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Sai Swami Metals and Alloys coming with IPO to raise Rs 15 crore
Apr-29-2024

Sai Swami Metals and Alloys

  • Sai Swami Metals and Alloys is coming out with an initial public offering (IPO) of 25,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 60 per equity share. 
  • The issue will open for subscription on April 30, 2024 and will close on May 3, 2024.
  • The shares will be listed on BSE SME Platform.
  • The share is priced at 6.00 times higher to its face value of Rs 10.
  • Book running lead manager to the issue is Swastika Investmart.
  • Compliance Officer for the issue is Vidhi Dilipkumar Mehta.

Profile of the company

The company is actively involved in the trading and marketing of a comprehensive array of stainless steel (S.S.) products, addressing the diverse needs of its discerning customers. Its product line is specifically designed to encompass a wide range of kitchenware, including Dinner Sets, S.S. Casseroles, S.S. Multi Kadai, S.S. Water Bottles, Stainless Steel Sheets, Stainless Steel Circles, and various types of utensils. It is also engaged in trading of basic raw material like S.S. Patta, S.S. Sheet, S.S. Coil, S.S. Scrap, S.S. Pipe, M.S. Round (Mild Steel Round) and M.S. beam and so on for its various customers. These products showcase the Company’s commitment to providing high-quality stainless steel kitchenware that spans a wide spectrum of categories. With a focus on innovation and quality, its offerings are crafted to meet the unique preferences and requirements of its diverse customer base. 

The company and its two subsidiaries i.e. Bhagat Marketing and Dhruvish Metals LLP are specializes in the trading and marketing of stainless steel kitchenware products through the distinguished brand ‘DOLPHIN.’ Employing an outsourcing model, the business collaborates with Dhruvish Metals LLP, a subsidiary company of Sai Swami Metals and Alloys, to source complete kitchenware products. Dhruvish Metals manufactures all kitchenware products, including comprehensive packaging, which is then sent to Sai Swami for further sales and distribution. This end-to-end approach underscores the commitment to delivering high-quality products to customers, emphasizing a streamlined and quality-centric production process through the strategic integration of subsidiary company. The synergy between Sai Swami and Dhruvish Metals ensures efficiency and excellence, strengthening the brand's market positioning.

The company has strategically appointed highly experienced sales personnel for the job, complemented by its promoter’s extensive three-decade experience in this field. Through a network including 6 Distributors and more than 150 sub-dealers/stockiest/retailers and strategic alliances, it ensures the widespread availability of its products across Pan India, either through direct channels or reputable semi-wholesalers. Additionally, its specialization in trading and marketing extends to special category products, further enhancing its presence and reputation in the market.

Proceed is being used for:

  • Meeting Incremental working capital requirements
  • Investing in subsidiary company
  • Purchasing of Machineries
  • General corporate purpose

Industry overview

Stainless steel, which has now become a very common material from which utensils are made. Stainless steel is made up of an alloy of chromium and nickel, which not just makes it stainless but also prevents any reaction with acids or alkalis and thus does not lead to any change in the color, smell, or taste of the food being cooked or stored in the utensil. This is the primary reason why stainless steel equipment has become very common these days. The use of stainless steel in utensils itself extends to various equipment including tableware like hot pots, bowls, plates, pans and saucepans, and many more; and many cookware like frying pans, baking pan, pressure-cooker, and many other tri-ply cookware. 

The Indian Cookware and Serveware Market witnessed moderate growth during the period 2017-2020 underpinned by rapid growth in population and rising urbanization in the country. The government of India has placed strong emphasis on the availability of LPG gas in every household in the country, henceforth driving the growth of the cookware market in the country. However, the COVID-19 pandemic brought slower growth in market revenues during the year 2020 as the movement restrictions imposed during the pandemic period disrupted the supply chain leading to a fall in market demand and hence the market revenues. India Cookware Market is projected to grow at a CAGR of 6.0% during 2021-2027F. The rising population in the country and faster urbanization are the two major factors driving the Indian Cookware Market growth at a faster pace. In addition, rising disposable incomes and the rising economy of the country also play an essential role in boosting market growth. 

The stainless-steel industry, standing at the precipice of transformation, is poised to enhance its global presence and significance. At the Global Stainless-Steel Expo 2023 (GSSE 2023), scheduled to grace Mumbai from the September 14, 2023 to September 16, 2024 domestic stakeholders in the stainless-steel sector will converge to deliberate on the means to elevate demand from the current 4 million tonnes, as of the end of FY 2022, to an ambitious 20 million tonnes by the year 2047. This gathering reflects the industry's collective commitment to steer India's economic growth, sustainability, and global leadership as it aligns with the G20 agenda to lead the world in a promising era of stainless-steel innovation and progress. GSSE 2023 is set to be a global convergence of stainless-steel prowess, with more than 150 industry-leading companies from both India and around the world confirming their participation.

Pros and strengths

Consistent focus on quality:  Its focus on quality is maintained at all stages right from the procurement of raw materials to the outsourcing of product manufacturing and assembly stage, which is subject to a rigorous review and monitoring process undertaken at its facilities. For products, which are outsourced by the company from third party suppliers, it has a dedicated sourcing team and quality assurance team, which closely monitors the quality of such products. Its products are as per Govt. norms and approval by ISI mark.

Diversified range of kitchenware products: The Company has a varied product range to cater to the requirements of its Customers. Its product portfolio includes Stain steel casserole, Stain Steel Dinner Set, stain steel vacuum bottle, copper bottom, stain steel gift set, sandwich bottom utensils, stain steel multi kadai, Triply utensils, vegetable chopper. Its range of products is offered at different pricing points to meet diverse customer requirements. It is also engaged in large scale of basic raw material trading for its various customers like S. S. Patta, S. S. Sheet, S. S. Coil and S. S. Scrap etc.

Established sales and distribution network: Its extensive sales and distribution network allows the company to reach a wide range of consumers and ensures effective penetration of its products and marketing campaigns. Its sales and distribution network is strategically spread across different states in India. As of December 31st, 2023, it has a network of 6 Distributors and more than 150 sub-dealers/stockiest/retailers and strategic alliances in the state of Gujarat, Madhya Pradesh, Maharashtra etc.

Risks and concerns

Dependent on third parties for distribution and sales of products: The heavy reliance on third-party entities for the distribution and sales of iits products poses substantial risks to its operations. Depending extensively on these external entities increases vulnerability to fluctuations in their performance, including their market presence, competence, and reliability. Any disruptions or inefficiencies in their operations, such as logistical challenges, financial instability, or changes in business priorities, could severely impact its market reach, sales volume, and revenue streams. Lack of direct control over these third parties also heightens the risk of potential conflicts of interest, divergent business strategies, and inadequate representation of its brand or products, potentially affecting its market positioning and brand reputation.

Demand and pricing in steel industry is volatile: Steel prices fluctuate based on a number of factors, such as the availability and cost of raw material inputs, fluctuations in domestic and international demand and supply of steel and steel products, worldwide production and capacity, fluctuation in the volume of steel imports, transportation costs, protective trade measures and various social and political factors. When downturn occur in these economies/sectors, it may experience decreased demand for its products, which may lead to a decrease in steel prices and in turn, have an adverse effect on its revenue, margins, financial condition and prospects.

Dependent on third party transportation providers: The Company uses third party transportation providers for the delivery of its products to customers. Though its business has not experienced any disruptions due to transportation strikes in the past, any future transportation strikes may have an adverse effect on the supplies from its suppliers and deliveries to its customers. These transportation facilities may not be adequate to support its existing and future operations. In addition, the materials and products may be lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of raw materials and products, which may also affect its business and results of operation negatively. An increase in the freight costs or unavailability of freight for transportation of its products to its customers may have an adverse effect on its business and results of operations.

Outlook

The company is actively involved in the trading and marketing of a comprehensive array of stainless steel products, addressing the diverse needs of its discerning customers. Its product line is specifically designed to encompass a wide range of kitchenware including Dinner Sets, S.S. Casseroles, S.S. Multi Kadai, S.S. Water Bottles, Stainless Steel Sheets, Stainless Steel Circles, and various types of utensils. It is also engaged in large scale of basic raw material trading for its various customers like S.S. Patta, S.S. Sheet, S.S. Coil, S.S. Scrap, S.S. Pipe, M.S. Round (Mild steel Round) and M.S. beam and so on. These products showcase the company’s commitment to providing high-quality stainless steel kitchenware that spans a wide spectrum of categories. On the concern side, Its continued reliance on single business segment for substantial portion of its revenue exposes it to risks, including but not limited to, reduction in the demand of the products in the particular segment in the future; increased competition from regional and national players; the invention of superior and cost-effective technology; fluctuations in the price and availability of the raw materials. Any occurrences of such event could significantly reduce its revenues, thereby materially adversely affecting its results of operations and financial condition.

The company is coming out with an IPO of 25,00,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 60 per equity share to mobilize Rs 15 crore. On performance front, the company’s total revenue for the year ended March 31, 2023 was Rs 626.76 lakh. The whole revenue is from the main business (trading of the products like SS Scrap, SS sheets, Molly & Nickel metal scrap, SS utensils and other products ) of the company. The restated profit after tax for the year ended March 31, 2023 was Rs 3.83 lakh, almost 0.61% of Total Revenue due to creation of deferred tax assets. Meanwhile, it intends to cater to the increasing demand of its existing customers and to increase its existing customer base by enhancing the distribution reach of its products in different parts of the country. It continually seeks to enhance its addressable market through its network of distributors and dealers across the country. It gradually intends to expand its business operations to other regions of the country. It plans to continue its strategy of diversifying and expanding its presence in those regions for the growth of its business.
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