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Times Green Energy (India)

• Times Green Energy (India)  has come out with an initial public offering (IPO) of 664000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 61 per equity share.

• The issue has opened on June 16, 2021 and will close on June 22, 2021.

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

• The share is priced 6.10 times higher to its face value of Rs 10.

• Book running lead manager to the issue is Aryaman Financial Services.

• Compliance Officer for the issue is Ashutosh Shukla.

Profile of the company

The company is a women entrepreneurial venture promoted by Dinne Lakshmi Jumaal and Kanuparthi Vani both of whom are dedicated to the cause of improving lives of rural women in India. It is one of the few companies in India having ‘All Women Board of Director’. Its organization is deeply involved in the rural eco-system surrounding women in and around certain villages of Telangana, Andhra Pradesh & border areas of Karnataka. It also involves local agents and traders based in the state of Telangana for sale its goods. Likewise the company also procures goods from local dealers and vendors via local agents based in the state of Telangana. It is currently involved in three core business activities - namely distribution of - Agro Products; Agrochemicals (including organic bio-products) and Sanitary Napkins.

The company’s promoters began their journey by getting involved in procuring and distribution of natural organic plant protection products and other organic products for the betterment of farming amongst villages and hence the company was formed to formalize such trading and distribution activities. Thereafter it acquired agricultural land in 2013 and used certain available farm area to carry out farming activities to research and develop methods of improving farm yield and thereafter educating and supporting women farmers to use such products thereby growing its distribution and touch point base. Further with its growing network of women among these villages it started helping to create awareness about women hygiene products such as Sanitary Napkins along with other organizations doing such work. Thereafter in 2018 it formally entered into Woman Hygiene & Safety Segment by launching Sanitary Napkins under its brand name -‘Monthly times’.

Proceed is being used for:

• Funding working capital requirement.

• Funding purchase and set-up of registered office.

• Funding purchase of vehicle and ERP package.

• Funding setting up of sanitary napkin SBUs.

• General corporate purpose.

Industry overview

The agriculture market expected to reach a value of nearly $12197.12 billion by 2022, significantly growing at a CAGR of 5.9% during the forecast period. The growth in the agriculture market is due to low interest rate environment, emerging markets growth and printing inks market and global economic growth. However, the market for agriculture is expected to face certain restraints from several factors such as weak wage growth in developed economies and reduction in free trade. Shortage of labour and increasing demand for advanced agriculture tools in many countries is driving the demand for agriculture robots or agribots. Agribots are used in farmlands for pruning, weeding and spraying pesticides and herbicides. They are connected to tractors for spraying water, seeds, pesticides, nutrients and harvesting. Potential Opportunities in the Agriculture Market with continued technology investment, investments in end user industries and Economic Growth, the scope and potential for the global agriculture market is expected to significantly rise in the forecast period.

India is expected to achieve the ambitious goal of doubling farm income by 2022. The agriculture sector in India is expected to generate better momentum in the next few years due to increased investment in agricultural infrastructure such as irrigation facilities, warehousing and cold storage. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers. India is expected to be self-sufficient in pulses in the coming few years due to concerted effort of scientists to get early maturing varieties of pulses and the increase in minimum support price.

Pros and strengths

Strong network and established relationships within rural communities in Southern India: The company’s promoters began their journey by getting involved in procuring and distribution of natural organic plant protection products and organic products for the betterment of farming amongst villages and hence the company was formed to formalize such trading and distribution activities. Thereafter it acquired agricultural land in 2013 (later converted into non-agricultural land) and used certain available farm area to carry out farming activities to research and develop methods of improving farm yield and thereafter educating and supporting women farmers to use such products thereby growing its distribution and touch point base. Even though it does not carry out any large scale farming activities itself it was able to create an ecosystem of various small farmers whom it acted as trading intermediaries for better realization of their produce.

Low indirect tax product space: The company’s all three core activities - i.e. -Agro Products; Bio-Products and Sanitary Napkins are all having NIL and/ or concessional indirect tax rates such as GST. These products would continue to enjoy government benefits and hence growth of its businesses would be benefitted from such government initiatives and regulations in future.

High asset value and low debt burden: As on December 31, 2020; the company does not have any external debt from banking and financial institutions. The company has an unsecured loan from the Directors amounting to Rs 20.19 lakh. Being a low debt company would ensure higher sustainability of its organization and better investor wealth creation in the future. Further; the company currently owns almost 18,875 sq yards of prime “N.A.” land in Nalgonda District. The realizable fair value of such land asset is Rs 1,415.63 lakh based on Government Registered Valuer’s opinion Certificate dated October 13, 2020 obtained by its company. Such a good balance sheet situation will help the company in generating long term Shareholder Wealth.

Risks and concerns

Agro and bio-pesticide business highly seasonal: The agro and bio-pesticide business is highly seasonal in country. This is due to the fact that majority of the farmers depend on rain for cultivation. Generally rainfall occurs during Kharif season and hence, the timing and seasonality of rainfall impacts the business of company. Thus, it is subject to seasonal factors, which make its operating results relatively unpredictable. Due to the inherent seasonality of its business, results of one reporting period (quarter/half year/year) may not be necessarily comparable with preceding or succeeding reporting periods. Sometimes, if there is a slight change in timing of rain fall, the sales will get deferred from one reporting period to another reporting period. The sales that were supposed to take place during one financial year will be added to sales of the next financial year and therefore results of even full financial year may not necessarily be comparable to other financial year.

Rely substantially on third party transportation providers: The company rely substantially on third party transportation providers for the supply of its products to its customers. Transportation strikes / non-availability of transportation services could have an adverse effect on its ability to deliver the same to its customers. In addition, transportation costs in India have been steadily increasing over the past several years. While usually the end consumer bears the freight cost, it may not always be able to pass on these costs to its customers. Continuous increase in transportation costs or unavailability of transportation services for its products may have an adverse effect on its business, financial condition, results of operations and prospects. In case of unavailability of transport services on time, the company might face loss on certain products being perishable in nature.

Relatively new in Woman Hygiene & Safety industry: The company has been primarily earning operating revenue from its agro products and bio-pesticides/organic bio-products business. In order to improve its local network by making a difference to the lives of rural women it got involved in distribution and awareness of Sanitary Napkins. Thereafter it has launched its own brand by the name -“Monthly Times” and it is currently getting the same manufactured by external vendors and distributing it through its rural distribution network. It has not yet monetized this business vertical substantially and are concentrating on increasing its brand awareness. It propose to set up small size SBUs in few villages whereby semi prepared materials will be sent by its vendors to such SBUs and its local representative shall complete the manufacturing and packaging of these products at such SBU thereby creating a local presence and increasing the visibility and mental comfort for the product. Hence it will be able to monetize this business vertical into a profitable business.

Outlook

Incorporated in 2010, Times Green Energy (India) is engaged in the farming and selling activities of agriculture produce and trading of natural organic products, bioproducts, and pesticides. The company operates in two business segments; Agro-Business (distribution of agro products and agrochemicals including organic bio-products) and Women Hygiene and Safety (distribution of Sanitary Napkins). The company has recently launched an application in September 2020, on the playstore by name of Bharatbazaar (Kisaan to Kitchen) wherein the company sells various categories of products i.e. it has more than 1,000 products in its catalogue ranging from cooking essentials such as oil, basmati rice to bakery and dairy items, snacks and branded foods, beverages and sanitary napkins etc. The company provides delivery service in and around Hyderabad. On the concern side, it is involved in the trading of various agro products any failure or defect in delivery could result in a claim against it for substantial damages, regardless of its responsibility for such a failure or defect. The company’s business is working capital intensive including fund requirement for payment for bulk purchases of various products. Hence, major portion of its working capital is utilised towards debtors and inventory.

The company is coming out with an IPO of 664000 equity shares of Rs 10 each at a fixed price of Rs 61 per equity share to mobilize Rs 4.05 crore. On the performance front, in fiscal 2020, the company’s total income decreased by Rs 0.79 or (0.05%), from Rs 1,515.51 lakh in Fiscal 2019 to Rs 1,514.72 lakh in Fiscal 2020. It’s Profit after Tax increased by Rs 2.57 lakh or 26.29%, from positive Rs 9.77 lakh in Fiscal 2019 to Rs 12.34 lakh in Fiscal 2020. The company is proposing to raise equity from the capital markets to ensure it has string liquidity to better negotiate terms with suppliers and improve its business scale as well as margins. It proposes to set up small SBUs at various village / district levels for being local warehouse / processing centers for its product “Sanitary Napkin” and thereby ensuring higher durability of products as well as stronger local acceptance levels. It continue to endeavor to increase its point of sales and touch points by adding newer women to its fold and also by launching innovative products and schemes for better economics of the business vertical.