About the Company:

The company was established in 2018, but its late former promoter, Ghisulal Dhanraj Rathod, who was the father of two current promoters, Pradeep Ghisulal Rathod and Pankaj Ghisulal Rathod, had been associated with Cello Plastic Industrial Works ("CPIW") and the "Cello" brand since 1962. The company's promoters, Pradeep Ghisulal Rathod (Chairman and Managing Director), Pankaj Ghisulal Rathod, and Gaurav Pradeep Rathod (Joint Managing Directors), collectively possess over 80 years of experience in the consumer products industry in India.

The corporate structure of the company can also be observed in the following table.

The company is a key player in India's consumerware market, covering the following segements:

1. Consumer houseware including glassware
2. Writing instruments and stationery
3. Moulded furniture and allied products

As of June 30, 2023, the company offered 15,891 stock-keeping units (“SKUs1”) across the product categories. The following table outlines the brands, sub-brands, and product ranges within these three categories:

The company presently operates 13 manufacturing facilities in five Indian locations, with plans to set up a new glassware manufacturing plant in Rajasthan. A significant portion of the company's revenue, accounting for approximately 78.65%, 82.63%, 79.37%, 82.08%, and 79.67% of total revenue for the fiscal years 2021, 2022, 2023, and the three months ending June 30, 2022, and June 30, 2023, is generated through in-house manufacturing.

Additionally, the company boasts a robust nationwide distribution network, which has been further developed by the promoters, building upon the foundation established by CPIW over the past six decades. The table below sets forth details relating to the nationwide sales and distribution network across the company’s three product categories:

The majority of the company's revenue is sourced from the domestic market within India, with some products being exported. However, for the fiscal year ending March 31, 2023, and the quarter ending June 30, 2023, revenue from sales outside India constitutes less than 10% of the total revenue from external customers.

Industrial Overview:

Since FY 2005, India's economy has consistently grown twice as fast as the global average, with a projected CAGR of 6.57% between FY 2021 and FY 2027. This growth surpasses major economies like China, the UK, Japan, and the USA for the period from CY 2021 to CY 2027. India is expected to become one of the top three global economies by FY 2030.

Historically, India's retail market was mostly unorganized, with organized retail at 8% in 2015. By 2022, the total market grew to USD 844 billion, with organized retail at USD 109 billion (13%). Projected values for 2027 are USD 1,418 billion and USD 325 billion, with CAGR of 11% and 24% for total market and organized retail respectively from 2022 to 2027.

Primary catalysts for retail market and overall economic growth in India include the country's demographic profile, the participation of women in the workforce, urbanization, the expanding middle class, and the trend towards nuclear families. Moreover, both the Indian and global Consumerware Market exhibit promising future prospects, driven by factors such as the introduction of cost-effective advanced materials, the surge in demand for modular kitchens and stylish consumerware, increased investment in remodeling and enhancement projects, the impact of social media, and rising disposable income.

IPO Objectives:

The company will not receive any proceeds from the Offer.

Financials

The Company’s revenue from operations increased from Rs. 1,049.46 crores in FY 2021 to Rs. 1,796.70 crores for FY 2023 indicating a CAGR growth of 30.84%. This increase in revenue from operations is on account of multiple factors like an increase in sales of services and the overall increase in demand and sales of the products across all three product categories.

The company's EBITDA expanded from Rs. 286.87 Crores in FY 2020-21 to Rs. 437.28 Crores in FY 2022-23, with a CAGR of 23.46%. The company’s EBITDA margin has seen a gradual fall from 27.34% in FY 2020-21 to below 25% in FY 2022-23.

The company's Net Profit expanded from Rs. 165.55 Crores in FY 2020-21 to Rs. 285.06 Crores in FY 2022-23, with a CAGR of 31.22%. The company’s Net Profit margin has been in the range of 15% - 17%.

The company's Return on Capital Employed (ROCE) stood at 58.73% in FY 2020-21, decreased to 40.92% in FY 2021-22, but rebounded to 44.48% in FY 2022-23.

Valuation:

The company's price-to-earnings ratio stands at 49.20, while the industry's average PE ratio is 43.80, suggesting that the issue price is overvalued. Additionally, the company's price-to-book ratio is 11.40, whereas the industry's average PB ratio is 6.76, again signifying that the issue price might be overvalued.

Key Risks:

1. A significant portion of the company's expenses is attributed to material costs. Variations in prices and disruptions in the availability of raw materials, particularly plastic granules and polymer prices, could negatively impact its business, financial performance, and cash flow.

2. The company's dependence on third-party contract manufacturers for certain products exposes them to risks that, if materialized, could have a detrimental impact on their business, financial performance, and cash flow.

3. The company lacks ownership of key brand trademarks like "Cello," "Unomax," "Kleeno," and "Puro," along with their logos. If they cannot renew licensing agreements for these trademarks, it may harm their business. Also, a competitor uses the "Cello" brand in the writing instruments sector, which could impact the company's reputation.

4. Legal Proceedings: - Pending litigation involving the company, its promoters, directors, subsidiaries, and group companies poses a potential risk, and an adverse outcome could have repercussions on their business, financial performance, cash flow, and financial condition.

IPO Details