Steelman Telecom coming with an IPO to raise upto Rs 26.02 crore

Steelman Telecom

• Steelman Telecom is coming out with an initial public offering (IPO) of 2710800 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 96 per equity share.
  
• The issue will open on September 26, 2022 and will close on September 29, 2022.
  
• The shares will be listed on SME Platform of BSE.
  
• The share is priced 9.60 times higher to its face value of Rs 10.
  
• Book running lead manager to the issue is Gretex Corporate Services.
  
• Compliance Officer for the issue is Nidhi Goyal.
  

Profile of the company

The company offers support services and solutions to address the Network requirements of Telecom industry. Over the years the company has been successfully implementing various projects and has been recognized by its clients for quality and timely execution of the projects undertaken. This expertise and capability has helped it to achieve continuous growth and success. The company provides services for Network Survey and Planning, Installation and Commissioning, Network Testing and Optimization, Network Solutions and Managed Services for network maintenance. The company’s strong technical background enables it to effectively carry out end-to-end services thereby covering the entire network & technology service solutions.

The company’s understanding of critical aspects of a technology and utilizing the same to improve coverage, capacity & quality of today’s networks leads to network quality improvement; thereby enhancing every subscriber’s experience. Its technically skilled field workforce ensures effective planning and execution of the projects. Its understanding of new technologies and proven track record of good quality services is complimented with efficient internal processes. The company is ISO certified Company which is testimony to its commitment towards quality and safety. Its manpower strictly maintains the safety precautions with right procedures, right skills and the best equipment available in the world.

Proceed is being used for:

• Investment in subsidiary.
  
• Working capital requirements.
  
• General corporate purposes.
  

Industry overview

Currently, India is the world’s second-largest telecommunications market with a subscriber base of 1.16 billion and has registered strong growth in the last decade. The Indian mobile economy is growing rapidly and will contribute substantially to India’s Gross Domestic Product (GDP) according to a report prepared by GSM Association (GSMA) in collaboration with Boston Consulting Group (BCG). In 2019, India surpassed the US to become the second largest market in terms of number of app downloads. The liberal and reformist policies of the Government of India have been instrumental along with strong consumer demand in the rapid growth in the Indian telecom sector. The government has enabled easy market access to telecom equipment and a fair and proactive regulatory framework that has ensured availability of telecom services to consumer at affordable prices. The deregulation of Foreign Direct Investment (FDI) norms have made the sector one of the fastest growing and the top five employment opportunity generator in the country. The total number of internet subscribers reached 658 million in January 2022. In India, tele-density (defined as the number of telephone connections per 100 individuals) stood at 85.91%, as of December 2021.

Gross revenue of the telecom sector stood at Rs. 64,801 crore ($8.74 billion) in the first quarter of FY22. Strong policy support from the Government has been crucial to the sector’s development. Foreign Direct Investment (FDI) cap in the telecom sector has been increased to 100% from 74%. In October 2021, the government notified 100% foreign direct investment (FDI) via the automatic route from previous 49% in the telecommunications sector. FDI inflow in the telecom sector stood at $38.25 billion from April 2000-December 2021. In January 2022, Google made a $1 billion investment in Airtel through the India Digitization Fund. The government is encouraging global telecom network manufacturers such as Ericsson, Nokia, Samsung and Huawei to manufacture all their equipment in India with 100% local products. The Rs. 12,195 crore ($1.65 billion) production-linked incentive (PLI) scheme has already triggered entry of several global players manufacturing mobile devices and components. European telecom gear vendors like Ericsson and Nokia are eager to expand their existing operation in India for global supply chain under the PLI scheme. Similarly, other global vendors like Samsung, Cisco, Ciena, Jabil, Foxconn, Sanmina and Flex have shown interest to set up manufacturing in India for telecom and networking products under the newly announced PLI scheme.

Pros and strengths

Established relationship with existing customers: The company has developed strong and sustaining relationships with its clients. It works with almost all the leading telecom operators in the country. Its experience of more than three decades, its track record of delivering timely services to its customers and demonstrated industry expertise consistently has helped it nurture long-term relationships with them. It has a history of high customer retention and derive a significant proportion of its revenue from repeated business.

Comprehensive telecom support services: The company has PAN India presence. It is providing end to end comprehensive services for all telecom technologies. Its experienced project managers work hand-in hand with customers to manage project milestones and ensure delivery as per schedule and quality.

Timely delivery of projects: The company is focused on executing contracts on timely manner. It always takes pride in the timely completion of awarded projects. This enables it to built trust and strong relationship with its clients. Over the years it has developed strong internal processes to build skillful field teams. It keeps on imparting training and incentivizing performance. They remain updated with client requirements ensuring quality performance on field.

Risks and concerns

Operate in highly competitive industry: As a telecom support service provider providing a wide range of services to its clients, it competes with a range of organized and unorganized competitors, depending on the nature and location of services provided. Such competitors collectively compete with the majority of its services. The market for telecom service providers is highly competitive with few organized players and localised smaller unorganised players. Important factors affecting competition in the telecom sector include project management ability, past track record, existing relationship with the clients, reliability, technical knowledge, price, scope and quality of services offered to customers. The company’s competitors’ companies that may have greater financial, marketing or other resources than it does and, therefore, may be better able to compete for new work and skilled professionals. Its competitors may be willing and able to develop and provide service offerings faster or at a lower price than it. Its competitors also may affect its business by entering into exclusive arrangements with existing or potential clients.

Rely on independent third-party service providers: The company utilizes various independent service providers and contractors to execute its services. If a service provider or contractor fails to perform its obligations satisfactorily or within the prescribed time periods with regard to services to its clients, or terminates its arrangement with it, it may be unable to provide service with its intended quality, within the intended timeframe and at the pre-estimated cost. If this occurs, it may be required to incur additional cost or time to meet appropriate quality standards in a manner consistent with its objective, which could result in reduced profits or, in some cases, significant penalties and losses which i may not be able to recover from the relevant service provider or independent contractor.

Face significant risk with regard to span of time needed to complete each project: The company is recognized by its clients for quality and timely execution of the projects undertaken. There has not been any material past instances of unscheduled delays with respect to its completed projects and phases thereof that have caused any material cost overruns. However, its business is extremely dynamic in nature and there could be unscheduled delays and cost overruns in relation to its ongoing or forthcoming projects. During the time there can be changes to the national, state and local business conditions and regulatory environment, local market conditions, perception of prospective clients with respect to the convenience and attractiveness of the project and changes with respect to competition from other companies.

Outlook

Steelman Telecom offers support services and solutions to address the Network requirements of the Telecom industry. It provides services for Network Survey and Planning, Installation and Commissioning, Network Testing and Optimization, Network Solutions and Managed Services for network maintenance. Its strong technical background enables it to effectively carry out end-to-end services thereby covering the entire network & technology service solutions. Its understanding of critical aspects of a technology and utilizing the same to improve coverage, capacity & quality of today’s networks leads to network quality improvement; thereby enhancing every subscriber’s experience. Its technically skilled field workforce ensures effective planning and execution of the projects. Its understanding of new technologies and proven track record of good quality services is complimented with efficient internal processes. On the concern side, the company is in services industry and its business is dependent on human resource for carrying out its operations. Shortage of skilled / unskilled personnel or work stoppages caused by disagreements with employees could have an adverse effect on its business and results of operations.

The company is coming out with a maiden IPO of 2710800 equity shares of Rs 10 each at a fixed price of Rs 96 per share to mobilize around Rs 26.02 crore. On performance front, the company’s total revenue increased by Rs 1,100.81 lakh or 12.21% to Rs 10,116.32 lakh for the financial year 2021- 22 from Rs 9,015.51 lakh for the financial year 2020-21. The company’s profit after tax increased by 188.13% to Rs 396.58 lakh for the financial year 2021-22 from Rs 137.64 lakh for the financial year 2020-21, reflecting a net increase of Rs 258.94 lakh. Meanwhile, the company intends to utilize project management skills to access the growing demand for telecom projects in India. It plans to use its expertise to bid for a large number of projects and deploy its resources more efficiently and improve operating margins. It intends to enter in the areas of latest upcoming new age technology i.e.,5G and this will enable it to further strengthen its relationships with its existing client.