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Published on 4/04/2019 5:40:47 PM | Source: HDFC Securities Ltd

IPO Note - Polycab India Ltd By HDFC Securities

Posted in IPO Reports| #IPO #HDFC Securities

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Background & Operations:

Polycab India Ltd (PIL) is engaged in the business of manufacturing and selling wires and cables and fast moving electrical goods (“FMEG”) under the “POLYCAB” brand. It is the largest manufacturer in the wires and cables industry in India, in terms of revenue from the wires and cables segment and provides one of the most extensive range of wires and cables in India. For Fiscal 2018, it has a market share of approximately 18% of the organized wires and cables industry and approximately 12% of the total wires and cables industry in India, estimated at Rs 525 billion based on manufacturer’s realization. Apart from wires and cables, it manufactures and sell FMEG such as electric fans, LED lighting and luminaires, switches and switchgears, solar products and conduits and accessories. According to CRISIL Research, the wires and cables industry in India, in value terms, has grown at a compound annual growth rate (“CAGR”) of approximately 11% in the last five years to reach Rs525 billion in Fiscal 2018. CRISIL Research expects the wires and cables industry in India to expand at a CAGR of approximately 15% in value terms to reach approximately Rs1,033 billion by Fiscal 2023.

PIL manufactures and sells a diverse range of wires and cables and its key products in the wires and cables segment are power cables, control cables, instrumentation cables, solar cables, building wires, flexible cables, flexible/single multi core cables, communication cables and others including welding cables, submersible flat and round cables, rubber cables, overhead conductors, railway signaling cables, specialty cables and green wires. In 2009, it diversified into the engineering, procurement and construction (“EPC”) business, which includes the design, engineering, supply, execution and commissioning of power distribution and rural electrification projects.

In 2014, PIL diversified into the FMEG segment and its key FMEG are electric fans, LED lighting and luminaires, switches and switchgears, solar products and conduits and accessories. PIL has 24 manufacturing facilities, including its two joint ventures with Techno Electromech Pvt Ltd. (‘Techno’) and Trafigura Pte Ltd (‘Trafigura’), located across the states of Gujarat, Maharashtra and Uttarakhand and the union territory of Daman and Diu. Four of these 24 manufacturing facilities are for the production of FMEG, including a 50:50 joint venture with Techno, a Gujarat-based manufacturer of LED products.

It has an established supply chain comprising its network of authorized dealers, distributors and retailers. This network supplies its products across India. Its distribution network in India comprised over 2,800 authorized dealers and distributors and 30 warehouses as at and for the nine months period ended December 31, 2018. It supplies its products directly to its authorized dealers and distributors who in turn supply its products to over 100,000 retail outlets in India.

PIL manages its sales and marketing activities through its corporate office, three regional offices and 20 local offices in various parts of India as at December 31, 2018. In addition, in Fiscal 2018, it exported its products to over 40 countries. PIL is an established manufacturer of cables and wires in India and will continue to strengthen its brand in both its wires and cables business and its FMEG business.

It has been awarded the gold trophy for five consecutive years from 2013 to 2017 at the Annual Convention on Quality Concepts organized by the Quality Circle Forum of India. It works closely with major power utilities, oil and gas, IT parks, metro rail, infrastructure, metal and non-metal, cement and EPC companies that operates in India and abroad. Its customers include institutional clients such as L&T Construction and government clients such as Konkan Railway Corporation Ltd.

 

Objects of Issue:

The Offer comprises of the Fresh Issue and the Offer for Sale. Offer for Sale Each of the Selling Shareholders will be entitled to the respective proportion of the proceeds of the

Offer for Sale

net of their proportion of Offer related expenses. PIL shall not receive any proceeds from the Offer for Sale.

 

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