Faalcon Concepts coming with IPO to raise Rs 12.09 crore

Faalcon Concepts

• Faalcon Concepts is coming out with an initial public offering (IPO) of 1950000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 62 per equity share. 
• The issue will open for subscription on April 19, 2024 and will close on April 23, 2024.
• The shares will be listed on BSE SME Platform.
• The share is priced at 6.20 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Navigant Corporate Advisors.
• Compliance Officer for the issue is Vinod Kumar.

Profile of the company

Incorporated in 2018, the company is engaged in designing, engineering, fabrication and installation of facade systems. It specialises in technically demanding facades. It offers various range of products to meet the demands of its customers. Over the years, it has developed a name for itself among its customers. Its product basket ranges from glazing /curtain walls, high end aluminium doors & windows, skylights, canopies, frameless glazing, MS structures, stone cladding, metal cladding, roofing & others. 

The company has completed a varied variety of projects for Schools, financial institutions, hospitality installations, corporate buildings, and luxury houses with success. Its clients are spread across India and the World, in communities from various states. Its team is totally responsible to produce a comprehensive turnkey package with all project specifics from the original design phase to the final installation for any commercial or residential facade project. It has offered its services for varied type of facade projects including residential buildings, commercial complexes, schools, parks etc. The company recognised list of clients include Espirit Techno Consultant, Galaxy Magnum Infra Height, Babbar Films, Maconns Infra, Silvers Stone Regency, St Xavier School Gurgaon High School etc. among others. It has also developed relations with some of the recognised suppliers in the company’s industry to fulfil its raw material supplies. The company has been ISO 9001: 2015 certified for developing Building façade. 

Proceed is being used for:

• Finance the capital expenditure for purchase of facade structural equipments.
• Part finance the requirement of working capital.
• General corporate purposes.

Industry overview

The India facade market size reached $2,638.2 Million in 2022. Looking forward, the publisher expects the market to reach $4,254.5 Million by 2028, exhibiting a growth rate (CAGR) of 8.23% during 2023-2028. The increasing construction activities, rising number of commercial spaces, and the growing number of remodeling and upgradation projects represent some of the key factors driving the market. The facade is an exterior front of a building that comprises roofing, street awnings, and ventilation louvers. It is produced using different materials, such as glass, brick, steel, aluminum, stone, concrete, metal, clay, and wood. It offers an aesthetic appeal to the building and enhanced waterproofing, fabrication, durability, and weather protection. It is generally used in energy efficient buildings for controlling light penetration, regulating internal temperature, and providing thermal insulation. It requires regular maintenance to ensure its longevity and functionality. It is commonly available in several shapes and sizes and can be created as per the requirements of the consumer.

The increasing construction activities in the residential areas on account of rapid urbanization and inflating disposable income levels represent one of the key factors driving the demand for façades in India. Moreover, the rising number of commercial spaces, such as shopping malls, restaurants, cafes, offices, hotels, and institutions, is contributing to the market growth. In addition, due to the growing environmental concerns, several measures are being undertaken by the government of India (GoI) to promote the use of sustainable construction materials and minimize carbon emissions. This, coupled with the launch of various government sponsored public housing programs due to the surging demand for affordable housing units, is driving the adoption of facades in the country. Apart from this, the increasing number of remodelling and upgradation projects for stadiums, airports, railway stations, metro, and hospitals is contributing to the market growth in the country. Furthermore, the rising popularity of polycarbonate facades in industrial and large-scale commercial buildings due to their numerous advantages, including easy installation, weather resistance, and low maintenance costs, is propelling the growth of the market. 

Pros and strengths

Leveraging the experience of its Promoter and employees: The company’s Promoters have played a key role in guiding, developing, and growing its business. Under the leadership and experience of its Promoters, the company has seen significant growth in the overall business. Its Promoters, have a proven background and experience in the Facade industry. Their leadership and vision have been instrumental in driving its growth since inception and implementing its business strategies. They are the guiding force behind all the corporate decisions and is responsible for the entire business operations of the Company along with the team of experienced and qualified professionals. Their industry knowledge and understanding also gives it the key competitive advantage enabling it to expand its geographical and customer presence in existing as well as target markets, while exploring new growth avenues.

Marquee client base and repeat orders: The company has undertaken projects across various segments in Residential, Commercial and Institutional buildings. The company value its relationships with its clients. Its motivated team of personnel and its work processes complement each other to enable it to deliver high levels of client satisfaction. Further, its quality of work and timely execution has allowed it to enhance its relationships with existing clients and to secure projects from new clients. Ability to successfully bid and win new projects is the result of its sustained focus on client satisfaction.

Designing and execution capability: The company is recognised for its capability to translate innovative architectural concepts in practical solutions, feasible in both technical and economic terms. Its success in the field is the result of constant research for innovation and improvement of the end user experience. Its designing and execution capability has enabled it to handle complex projects. Its designing and execution capability gives it a competitive edge over the peers.

Risks and concerns

Dependent upon few key suppliers: The company procure the material required for the development of facades. The major materials used in development of facades and other allied products are glass, aluminium composite panels, aluminum profiles, mild steel, GI sheet, sealant, gasket & hardwares, etc. It procures materials required in its installation of facade systems from domestic market. It procures a large portion of its material from few key suppliers, with whom it does not have any long-term supply contracts and therefore, it cannot assure that it shall always have a steady supply of raw material at prices favourable to it. For the Fiscals 2021, 2022, 2023 and seven months ended October 31, 2023, purchases from its top ten suppliers represented 82.56%, 96.74%, 80.59% and 74.82% of its total purchases respectively. Inadequate supply of its material either by a sudden change in the prices or imposition of any new taxes or loss of any of its existing major vendors for any reason could have a material adverse effect on its business operations and profitability. If it cannot fully offset increases in the cost, it would experience lower margins and profitability, which would have a material adverse effect on its financial condition and results of operations.

Requires significant amounts of working capital: The company’s business requires significant amount of working capital and major portion of its working capital is utilized towards inventories and trade receivables. Its growing scale and expansion, if any, may result in increase in the quantum of current assets. Its inability to maintain sufficient cash flow, credit facility and other sources of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of its operations. Further, it has high outstanding amount due from its debtors which may result in a high risk in case of non-payment by these debtors.

Business requires the services of third parties: The company’s business generally requires the services of third parties, including sub-contractors and suppliers of materials. The timing and quality of facade it installs depends on the availability and skill of those third parties, as well as contingencies affecting them, including labour and material shortages and industrial action, such as strikes and lockouts. It cannot assure that skilled third parties will continue to be available at reasonable rates and in the areas in which it needs to execute its projects. As a result, it may be required to make additional investments or provide additional services to ensure the adequate performance and delivery of contracted services, and any delay in project execution could adversely affect its profitability. There is also a risk that it may have disputes with its subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor, customer concerns about the subcontractor, or its failure to extend existing orders or issue new orders under a subcontract. In addition, if any of its subcontractors fail to deliver on a timely basis the agreed upon supplies and/or perform the agreed-upon services, its ability to fulfil its obligations as a prime contractor may be jeopardize.

Outlook

Faalcon Concepts deals with the planning, design, fabrication, and installation of façade systems. The company offers facades resistant to UV rays, acid rain, dust, noise, and other influences. The company’s product portfolio includes glazing/curtain walls, aluminium doors and windows, skylights, canopies, frameless glazing, MS structures, stone cladding, metal cladding, and roofing. The company has catered to customers in various states like Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh, Karnataka, Gujrat, Punjab, Delhi and overseas. The company’s focus on quality and innovation helps it to complete in the segment it deals. Intensive care is taken to determine the standard of every material/ product dispatched. Additionally, the company also keeps itself abreast with the latest changes in technology. On the concern side, modernization and technology up gradation is essential to reduce costs and increase the output. Its equipment may become obsolete or may not be upgraded timely, hampering its operations and financial conditions and it may lose its competitive edge.

The company is coming out with an IPO of 1950000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 62 per equity share to mobilize Rs 12.09 crore. On performance front, the company’s total revenue decreased by 28.50% to Rs 1,324.81 lakh for the financial year 2022-23 from Rs 1,852.93 lakh for the financial year 2021-22. The company’s profit after tax increased by 83.57% to Rs 179.52 lakh for the financial year 2022-23 from Rs 97.79 lakh for the financial year 2021-22. Meanwhile, a key strategy for increasing and growing its business is to increase the strength of its relationship with its existing customers, reaching out for new customers & widen its customer base. The company’s strategy is to widen its customer base geographically as well as demographically. It intends to continue to invest in its existing services so as to provide better experiences to its existing clients and also provide services for increasing the client base of the company.