Naturo Indiabull coming with an IPO to raise Rs 10.92 crore

Naturo Indiabull

• Naturo Indiabull is coming out with an initial public offering (IPO) of 3640000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 30 per equity share.
  
• The issue will open on August 22, 2022 and will close on August 24, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 3 times higher to its face value of Rs 10.
  
• Book running lead managers to the issue is Finshore Management Services.
  
• Compliance Officer for the issue is Shalini Joshi.
  

Profile of the company

The company, Naturo Indiabull was incorporated in the year 2016 and is into the business of Fast-Moving Consumer Goods (FMCG). The company is into the business of garments, textiles, jewellery, FMCG, Real Estate, Stone-Mines, Herbal Products, Automobile, Printing, Share Trading, providing education, Agriculture Seeds and Fertilizers, Hospitality and Food items through Directly and/or through the network of members, consultants, bonafide commission agents, franchises, associates and distributors of multi-level marketing through network publicity, market research analysis, surveys, organizing events, contest, seminar and other advertising and related outdoor activities, as it found that to be more advantageous and profitable.

The company is in the business of trading of various health products and kits including Sanitary Towels, Sanitary Napkins, hand sanitiser and other health kits etc. Now the company is diversifying its products to various health and herbal products like, juices, soaps, shampoos, medicines, tablets, etc. under the name and style of Naturo Indiabull. The company has started distribution of Samples. The company purchases the goods from various manufacturers and sells them in its own brand both directly to wholesellers and also through agents. Its areas of operations currently are Jaipur, Rajasthan.

Proceed is being used for:

• Meeting working capital requirements.
  
• General corporate purposes.
  
• Meeting issue expenses.
  

Industry Overview

Fast-moving consumer goods (FMCG) sector is India's fourth-largest sector with household and personal care accounting for 50% of FMCG sales in India. Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector. The urban segment (accounts for a revenue share of around 55%) is the largest contributor to the overall revenue generated by the FMCG sector in India. However, in the last few years, the FMCG market has grown at a faster pace in rural India compared to urban India. Semi-urban and rural segments are growing at a rapid pace and FMCG products account for 50% of the total rural spending.

The FMCG market in India is expected to increase at a CAGR of 14.9% to reach $220 billion by 2025, from $110 billion in 2020. The Indian FMCG industry grew by 16% in CY21 a 9-year high, despite nationwide lockdowns, supported by consumption-led growth and value expansion from higher product prices, particularly for staples. The rural market registered an increase of 14.6% in the same quarter and metro markets recorded positive growth after two quarters. Final consumption expenditure increased at a CAGR of 5.2% during 2015-20. Price increases across product categories will offset the impact of rising raw material prices, along with volume growth and resurgence in demand for discretionary items, are driving growth. The FMCG sector grew by 36.9% in the April-June quarter of 2021 despite lockdowns in various parts of the country. The government has allowed 100% Foreign Direct Investment (FDI) in food processing and single-brand retail and 51% in multi-brand retail. This would bolster employment, supply chain and high visibility for FMCG brands across organised retail markets thereby bolstering consumer spending and encouraging more product launches. The sector witnessed healthy FDI inflows of $ 20.01 billion from April 2000-December 2021. 

Pros and strengths

Smooth flow of operations: The company has maintained good relationship with its major customers. It is successful in building a strong client base for its business. Its existing relationships help it to get repeat business from its customers. This has helped it to maintain a long-term working relationship with its customers and improve its customer retention strategy. Its existing relationship with its clients represents a competitive advantage in gaining new clients and increasing its business.

Well-defined organizational structure: The company has a qualified and experienced management that has decision making powers. It is expected to benefit from the management’s ability to ensure smooth flow of operations. The company is managed by a team of competent personnel having knowledge of core aspects of its Business. It has an experienced management team having vast experience in the industry. Its senior management has pioneered its growth and fostered a culture of innovation, entrepreneurship and teamwork within its organization. A motivated and empowered employee base is keys to its competitive advantage. Its personnel policies are aimed towards recruiting talented employees and facilitating their integration into its organization and encouraging the development of their skills and expertise. Its experience, knowledge and human resources will enable it to drive the business in a successful and profitable manner.

Existing supplier relationship: The company’s existing supplier relationship protects the business with terms of supply and pricing of the products, the quality of the products offered etc. The company, being a small and medium size organization, rely on personal relationships with its suppliers. The company enjoys existing relationship with its suppliers. Further it also leverages the past experience of its management in maintaining effective supplier relationship.

Risks and concerns

Heavily dependent on certain suppliers: The company does not manufacture any of the products it sells. The company mainly procures its traded goods from various suppliers. The quality of products supplied, the transparent pricing, locational advantage, etc. are some of the major reasons, the company prefers to procure its traded goods from these key suppliers. However, it has not entered into any formal agreement with these key suppliers. Also, the fact that it is so heavily dependent on these suppliers, exposes it indirectly to the risks that these suppliers face. Any failure of the suppliers to deliver these traded goods in the necessary quantities or to adhere to delivery schedules or specified quality standards and specifications would adversely affect its business operations and its ability to deliver orders on time and at the desired level of quality. Further any deterioration in the financial condition or business prospects of these suppliers could reduce their ability to meet its requirements and which may result in delay of supply of its products.

Face competition: The market for company’s industry is highly competitive on account of both the organized and unorganized players. Players in this industry generally compete with each other on key attributes such as timely delivery, pricing, the quality etc. Some of its competitors may have longer industry experience and greater financial, technical and other resources, which may enable them to react faster in changing market scenario and remain competitive. Moreover, the unorganized sector offers their products at highly competitive prices which may not be matched by it and consequently affect its volume of sales and growth prospects. Growing competition may result in a decline in its market share and may affect its margins which may adversely affect its business operations and its financial condition.

Rely on third party logistic providers: The company relies on third party logistic providers and consequently, any disruption in its transportation arrangements or increases in transportation costs may adversely affect its business, results of operations and financial condition. There are a limited number of such logistic providers and in the absence of a formal arrangement, it is exposed to fluctuations in transportation costs. Also, if the terms offered to such logistic providers by its competitors are more favourable than those offered by it, they may decline to provide their services to it and terminate their informal arrangements with it. It may also be affected by transport strikes, which may affect its delivery schedules. If it is unable to secure alternate transport arrangements in a timely manner and at an acceptable cost, or at all, its business, results of operations and financial condition may be adversely affected.

Outlook

Incorporated in 2016, Naturo Indiabull is in the business of the Fast-Moving Consumer Goods industry. The brand purchases a variety of products from manufacturers and sells them in its own brand directly to wholesellers and through agents. It carries on the business of garments, textiles, jewellery, FMCG, Real Estate, Stone-Mines, Herbal Products, Automobile, Printing, Share Trading, providing education, Agriculture Seeds and Fertilizers, Hospitality, and Food items. It also trades in various health products and kits including sanitary towels, sanitary napkins, hand sanitiser, and other health kits. Currently, it is diversifying its product portfolio to health and herbal products i.e., soaps, shampoos, medicines, juices, tablets, etc. The company’s group has an established track record of over 5 years which indicates the company’s ability to weather economic and business cycles and competent promoters have over a decade of relevant experience.  On the concern side, the company has not obtained any insurance policies (except for a vehicle insurance) for covering it against possible economic losses that it may be subject to in the course of carrying on business. Besides, the company’s growth and business strategies may require it to raise additional capital which may be met through a further issue of equity, or securities convertible into equity. Any issuance of Equity Shares to persons other than the existing Equity Shareholders will dilute your existing equity shareholding.

The company is coming out with a maiden IPO of 3640000 equity shares of Rs 10 each at a fixed price of Rs 30 per share to mobilize around Rs 10.92 crore. On performance front, during the FY 2021-22 the revenue from operation and other income of the company has been increased to Rs 1144.63 lakh as against Rs 700.72 lakh in the FY 2020-21. This increase was mainly due to increase in volume of operation during the FY and getting repeated orders. The restated Profit after Tax for FY 2021-22 has been increased to Rs 109.22 lakh as against Rs 74.57 lakh in the FY 2020-21. Meanwhile, the company endeavors to maintain the quality of its service, and follow strict procedures to ensure timely delivery and competitive prices. The company intends to strengthen its product development effort by leveraging skills of its employees which will help to increase the sales of the company and retain customers. Going forward it plans to establish its presence in the more geographical potential regions. Its emphasis is on expanding the scale of its operations as well as growing its supply chain network, which will provide attractive opportunities to grow client base and revenues.