, 2.68 Cr ,80.7 Lacs and 2.25 Cr respectively. (iii) The EBITDA Margins of the company for FY13( 10%), FY14(11%), FY15(11%) ,FY16(14%), FY17(11%) and 9MF18(14%) . (iv) P/B(post issue)= 21.63(at cutoff price of 36) (v) Annualized EPS(post issue)= 3 (vi) Annualized P/E(post issue)= 12 at the cutoff price of 36
3. Cash Flow Statement(all figures in Lacs)
Particulars FY17 FY16 FY15 FY14 FY13
(i) Net Cash Generated from Operation 270.57 468.16 94.12 154.71 350.22
(ii) Net Cash Generated from Investment -150.88 -261.12 -63.5 -192.27 -173.37
(iii) Net Cash Generated from Financing Activity -130.65 -211.95 -76.87 46.05 -155.2
(iv) Total[ (i)+(ii)+(iii) ] -10.96 -4.91 -46.25 8.49 21.65
Key Observations (i)The Company is regular defaulter in depositing TDS to the Govt and hence company has received prosecution notice under Income Tax Act, 1961. The total outstanding TDS is around 38 Lacs. This is a serious offence where you are deducting TDS and not submitting to the govt. (ii)As on 31st Dec 2017, the company owes around 4.77 Cr to 113 creditors. Moreover, the company owes more than 5% of the total consolidated trade payables from 2 creditors. (iii)The Company export nearly 40% of their products to Dubai and Iraq. So fluctuation in currency is a big factor to consider in this company. (iv)The Promoter Group Entity & Group Company namely, Sonam Tradelink LLP, is in the same business as Sonam Clock Limited, which can create conflict of interest in future. (v)Avearge cost of Acquisition to the promoters Sr.no,  No. of shares held , Average cost of acquisition Mr. Jayeshbhai Chhabildas Shah, 62,39,200, 2.43 Mrs. Deepaben Jayeshbhai Shah 4,80,000, 2.50 (vi)The Revenue and PAT of the company in FY17 were only 39.03 Cr and 80 Lacs against 9MFY18 Revenue and PAT of 38.61 Cr and 2.25 Cr respectively. This shows Company has achieved amazing growth of 3x times in PAT under falling revenue speaks nothing less than manipulation of books just before the IPO. The inventory has gone up which results into less expense and hence more profit. (vii)The Company has muted revenue growth of 3% in last 5 years. (viii)Though P/E at 12 looks reasonable on earning of annualized 9MFY18. However, as we discussed earlier that the PAT of 2.25 Cr on decreased revenue looks fishy , so if we consider FY17 PAT of 80 lacs to calculate P/E , it comes out to be 45 post issue which looks overvalued.

Comparison With Peers:

As per DRHP, the The company has shown Opal Luxury Time Products Limited as a peer which is in losses, so no point of comparing it with Sonam Clock Limited.

Recommendation on Sonam Clock Limited IPO:

Review and Recommendation of

Sonam Clock Limited IPO

from our side is: Rating: 1/10. 1-5: Fair 5-7: Good 7-10: Excellent

Lead Manager of Sonam Clock Limited IPO:

  1. Hem Securities Limited

Registrar of Sonam Clock Limited IPO:

  1. Bigshare Services Private Limited

Company Address:

Sonam Clock Limited Survey No. 337/p, Morbi Rajkot Highway, Village Lajai, Taluka Tankara, District Morbi - Gujarat - 363641, India Phone No. +91-2822-285017 Fax No. +91 2822 285987 E-mail: info@sonamquartz.com Website: www.sonamquartz.com

Bid Details of Sonam Clock Limited IPO as on
06-Jun-2018 17:30:00 IST

Category No.of shares offered No. of shares bid
1,332,000 1,389,000
1,332,000 5,115,000
144,000 144,000
2,808,000 6,648,000
QIBs No
QIBs+HNIs Subscription 1.04X
Retail Subscription 3.84X
Total Subscription 2.44X

Discussion on Sonam Clock Limited IPO:

3 Comments

    Though revenue of the company has gone up from 36 cr to 39 cr from FY16 to FY17 but increase in receivables days from 29 to 66 days clearly indicates that company is selling products on credit of 66 days almost double from previous years, which is quite negative for the companies with the large working capital requirement.

    Reply

    It is a big avoid. No point of applying in a company which has big corporate governance issues like No filling of TDS , increase in trade payables and many more issues.

    Reply

    The recently announced Customs Duty on Imported clocks as well as other new regulatory impositions by the Government, such as introduction of GST and the likely to be announced E-way will help a great deal in eliminating from the scene those businesses that were operating nefariously by evading payment of taxes Organised Players grow their businesses and progressively move forward

    Reply

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