Kitchen appliances maker Stove Kraft is set to open its initial public offering for subscription on January 25. It is the fourth company to launch IPO in the current month after Indian Railway Finance Corporation, Indigo Paints and Home First Finance Company.
The issue will close on January 28. Equity shares will be listed on both BSE and the National Stock Exchange. Edelweiss Financial Services and JM Financial are the book running lead managers to the offer.
Here are 10 key things you must know about the issue:
1) About Public Issue
The initial public offering comprises fresh issue of Rs 95 crore by the company and offer for sale of 82.50 lakh equity shares by promoters and investors.
The offer for sale consists 6,90,700 equity shares by promoter Rajendra Gandhi and 59,300 shares by promoter Sunita Rajendra Gandhi, and 14,92,080 shares by Sequoia Capital India Growth Investment Holdings I and up to 60,07,920 shares by SCI Growth Investments II.
Investor can bid for a minimum of 38 equity shares and in multiples of 38 equity shares thereafter.
2) Price Band
The company and shareholders that are selling, in consultation with merchant bankers, have fixed a price band of Rs 384-385 per share.
3) Fund Raising
Stove Kraft aims to raise Rs 411.8 crore - Rs 412.63 crore through public offer, at a price of Rs 384-385 per share respectively. The company already raised Rs 185 crore from anchor investors on January 22.
4) Objectives of Issue
The company is going to utilise the net proceeds from its fresh issue for repayment of certain borrowings (Rs 76 crore) and general corporate purposes.
It will not receive any money from offer for sale portion which will go to selling shareholders and promoters.
5) Company Profile
Stove Kraft is a kitchen solutions and an emerging home solutions brand. It is one of the leading brands for kitchen appliances in India, and is one of the dominant players for pressure cookers and amongst the market leaders in the sale of free standing hobs and cooktops.
It is engaged in the manufacture and retail of a wide and diverse suite of kitchen solutions under Pigeon and Gilma brands, and proposed to commence manufacturing of kitchen solutions under the BLACK + DECKER brand, covering the entire range of value, semi-premium and premium kitchen solutions, respectively.
During the six month periods ended September 2020 and for fiscal 2020, its Pigeon branded products contributed 76.90 percent and 86.20 percent to overall sales, while its Gilma branded products contributed 5.43 percent and 2.54 percent, and BLACK + DECKER products contributed 1.50 percent and 2.70 percent to overall sales in same periods.
As of September 2020, Stove Kraft manufactures 79.75 percent of Pigeon and Gilma branded products at its manufacturing facilities at Bengaluru (Karnataka) and Baddi (Himachal Pradesh).
As of September 2020, it had an installed annual production capacity of 3.84 crore units, with the capability to manufacture products in the pressure cookers, non-stick cookware (roller coated and spray coated), LPG stoves, mixer grinders, LED bulbs, iron and induction cooktops categories. Similarly, Baddi facility, focused on the oil company business, which includes manufacturing and co-branding of products with such companies, has an installed capacity of 28 lakh units per annum, with the capability to manufacture products such as LPG stoves and inner lid cooker.
The company has 651 distributors in 27 states and five union territories of India and 12 distributors for products that are exported as of September 2020. As of September 2020, the C&F agents and distributors are, in turn, connected with a dealer network comprising of over 45,475 retail outlets, which are driven through a sales force of 566 personnel.
6) Competitive Strengths
a) Stove Kraft is a one stop shop for well recognized, award winning portfolio of kitchen solutions brands with a diverse range of products across consumer preferences.
b) It has widespread, well connected distribution network with a presence across multiple retail channels and a dedicated after-sales network.
c) It has strong manufacturing capability with efficient backward integration.
d) It consistently focus on quality and innovation.
e) It has professional management with successful track record and extensive experience in the kitchen solutions industry, and a young and dynamic workforce.
f) It has maintained a strong track record of growth over the years through expansion of brand portfolio, distribution network, improved procurement costs and increase in sales growth.
7) Strategiesa) The company continually seeks to enhance addressable market through its network of 45,475 retail outlets, 651 distributors and nine
C&F agents across the country.
b) It seeks to scale up branding, promotional and digital activities.
c) It aims to expand its portfolio in the existing product categories.
d) Invest in new plants and increase automation in existing manufacturing facilities.
e) The company intends to focus on and augment LED consumer lighting business.
f) The company intends to increase exports.
Stove Kraft increased its profitability significantly to Rs 28.8 crore in first half of FY21, from Rs 4.4 crore in the corresponding period. In the financial year 2019-20, profit rose to Rs 3.2 crore from Rs 0.7 crore in previous year.The operating revenues climbed to Rs 328.9 crore in first half of FY21, from Rs 315.5 crore in same period last year. The operating revenues in FY20 rose to Rs 669.9 crore from Rs 640.9 crore in FY19.
Stove Kraft can be compared with the listed industry peers - TTK Prestige, Hawkins Cookers and Butterfly Gandhimathi Appliances.
9) Promoters and Shareholding
Rajendra Gandhi and Sunita Rajendra Gandhi are the promoters of company, who held 1,84,43,919 equity shares, representing 61.31 percent of pre-offer paid-up equity of the company.
Rajendra Gandhi is the Managing Director and founder of the company. Neha Gandhi is the Executive Director and Bharat Singh is the Nominee Director on the board.
Rajiv Mehta Nitinbhai is a Whole Time Director designated as the Chief Executive Officer of the company. He has previously served as the chief executive officer of Arvind Limited and managing director of Puma Sports India. He has also been a director of Fourseven Services.
Lakshmikant Gupta is the Chairman and Independent Director, while Shubha Rao Mayya is the Independent Director on the board.
Shashidhar SK is the Chief Financial Officer, Company Secretary and Compliance Officer of the company. Prior to joining the company, he worked with WaterHealth India as their Chief Financial Officer- Global, Tata Advanced Materials as their Chief Financial Officer and Company Secretary, Craigmore Textiles (part of the Inlaks Group), KG Gluco Biols and Carrier Transicold India. He has over 25 years of experience in the corporate finance and corporate secretarial field.