Yash Optics & Lens coming with IPO to raise upto Rs 53.15 crore

Yash Optics & Lens 

• Yash Optics & Lens is coming out with initial public offering (IPO) of 6,561,600 shares of Rs 10 each in a price band Rs 75-81 per equity share.  
• The issue will open for subscription on March 27, 2024 and will close on April 3, 2024.
• The shares will be listed on NSE Emerge Platform.
• The face value of the share is Rs 10 and is priced 7.50 times of its face value on the lower side and 8.10 times on the higher side.
• Book running lead manager to the issue is Shreni Shares.
• Compliance Officer for the issue is Gaurav Ramesh Khandelwal.

Profile of the company

Established in the year 2010, initially the company was engaged in trading and distribution of spectacle and optical lenses which were sourced from Indian importers and traded in Mumbai. Over the years, it has increased its product portfolio with brands like Seto, IRIS etc. and expanded its network & distribution channel in Maharashtra, Gujarat and Rajasthan. Under the trading space, the company sources the spectacle/optical lenses and market the same under its own brands for further sale through distributors and own retail channels. The company provides wide array of vision correction solutions. The company is primarily engaged in the business of manufacturing, trading, distribution and supplying of comprehensive range of spectacle/optical lenses. It is offering from single vision lenses to advanced progressive lenses, customized progressive lenses to personalized progressives for professionals along with wide range of coatings. Its products are available across the entire range of price points enabling it to serve the entire gamut of customers from economy. The company manufactures the lenses based on order and prescription received from the customers. 

Its manufacturing facility is situated at Government Industrial Estate, Ganesh Nagar, Kandivali (West), Mumbai, is well equipped with required facilities including machinery, other handling equipment’s to facilitate smooth manufacturing process and easy logistics. It endeavors to maintain safety in its premises by adhering to key safety norms, established through its internal health and safety manual, accompanied by regular safety meetings. Its manufacturing facility is accredited with ISO 9001:2015 for quality management system for the manufacturing, import, export, trading, stockiest and supplier of ophthalmic lens and ophthalmic products.

The company is led by its Promoters, Mr. Tarun Manharlal Doshi, Mr. Dharmendra M Doshi and Mr. Chirag Manharlal Doshi. They are involved in the critical aspects of its business, including expansion, process and plant, finance, sales and marketing etc. Its market position has been achieved by adherence to the vision of its Promoters and their combined experience in the industry in which the Company operates.

Proceed is being used for:

• Funding of Capital expenditure for setting up a manufacturing unit for backward integration 
• Purchase of plant and machinery at existing manufacturing unit 
• Repayment/ prepayment of certain borrowings availed by the company 
• Funding working capital requirements of the company 
• General corporate purposes

Industry overview

The Indian manufacturing industry generated 16-17% of India’s GDP pre-pandemic and is projected to be one of the fastest growing sectors. The machine tool industry was literally the nuts and bolts of the manufacturing industry in India. The Indian manufacturing sector is steadily moving toward more automated and process-driven manufacturing, which is projected to improve efficiency and enhance productivity. India has the capacity to export goods worth $1 trillion by 2030 and is on the road to becoming a major global manufacturing hub. With 17% of the nation’s GDP and over 27.3 million workers, the manufacturing sector plays a significant role in the Indian economy. Through the implementation of different programmes and policies, the Indian government hopes to have 25% of the economy’s output come from manufacturing by 2025.

India’s gross domestic product (GDP) at current prices stood at Rs 51.23 lakh crore in the first quarter of FY22, as per the provisional estimates of gross domestic product for the first quarter of 2021-22. The manufacturing GVA at current prices was estimated at $77.47 billion in the third quarter of FY22 and has contributed around 16.3% to the nominal GVA of during the past ten years. India has potential to become a global manufacturing hub and by 2030, it can add more than $500 billion annually to the global economy. As per the economic survey reports, estimated employment in manufacturing sector in India was 5.7 crore in 2017-18, 6.12 crore in 2018-19 which was further increased to 6.24 crore in 2019-20. India's display panel market is estimated to grow from around $7 billion in 2021 to $15 billion in 2025. 

India is an attractive hub for foreign investments in the manufacturing sector. Several mobile phone, luxury and automobile brands, among others, have set up or are looking to establish their manufacturing bases in the country. The manufacturing sector of India has the potential to reach $1 trillion by 2025. The implementation of the Goods and Services Tax (GST) will make India a common market with a GDP of $2.5 trillion along with a population of 1.32 billion people, which will be a big draw for investors. The Indian Cellular and Electronics Association (ICEA) predict that India has the potential to scale up its cumulative laptop and tablet manufacturing capacity to $100 billion by 2025 through policy interventions.

Pros and strengths

Customer centric business model: The company focuses on customer first. Everything flows from customer understanding and needs. Its products are designed keeping customers in mind with focus on customer satisfaction and feedback. It trusts that maintaining a variety of products in its business provides it with an opportunity to cater to diverse needs of different customer segment. The company has assessed the changing consumer preferences from time to time and redesigning/reshaping its products accordingly by continuously exploring new designs, styles, etc.

PAN India Presence: It has PAN India presence with its distributors network for its domestic market. It follows offline distribution model for sale of its products and have distributors spread across the country who in turn sell its products through various opticians, showrooms and optical counters. It follows B2B and B2C models whereas in B2B model, it sells its products to distributor for further sale and under B2C, it sells its products directly to opticians, directly through its branch offices or sale depot.

Wide range of products with ability to customize: The company is primarily engaged in the business of manufacturing, trading, distribution and supplying of comprehensive range of spectacle/optical lenses. It is offering from single vision lenses to advanced progressive lenses, customized progressive lenses to personalized progressives for professionals along with wide range of coatings. Its products are available across the entire range of price points enabling us to serve the entire gamut of customers from economy to the luxury segment.

Risks and concerns

Do not have long-term agreements with suppliers: Its business is significantly affected by the availability, cost, and quality of the raw materials which it needs to manufacture its products. Its principal raw materials include semi-finished ophthalmic lenses and plastic plain/ blank lenses etc. It usually does not enter long-term supply contracts with any of its raw material suppliers and typically source raw materials from third-party suppliers under the open market. Its raw materials are majorly procured in the international market from China, Germany, Japan, South Korea, USA etc and in the domestic market from Maharashtra, Telangana Rajasthan, Karnataka and Delhi etc. The prices and supply of raw materials depend on factors beyond its control, including general economic conditions, competition, production levels, transportation costs and duties. If, for any reason, its suppliers of raw materials should curtail or discontinue their delivery of such materials to it in the quantities it needs or at prices that are competitive or expected by the company, its ability to meet the requirements of its customers could be impaired and its earnings and business could suffer.

Dependent on third-party transportation providers: Its success depends on the supply and transport of the various raw materials required for its manufacturing facility and on third-party couriers to deliver orders from its warehouses to consumers, which are subject to various uncertainties and risks. While transportation restrictions, if any, could have an adverse effect on supplies and deliveries to and from its customers and suppliers. In addition, raw materials and finished products may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be a delay in delivery of raw materials and products which may also affect its business and results of operations negatively.

Working capital requirement: Its business demands working capital requirements. In case there are insufficient cash flows to meet its working capital requirement or it is unable to arrange the same from other sources or there are delays in disbursement of arranged funds, or it is unable to procure funds on favourable terms, it may result into its inability to finance its working capital needs on a timely basis which may have an adverse effect on its operations, profitability and growth prospects. Its inability to maintain sufficient cash flow, credit facility and other sources of fund, in a timely manner, or at all, to meet the requirement of working capital could adversely affect its financial condition and result of its operations.

Outlook

Yash Optics & Lens is primarily engaged in the business manufacturing of optical lenses and other ancillary products. It is offering from single vision lenses to advanced progressive lenses, customized progressive lenses to personalized progressives for professionals along with wide range of coatings. Its products are available across the entire range of price points enabling the company to serve the entire gamut of customers from economy. On the concern side, it operates in a competitive atmosphere. Some of its competitors may have greater resources than those available to the company. While service, brand value, marketing, etc. are key factors in client decisions among competitors, reliability and business logic contribution is the deciding factor in most cases. It faces fair competition from both organized and unorganized players in the market

The company is coming out with an IPO of 6,561,600 equity shares of face value of Rs 10 each. The issue has been offered in a price band of Rs 75-81 per equity share. The aggregate size of the offer is around Rs 49.21 crore to Rs 53.15 crore based on lower and upper price band respectively. On performance front, revenue from operations had increased by 33.40% from Rs 2975.03 lakh in Fiscal 2022 to Rs 3968.81 lakh in Fiscal 2023. This increase was due to increase in sales of products during the year. The company reported a net profit of Rs 806.58 lakh in Fiscal 2023 as compared to a net profit of Rs 681.67 lakh in Fiscal 2022 which got increased due to higher revenue from operation during the year. Going forwards, it intends to cater to the increasing demand of its existing customers and also to increase its existing customer base by enhancing the reach of its products in different parts of the country. The company operates from Mumbai, Maharashtra in India. It proposes to enter into new geographies and increase its marketing and sales team which can focus on different regions and also maintain and establish relationship with customers.