IGI Logo

Shashwat Furnishing Solutions

• Shashwat Furnishing Solutions is coming out with an initial public offering (IPO) of 558000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 45 per equity share.

• The issue will open on April 20, 2022 and will close on April 25, 2022.

• The shares will be listed on SME Platform of BSE.

• The share is priced 4.50 times higher to its face value of Rs 10.

• Book running lead manager to the issue is Beeline Broking.

• Compliance Officer for the issue is Ratika Khandelwal.

Profile of the company

The company is engaged in processing of semi-finished furniture products into finished products and manufacturing through job work of furniture and handicraft items. The company specialize in developing a qualitative range of Industrial Furniture and Restaurant and Cafe Furniture, Garden and Outdoor Furniture Vintage Furniture, Mirror Frames, Wall clocks and various other decoration & handicrafts objects. It is instrumental in presenting a wide assortment of exclusively designed products, such as Restaurant Furniture, Cafe Furniture, and Metal Furniture. Its expert professionals are devoted to developing an exclusive product range capable to gain a nationwide appreciation for its remarkable finish, unique designs, trendy colour combinations, flawless detailing, unbreakable quality and higher durability.

The company’s proficiency lies in understanding the specific requirement of its customers and based on which it places the order of its products to manufacturer having requisite manufacturing facilities. It source its products from reliable manufacturers of the market. It purchase the order in semi-finished condition and then process the same by finishing, assembling and repairing turning them into finished products. Also it purchase raw material and manufacture through job work from third party. The company makes further sales to wholesalers, retailers and customers through online platforms such as Indiamart, Trade India, Exporter India etc.

Proceed is being used for:

• Working capital requirement.

• General corporate purpose.

• Meeting the issue expenses.

Industry overview

The handicrafts sector is of importance to the Indian economy as it is one of the largest employment generators and account for a significant share in the country’s export. The state and regional clusters contribute significantly to handicrafts export. The Indian handicrafts industry is fragmented with more than seven million regional artisans and over 67,000 exporters/export houses promoting regional art and craftsmanship in the domestic and global markets. Indian handicrafts are exported across geographies, with the top 10 destinations being the US, the UK, the UAE, Germany, France, Latin American countries (LAC), Italy, the Netherlands, Canada and Australia. Government of India increased incentive rates under the merchandise export from India scheme (MEIS) to 7% from 5% for handicraft items which will help exporters to recover the input costs involved in the production of handicrafts and will lead to competitive pricing and boost export. In the month of September 2020, fund of Rs 2.8 crore was approved for the integrated project for development and promotion of handicrafts of Varanasi by the Ministry of Textiles to overcome the COVID-19 crisis faced by the artisans.

The India furniture market by commercial sector is anticipated to achieve a CAGR of 11.97% during the forecast period i.e. 2018-2023. The commercial sector is further sub-segmented into non contracting and contracting. The demand for furniture has been observed to majorly generate from northern and southern India. India is the fifth largest furniture producer at a global level and the fourth largest consumer of furniture. India is also cost competitive in cotton fabric (textiles). The total rental furniture and appliances market in India reached Rs 33,500 crore during FY21. The market is expected to garner $61.09 bn by the end of 2023. Further, the Indian furniture market is anticipated to achieve a Y-o Y growth rate of 14.30% in 2023 as compared to the previous year. The domestic Indian furniture market is anticipated to grow at a CAGR of 13% in the next four years and 11.97% during the forecast period i.e. 2018-2023.

Pros and strengths

Existing supplier relationship: The company’s existing supplier relationship protects the business with terms of supply and pricing of the products, the quality of the products offered etc. It, being a small and medium size organisation, rely on personal relationships with suppliers. The company enjoys existing relationship with its suppliers. Further it also leverage the past experience of its management in maintaining effective supplier relationship.

Scalable business model: The company’s business model is scalable. Its business model is customer centric, and requires optimum utilization of its existing resources, assuring quality supply and achieving consequent economies of scale. The business scale generation is basically due to development of new markets both domestic and international by exploring customer needs and by maintaining the consistent quality output.

Quality assurance and standards: The company’s ability to maintain and improve the products it offer to customers enables it to generate stable revenue and minimize customer complaints. It is very particular from usage of right quality of material for production. Its dedicated efforts towards the quality of material have helped it gain a competitive advantage over others. Its quality production has earned it a goodwill from its customers.

Risks and concerns

Rely on suppliers for semi-finished products: The company relies on suppliers for majorly semi-finished goods. In the event that there are any delays or disruptions in the supply of semi-finished goods from its suppliers, its ability to deliver the products may be affected. Any of its supplier’s failure to adhere to agreed timelines, whether due to their inability to comply with, or obtain, regulatory approvals, or otherwise, may result in delays and disruptions to its sales, increased costs, delayed payments for its products and damage to its reputation leading to an adverse effect on its results of operations. In the event its suppliers for semi-finished goods cease to be available to it at terms acceptable to its or it experience problems with, or interruptions in, such supplies, and it is unable to find other suppliers to provide similar semi-finished goods on comparable terms and on a timely basis, its operations may be disrupted and its results of operations and financial condition may be adversely affected.

Face competition: The Jodhpur, Rajasthan is one of the main places for the Handicraft Industry including furniture products and this has resulted in huge competitive pressures. It may have to confront pressures in respect of pricing; product quality etc. from the clients and such pressures may put strain on its profit margins which may consequently affect the financial position of the company. Competition emerges not only from the organized sector but also from the unorganized sector and from both small and big players. Its inability to compete with this intense competition; local, national and international will have material adverse impact on the company's financial position.

Dependent on third party transportation providers: The company’s success depends on the smooth supply and transportation of material from its supplier to its warehouse & processing unit and from its warehouse & processing unit to its customers both of which are subject to various uncertainties and risks. In addition, products may lost or damaged in transit for various reasons including occurrence of accidents or natural disasters. There may also be delay in delivery of products which may also affect its business and its results of operation negatively. A failure to maintain a continuous supply of its products to its customers in an efficient and reliable manner could have a material and adverse effect on its business, financial condition and results of operations.

Outlook

Shashwat Furnishing Solutions is a manufacturer and supplier of furniture and handicraft items. The company specialize in developing Industrial Furniture, Restaurant and Cafe Furniture, Garden and Outdoor Furniture, Vintage Furniture, Mirror Frames, Wall clocks and various other decoration & handicrafts objects. The company engages in the business of purchasing, assembling, finishing and repairing semi-furnished furniture to converting them into finished goods. It sells its furniture to wholesalers, retailers and customers through online platforms such as Indiamart, Trade India, Exporter India etc. On the concern side, the company may encounter problems in executing the orders in relation to its products, or executing it on a timely basis. Moreover, factors beyond its control or the control of its customers may postpone the delivery of such products or cause its cancellation, including delays or failure to obtain necessary permits, authorizations, permissions and other types of difficulties or obstructions. The company may also face increased labour costs because of competition for skilled employees, higher employee turnover rates, increase in minimum wages or employee benefits under applicable laws, its growth could be adversely affected.

The company is coming out with a maiden IPO of 558000 equity shares of Rs 10 each at a fixed price of Rs 45 per share to mobilize Rs 2.51 crore. On performance front, the company’s total income which includes from Sale of Products during the stub period ended on February 28, 2022 was Rs 123.46 lakh. The restated net profit during the stub period ended on February 28, 2022 was Rs 16.10 lakh representing 13.04% of the total revenue of the Company. The company aims to enhance the growth by leveraging its relationships and further enhancing customer satisfaction. It plans to increase its customers by meeting orders in hand on time, maintaining its customer relationship and renewing its relationship with existing buyers. It intends to cater to the increasing demand of its existing customers and also to increase its existing customer base by enhancing the distribution reach of its products in different parts of the country.