Latteys Industries Limited– a Gujarat based pumping solution provider for homes, agriculture, and industries- is all set to launch its IPO on 23 May, 2018. The price band for this issue is set at ₹ 66 per share and 12,22,000 shares shall be offered as a fresh issue in this IPO.
For those who understand this industry and want to invest, the question here that needs to be addressed – is Latteys Industries Limited IPO a good investment option? In the time of market volatility, is this IPO an opportunity that investors should not miss?
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To find answers to the above questions and to understand if this IPO is a good investment or if it is better to stay away from it, read this article below.
In this article
- Latteys Industries Limited IPO Details
- Latteys Industries Company Financials
- Objects of the Issue: Latteys Industries
- Latteys Industries Limited Details
- Strengths of Latteys Industries
- Industry Overview
- IPO vs Mutual Funds
Latteys Industries Limited IPO Details
|Issue Opens on||23rd May 2018|
|Issue Closes on:||28th May 2018|
|Price Band||₹ 66 per share|
|Face Value||₹ 10 per equity share|
|Fresh Issue||12,22,000 shares|
|IPO Size||₹ 8.07 Crore|
|Offer for Sale||Nil|
|Minimum Lot Size||2,000 shares|
|Minimum Investment Amount||₹ 1,32,000|
Latteys Industries Company Financials
|Summary of financial Performance (Restated)|
|Particulars||For the year/period ended (in ₹ Lakhs)|
|Return on Net worth||18.22%||12.46%||10.47%||15.56%|
Objects of the Issue: Latteys Industries
- Funding the working capital requirements of the Company
- General corporate purposes.
Utilization of Net Proceeds
|Particulars||Amount to be utilized from Net Proceeds ( ₹ in Lakhs)|
|Funding the working capital requirements of the Company||746.52|
|General corporate purposes||10.00|
Latteys Industries Limited Details
About the company
The company was originally incorporated as ‘Latteys Pumps Industries Private Limited’ under the Companies Act, 1956.
In April 2013, the company acquired the business of its current promoter Mr. Kapoor Chand Garg, namely M/S Latteys Pumps Industries. Thereafter, the name of the company was changed to ‘Latteys Industries Private Limited’.
The company is promoted by Mr. Kapoor Chand Garg and Mr. Pawan Garg. The Promoters are fully involved in the day-to-day affairs of the Company’s operations.
The company is in the business of manufacturing of pumping solutions for homes, industrial sector and also agriculture. The company’s robust portfolio includes more than 700 models of pumps.
These include Submersible, Self-Priming, Centrifugal, Shallow and Horizontal pumps. Among all these pumps, the company pioneers in manufacturing of Submersible pumps.
These pumps find their applications across the industrial and domestic sector. The entire manufacturing process for all the pumps is done entirely in India.
The company’s manufacturing operations take place at GIDC Naroda, Gujarat with an area of 5,718 sq. meters. Moreover, the current installed production capacity of the company is 1,59,500 pumps per annum.
Board of Directors of Latteys Industries Limited
|Kapoor Chand Garg, 44||Chairman & Managing Director|
|Pawan Garg, 37||Whole Time Director|
|Saroj Garg, 43||Non-Executive Director|
|Sandeep Kumar Mangal, 29||Independent Director|
|Sachin Gupta, 34||Independent Director|
Promoter Share Pre and Post Issue
|Name of Director||No of Equity Shares||% Pre Issue||% Post Issue|
|Kapoor Chand Garg||29,16,090||86.33%||63.40|
Top 5 customers of the company (as of 30th September, 2017)-
|Customer Name||% of Total Sales|
|V-Guard Industries Ltd||56.79%|
|Ramji Muralilal Tube Company||2.52%|
|Shree Om Enterprises||1.74%|
|Krishna Electric Stores||1.33%|
Strengths of Latteys Industries
The company believes that the following points are the strongest areas for the company. The competitive strengths of the company are as follows-
The raw materials used in the manufacturing process is procured from domestic players having their facility/warehouses in close proximity to the manufacturing facility of the company, thereby reducing the cost of transportation substantially without compromising on the quality of the raw material procured.
Wide Range of Products
The company manufactures more than 700 different types of models under its products portfolio. The products on offer differ in terms of sizes, horsepower, structures, shapes, etc.
Experienced Promoters and Management
The company is managed by an experienced management team including the promoters who have a combined experience of more than 2 decades in pumps and motor industry.
Focus on Quality and Innovation
To ensure that the production is of high quality, the company test samples from every lot of raw material in its laboratory or National Accreditation for Testing and Calibration Laboratories (NABL).
Registered Office and Manufacturing facility:
Latteys Industries Limited
Plot No. 16, Phase- 1/2,
GIDC Estate, Naroda Ahmedabad
Gujarat 382330 India
Tel: 079-22823354/ 22822894
Fax: Not Available
Corporate Identification Number: U29120GJ2013PLC074281
Manufacturing of Pumps Industry
The net value addition ratio in manufacturing for the pumps & valves sector is over 20%. Serving various engineering segments, to over 100 countries; India already exports pumps & valves worth over US$ 1.55 billion.
The exports in this segment are growing at a robust rate of around 10-12% annually. Moreover, the Indian market is already worth over ₹ 5,000 crores (US$ 780 million) in pumps and ₹ 4,500 crores (US$ 700 million) in valves.
The Indian pump industry is growing at an annual CAGR of approximately 10%. At the same time, the international annual CAGR average is approximately 6%. The difference could be attributed to the surge in infrastructure development, growth in agriculture and other water-intensive industries.
The Indian pump industry offers one of the highest net value additions in the engineering industry. The figures for the same is over 20%. Complementing this number, the domestic market for Indian pumps is growing at a healthy rate of 16-18% per annum.
A total of 12,22,000 equity shares of face value of ₹ 10/- each fully paid shall be issued in this IPO at a price of ₹66 per equity share.
Out of the above-mentioned shares, 62,000 equity shares of face value of ₹ 10/- each fully paid at a price of ₹ 66 per equity share, shall be reserved for the Market Marker. The total amount of equity shares reserved for this portion shall amount to ₹ 40.92 lakhs.
Therefore, net issue to the public shall amount to 11,60,000 equity shares of face value of ₹ 10/- each fully paid, amounting to ₹ 765.60 lakhs.
Of the total net issue of equity shares to the public, 50% amounting to 5,80,000 equity shares will be available to retail individual investors of up to ₹ 2 lakhs. The total equity shares for this purpose shall aggregate to ₹ 382.80 lakhs.
The remaining 5,80,000 equity shares aggregating to ₹ 382.80 lakhs shall be available for allocation to investors above ₹ 2 lakhs.
Equity shares outstanding prior to the issue totaled to 33,77,666 shares. The corresponding figure after the issue would total to 45,99,666 equity shares.
IPO vs Mutual Funds
In this time of volatile markets as well as volatile IPO listings, mutual funds are a good alternative. They ensure disciplined investing over the long-term. In this process, they enable the investors in unlocking the power of rupee cost averaging, thereby overcoming the uncertainty of market volatility.
Thus, investing in mutual funds is a very practical investment option. It helps in achieving the investors’ financial goals in a timely and systematic manner.
This is more so for those investors who want to invest in the equity market, however, they do not possess the requisite knowledge, know-how and/or time to track and follow the stocks in particular and markets in general.
Many mutual funds invest in IPOs – many times they also invest at a discounted rates that are not available to retail investors.
In a mutual fund, a skilled and trained professional handles all investments for you and therefore, you can benefit from the equity markets without spending too much time gaining the skills needed to understand the markets.
- Large Cap Funds– In this type of mutual funds, the investment is made in large-cap companies. These companies are stable, have a proven track record and good ratings. These companies have historically given returns between 12% and 18%. Moderate risk is involved and it is suggested to invest in these funds for more than 4 years.
- Mid Cap Funds– In this type of mutual funds, the investment is made in mid-cap companies. These companies come after large-cap funds in the hierarchy. These companies have historically given returns between 15% and 20%. The risk is slightly more than large-cap funds. It is suggested to invest in these funds for more than 5 years.
- Small Cap Funds– In this type of mutual funds, the investment is made in small-cap companies. These companies offer 16-22% return. This category is a high risk- high return one.
- Balanced Fund– This fund is a combination of equity and debt in its portfolio. Depending on the proportion of investment made in equity and debt, the risk and returns are accordingly determined.
Investment can be made via lump sum investment or through SIP (Systematic Investment Plan) mode in any of these funds.
If you want to see more funds to invest in 2018, check out: 30 best funds to invest in 2018.
Disclaimer: the views expressed here are of the author and do not reflect those of Groww.