Swaraj Suiting Limited IPO

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The Company was set up in the year 2003 and was initially engaged in the manufacture of cotton/synthetic fabrics but later shifted to trading in synthetic fabrics in 2009 by selling off its Sulzer weaving looms to an associate concern, Swaraj Sulz Private Limited. The Company re-entered into manufacturing of Cotton and Synthetic fabrics in 2011 and commenced commercial operations in January 2013. The Promoters Mohammed Sabir Khan, Samar Khan and Nasir Khan have a combined experience of more than 25 years in Textile Industry and have sound knowledge of production process, marketing, finance and all kind of other commercial activities related to the textile industry.

The company is presently, primarily engaged in the Manufacturing of Grey Fabric involving Cotton and Synthetic, Trading of Yarn, Grey fabric and Finished fabric and Weaving on Job work basis.

Manufacturing Units

The existing manufacturing unit is located at Bhilwara, Rajasthan which is also their Registered Office. In this unit, they have installed 123 Airjet looms which translates into 1.50 million meters of cotton & synthetic fabric per month translating into 225 Lakh Meters Per Annum (LMPA). The Company has strategically planned the vertical integration of its operations to the next level of supply chain, aiming to lower production costs and increase the efficiency of the company. In view of this, the Company is in advanced stages of setting up a project in the district of Neemuch, Madhya Pradesh (MP), which is both the backward and forward integration of its existing activity. The commencement of commercial production shall be between March – April, 2022. This unit will manufacture premium quality denim fabric and tap new markets. The new manufacturing unit in MP is a denim processing plant with annual capacity of converting approximately 21.75 million metric meters of denim fabric. Total Cost of the project is Rs. 71.37 Crores, which is funded by Banks in the form of Term Loan to the extent of Rs. 43.00 Crores, Rs.18.82 crores will be sourced through Promoter’s contribution including internal accruals and unsecured loans and balance Rs.9.55 crores will be for Working Capital which will be funded by the issue proceeds.

Business Verticals

The Company operates under the following verticals:
1. Manufacturing of Grey Fabric
2. Weaving on Job Work basis
3. Trading of Finished Fabric, Grey Fabric and Yarn

Objects of the Swaraj Suiting Limited IPO:

The Issue includes a fresh Issue of 19,08,000 Equity Shares of the Company having face value of Rs. 10/- each at an Issue Price of ₹56/- per Equity Share aggregating to ₹10.68 Crores. The Objects of the Issue are: A. To meet the working capital requirements for our new expansion of production capacity at Neemuch, Madhya Pradesh. B. To meet the Issue Expenses C. General Corporate Purposes
DRHP of Swaraj Suiting Limited IPO

Swaraj Suiting Limited IPO Details:

Open Date: Mar 15 2022
Close Date: Mar 17 2022
Total Shares: 1,908,000
Face Value: ₹ 10 Per Equity Share
Issue Type: Fixed Issue
Issue Size: 10.68 Cr.
Lot Size: 2000 Shares
Issue Price: ₹ 56 Per Equity Share
Listing At: NSE Emerge
Listing Date: Mar 28 2022

Promoters And Management:

1. Mr. Mohammed Sabir Khan, 48 years of age, is the Founder Promoter of the company since incorporation. He is a B. Com (Hons) Graduate from MLV Govt (Autonomous) College, Bhilwara and has vast industrial experience of more than 22 years in the textile industry. He plays an important role in the Company as a Managing Director and is responsible for its future growth. He is having a strong network in the market and is good at management skills. Swaraj Suiting Limited was the idea conceived by Mr. Mohammed Sabir Khan and he is the mastermind and the propeller of the upcoming expansion project of the company as well. He has also assisted the Board in making business strategies, formation of policies, technological upgradation plan and new product development. Apart from Swaraj Suiting Limited, he has also promoted some other companies and engaged in the capacity of Director also. He is also the secretary of the Synthetic Weaving Mills Association. 2. Mrs. Samar Khan, w/o Sh. Mohammed Sabir Khan is 43 years of age. She is the Promoter Director of the company since incorporation. Soon after marriage, she assisted her husband in the business. She has gained over 18 years of working experience and is responsible for looking into the office administration matters and managing internal affairs of the business. Apart from Swaraj Suiting Limited, she has also promoted some other companies and engaged in the capacity of Director also. She become whole time director in this company since January 01, 2021. 3. Mr. Nasir Khan, s/o Sh. Mohammed Sabir Khan is 24 years of age. He is the Promoter and Whole Time Director. He joined his father in the family business in 2018. Apart from Swaraj Suiting Limited, he is also engaged in some other companies in the capacity of Director/Designated Partner. He is looking after the day-to-day affairs of the Company since his joining, specifically towards financial and marketing aspects of the business.

Financials of Swaraj Suiting Limited IPO:

Particulars (in Cr.) Sep-21 Mar-21 Mar-20 Mar-19
Sales 82 60 80 76
Cost of Material Consumed 64 16 13 12
Purchases of Stock-In-Trade 1 24 35 31
Changes in Inventories 0 -2 -4 -1
Manufacturing Expenses 6 7 13 14
Employee Benefits Expense 3 3 6 5
Other Expenses 1 1 1 1
Operating Profit 7 10 17 15
OPM % 8.54% 16.67% 21.25% 19.74%
Other Income 0 1 1 0
Interest 2 3 5 4
Depreciation 3 4 7 7
Profit before tax 3 3 4 3
Total Tax Exps 1 1 1 1
Net Profit 2 3 3 2
NPM % 2.44% 5.00% 3.75% 2.63%
No. of shares 0.72 0.72 0.72 0.72
EPS in Rs 2.78 4.17 4.17 2.78

Comparison With Peers:

As per DRHP company do not have any listed peers in the market.

Recommendation on Swaraj Suiting Limited IPO:

Review and Recommendation of  Swaraj Suiting IPO by InvestorZone is 4/10

Lead Manager of Swaraj Suiting Limited IPO:

  1. Finshore Management Services Limited

Registrar of Swaraj Suiting Limited IPO:

  1. Bigshare Services Private Limited

Discussion on Swaraj Suiting Limited IPO:

1 Comment

    Valuation

    1. Total Shares Outstanding before IPO = 52,92,130
    2. Total shares to be issued in IPO = 19,08,000
    3. Total Shares outstanding after IPO = 72,00,130
    4. PAT (FY21) = 3.8 Crores
    5. EPS = 5.2
    6. P/E = 10.76 ( looks fairly priced).

    Reply

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