Lamosaic India coming with IPO to raise Rs 61.20 crore

Lamosaic India

• Lamosaic India is coming out with an initial public offering (IPO) of 30,60,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 200 per equity share.
• The issue will open on November 21, 2024 and will close on November 26, 2024.
• The shares will be listed on SME Platform of NSE.
• The share is priced 20 times higher to its face value of Rs 10. 
• Book running lead manager to the issue is Inventure Merchant Banker Services.
• Compliance Officer for the issue is Swati Navneet Jain.

Profile of the company

In January 2020, the company’s promoters (erstwhile partners) started a trading business under the name and style of “Swastik Marketing”. Under this firm, the products such as flush doors, decorative laminates, acrylic sheets, printing paper (base), plywood, etc. were sold under the brand name of “Swastik”. It sells its products to primarily real estate and infrastructure industry for commercial and residential usage, Construction Industry, Interior Decor, Furniture, Plywood Industry etc. In FY 2024, its partnership firm was converted to a Public Limited Company under Companies Act, 2013 with the name and style of “Lamosaic India Limited” and received a Certificate of Incorporation from the Registrar of Companies, Pune dated June 13, 2023. The company was incorporated on June 13, 2023 with the name and style of “Lamosaic India Limited” to pursue and expand the business of partnership firm in corporate entity and the business in partnership firm dissolved from June 13, 2023.

Over the period, after establishing ourselves in trading of flush doors, decorative laminates, acrylic sheets, printing paper (base), plywood, etc., the company diversified its activities to manufacturing activities since September 2023 by setting up a workshop in Chembur, Mumbai which is spreading over an area of approx. 650 sq. ft. The company also provides customized solutions to its customer. This includes designing the laminates and acrylic sheets. Beside this, it also manufactures and supplies laminated and decorative laminated flush doors based on the order received by its customers. Currently, its business operations (trading and manufacturing) are conducted within Maharashtra. Apart from selling its products directly in the market, it also sells its products through one of its franchisee located at Mumbai, Maharashtra. 

Proceed is being used for:

• Repayment of certain borrowings
• Meeting incremental working capital requirements
• Pursuing inorganic growth
• General corporate purpose

Industry Overview

Plywood is manufactured by pressing required number of cores depending upon thickness over each other and top, bottom comprising of face veneer. At present, the increasing demand for plywood due to the growing number of distribution networks and exclusive outlets of premium furniture manufacturers represents one of the primary factors influencing the market positively in India. Besides this, the rising integration of technologically advanced production methods to manufacture plywood with improved features, such as flexible plywood, is propelling the growth of the market. In addition, the growing utilization of plywood for making partitions and false ceilings in houses and office spaces is offering a favorable market outlook in the country. Apart from this, the increasing employment of plywood in manufacturing various easy-to-assemble and lightweight furniture is contributing to the growth of the market.

Medium-density fibreboard (MDF) is an engineered wood product that is composed of wood fibers, wax, and resin compressed under high pressure and heat to create a dense, sturdy board. It is known for its versatility and offers uniform density and smooth surface, which makes it an ideal choice for cabinetry, furniture, shelving, and interior molding. The global medium-density fibreboard (MDF) market size reached $24.0 Billion in 2022. Looking forward, IMARC Group expects the market to reach $35.42 Billion by 2028, exhibiting a growth rate (CAGR) of 6.60% during 2023-2028. The growing demand for affordable and customizable furniture solutions that provide stylish furnishing look, rising popularity of laminated flooring in residential settings, and increasing number of construction activities are some of the major factors propelling the market.

Meanwhile, the Plywood laminates market is primarily driven by the elevating living standards and the increasing per capita expenditure of consumers on home decor products. The rising popularity of ready-to-assemble (RTA) floorings, furniture, and cabinets has also encouraged consumers to shift toward modern home furnishing designs. Furthermore, the rapid development of commercial infrastructure in India has increased the demand for decorative interior products such as laminates in gymnasiums, convention centres, indoor sports clubs, and auditoriums. Plywood laminates are durable sheeting materials that are utilized in home and industrial furnishings. They are coated with phenolic acid and then decorated with desired patterns and melamine resin. These laminates are resistant to stains, scratches and heat, due to which they are used for surfacing kitchen counters, tabletops and cabinetry. They find applications in hotels, hospitals, shopping malls, airports, educational institutions, and commercial infrastructures. The India decorative laminates market size reached $1.7 Billion in 2022. Looking forward, IMARC Group expects the market to reach $2.4 Billion by 2028, exhibiting a growth rate (CAGR) of 5.8% during 2023-2028. 

Pros and strengths

Distribution and marketing network: Laminates industry is an unorganized sector and is mainly design driven market. The company has been using the word of mouth to marketing, advertising and promoting its products. The company circulates various designs to its network of clients on one to one basis including Dealer, Distributors, Stockiest and/ or Wholesalers. On approval of designs, a sample panel/ product is made so that the client gets the real feel of the texture, design, colour etc. Further, as on March 2024, the company has tied with 4 dealer and distributors who are located across Maharashtra.

In house designers: Laminate industry is highly exposed to the risk of frequent change in customer preference for designs trends and obsolescence of designs. The company insulate itself from these changes by keeping pace with changing preference trends and introducing new and innovative designs and products Two of its employees are involved in creating various design suitable for the market. gather information about various popular design globally through international magazines, brochures of various companies, internet contents, etc. Based on design received, it recreates such design which are suitable to Indian market and with the help of in-house designers, it prepares samples of such designs. Once the company developed the samples it circulates to various to retailers, wholesalers, direct customers, distributors, etc. and based on the feedback received the company short list the top liked design and put add them to its design portfolio. Currently, the company has more than 200 designs from which its customers can select as per their taste and preferences.

Experienced management team: The company’s Promoters, namely Vinod Visaria Juthalal, Jitesh Khushalchand Mamaniya and Jay Manilal Chheda have an experience of more than ten years altogether in the decorative laminates and plywood industry which has further assisted the company in establishing a strong distributor/ dealer network, suppliers’ network and godown for storage of products. Its senior management team has an approximately 10 years of in the commissioning of and operating manufacturing capacities, finance, sales, business development and strategic planning in the industry. The vision and foresight of its management enables it to explore and seize new opportunities and accordingly position ourselves to introduce new products to capitalize on the growth opportunities in the interior infrastructure sector.

Risks and concerns

Limited operating history: The company has very limited operating history from which one can evaluate its business, future prospects and viability. The future revenues and profitability of the company are difficult to estimate and could fluctuate significantly and as a result the price of the Equity Shares the company may remain volatile. Further the business prospects of the company must be considered in light of the risks and uncertainties in respect of plywood and lamination industry. Although the partnership firm has retained the growth path in past years, and the company will continue to undertake all possible steps towards the growth path, but there is no assurance that this growth will be met successfully in future. In case it is unable to meet the desired growth in revenues and profitability, the results of operations and financial condition of the company will be adversely affected.

Significant revenue comes from single product i.e. Laminates: The company derives a significant portion of its revenue from its single product and are dependent on the cash flow generated from its lamination for the growth. Its single product laminate accounted for 86.00%, 83.92 %, 81.99 % and 93.34% of its total revenue from operations for the six months’ period ended on September 30, 2024, fiscal 2024, 2023 and 2022 respectively. Consequently, factors that adversely affect the demand for Lamination or its position or reputation as a provider of Lamination may adversely affect its business and profitability. The loss of a major customer could lead to a significant decrease in revenue, harm its reputation and reduce its ability to accurately predict cash flow. The risk of such a loss is increased by the fact that the Lamination industry business is an extremely competitive segment in the lamination industry in India as it consists of both unorganized and organized sector. All of these factors could have an adverse effect on its business, financial condition and results of operations.

Geographical constrain: The company conducts its business operations sell its products in Western India, particularly in state of Maharashtra. Any occurrence of change in the customers’ requirements/ preference and/ or any other contingencies, it may not be able to effectively sell its products in these markets and as a result its revenues and profitability may be adversely affected. This concentration of its business sales and revenues from Western India, subjects it to various risks including but not limited to the risks such as reduction in the demand for its brass and steel wire products, change in steel and brass prices etc. Further, any failure in expanding its revenue sources from the existing markets in which it operates may lead to loss of opportunity in earning higher revenues thereby effecting its growth, business, results of operations and financial condition.

Outlook

Lamosaic India trades various products, including flush doors, decorative laminates, acrylic sheets, printing paper (base), and plywood. In September 2023, the company expanded its operations into manufacturing by setting up a workshop in Chembur, Mumbai, covering an area of approximately 650 sq. ft. The company offers customized solutions for its customers, including the design of laminates and acrylic sheets. Additionally, the company manufactures and supplies laminated and decorative flush doors based on customer orders. On the concern side, the company has been recently incorporated thus it has limited operating history as a company which may make it difficult for investors to evaluate its historical performance or future prospects. Moreover, the company’s business operations geographically restricted to Maharashtra and any downturn and/ or any economic, regulatory, social and political change in any of the Indian states in which it operates or seeks to operate may affect its market share and/ or may adversely affect its business, financial condition and results of operations.

The company is coming out with an IPO of 30,60,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 200 per equity share to mobilize Rs 61.20 crore. On performance front, the company has reported 75.25% rise in total income to Rs 5565.72 lakh in FY24 as compared to Rs 3175.85 lakh in FY23. Moreover, the company’s profit after tax surged over two fold to Rs 822.94 lakh in FY24 as compared to Rs 407.14 lakh in FY23.

After establishing itself in trading business operations, the company took a growing and progressive step of starting its own workshop for manufacturing Flush Doors and Decorative Laminates. Its workshop is located in Chembur, Mumbai which is spreading over an area of approx. 650 sq. ft. It is dedicated to constantly expanding and updating its product range in order to stay ahead in the market. This strategic move, will assist the company focusing and improving its operating efficiencies, continuous supply of quality products, customized products. In house manufacturing will also give a leverage over its competitors in terms of customized size and design products, placing large quantities of order directly with it which will help it in increasing its profit margins in the coming years.