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Cryogenic OGS

• Cryogenic OGS is coming out with an initial public offering (IPO) of 37,80,000 equity shares in a price band Rs 44-47 per equity share.
• The issue will open on July 3, 2025 and will close on July 7, 2025.
• The shares will be listed on SME Platform of BSE.
• The face value of the share is Rs 10 and is priced 4.40 times of its face value on the lower side and 4.70 times on the higher side.
• Book running lead manager to the issue is Beeline Capital Advisors.
• Compliance Officer for the issue is Rashmi Kamlesh otavani.

Profile of the company

Cryogenic OGS provides high-quality measurement and filtration equipment and systems by fabrication and assembling for various sectors like oil, gas, chemicals and allied fluid industry. Focused on innovative and tailored services, for oil, gas, chemicals and allied fluid industry, it provides customized solutions to meet the specific needs of its customers. Its team of experts works closely with clients to understand their unique requirements, developing tailored strategies that maximize efficiency and minimize costs.

Its in-house engineering and design capabilities helps it to offer diversified products and solutions to its customers in each of the segments in which it operates. Its comprehensive solutions include design, process engineering and manufacturing including fabrication, assembly and testing facilities. It uses Auto-CAD ELD software along with other pairing software for preparing designs of its products.

Spanning in over 8300 Square meters located at Vadodara, Gujarat, the company’s production facilities are equipped with all the required machineries and equipment required for its production processes. It also has a well-equipped quality checking department with highly skilled manpower to carry out the required testing of all kinds relating to the machines and equipment being prepared by it for e.g. Chemical testing, Mechanical testing, non-destructive testing, Hydro test of Equipment, Pneumatic leak test with air etc. It also has its administration block built up in the same premises to facilitate and ease out the overall working of the business.

Proceed is being used for:

• Meeting working capital requirements
• General corporate purposes 

Industry Overview

India’s Capital Goods manufacturing industry serves as a strong base for its engagement across sectors such as Engineering, Construction, Infrastructure and Consumer goods, amongst others. The engineering sector is the largest of the industrial sectors in India. It accounts for 27% of the total factories in the industrial sector and represents 63% of the overall foreign collaborations. Demand for engineering sector services is being driven by capacity expansion in industries like infrastructure, electricity, mining, oil and gas, refinery, steel, automobiles, and consumer durables. India has a competitive advantage in terms of manufacturing costs, market knowledge, technology, and innovation in various engineering sub-sectors. India’s engineering sector has witnessed remarkable growth over the last few years, driven by increased investment in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of huge strategic importance to India’s economy.

The development of the engineering sector of the economy is also significantly aided by the policies and initiatives of the Indian government. The engineering industry has been de-licensed and allows 100% foreign direct investment (FDI). Additionally, it has grown to be the biggest contributor to the nation's overall merchandise exports. India became a permanent member of the Washington Accord (WA) in June 2014. it is now part of an exclusive group of 17 countries that are permanent signatories of the WA, an elite international agreement on engineering studies and the mobility of engineers. Engineering Trade Analysis for April 2024 After registering a marginal increase in 2023-24, Indian engineering exports started the new fiscal 2024-25 with a decline of 3.2% year-on-year in April 2024. Share of engineering however was above 25 percent during the month. The decline in engineering exports was mainly due to 36.4 percent drop in exports of Iron and Steel. Lower shipment of steel was mainly witnessed in Italy, Nepal, UAE, Netherland, USA, China and Korea among others.

The oil and gas sector in India holds a pivotal position as one of the eight core industries, exerting a significant influence on the country's economic landscape. With India's economic growth intricately tied to its energy demand, the sector's importance is set to surge, fostering a conducive environment for investment. As of 2023, India remains the third-largest consumer of oil globally, underscoring the sector's significance. To meet the escalating demand, the government has implemented various policies, including permitting 100% foreign direct investment (FDI) in key segments such as natural gas and petroleum products. India's rapid economic expansion is propelling significant shifts in its energy landscape, particularly in the oil and gas sector. With burgeoning outputs and escalating demands for production and transportation, the consumption of crude oil is forecasted to surge, registering a remarkable CAGR of 4.59% to reach 500 million tonnes by FY40, soaring from 223 million tonnes in FY23.  

Pros and strengths

Strong and unique product technology: By leveraging its core technologies and unique ideas, it continues to provide new value to industry. It offers a wide range of products that are designed to meet the specific needs of its clients. The company’s products are made from the finest materials and are built to last, ensuring that they provide reliable performance year after year.  

Consistency in quality and service standards: It has been accredited with ISO 45001, ISO 14001, ISO 9001, confirming that it adheres to the highest standards in occupational health environmental management and quality control. ISO 45001 reflects its commitment in ensuring a safe and healthy workplace, ISO 14001 underscores its dedication to environmental sustainability, and ISO 9001 attests to its unwavering focus on quality management. These certificates are more than badges; they represent its pledge to excellence in every facet of its operations.

Established relationships with suppliers: The company has a strong relationship with its suppliers and due to its relationships with its suppliers, it gets quality and timely supplies of materials. This enables it to manage its inventories and supply quality products on timely basis to its customers.

Risks and concerns

Maximum revenue comes from limited customers: The company derived a significant portion of its revenues from limited number of clients. The company has garnered 70.27%, 73.21% and 68.78% of its total revenue from top 5 customers in FY25, FY24 and FY23 respectively. While, the company has maintained good and long-term relationships with its customers, but there can be no assurance that it will continue to have such long-term relationship with them. It cannot assure that it shall generate the same quantum of business, or any business at all, from these customers, and loss of business from one or more of them may adversely affect its revenues and profitability.

Majority of revenue from operation comes from Gujarat and Maharashtra: The company derives 46.72% and 34.95% of its revenue from State of Gujarat and Maharashtra respectively for the year ended March 31, 2025. Such geographical concentration of its business in this region heightens its exposure to adverse developments related to competition, as well as economic and demographic changes in this region which may adversely affect its business prospects, financial conditions and results of operations. It may not be able to leverage its experience in these regions to expand its operations in other parts of India.

Required services of third party manufacturers and suppliers: The company’s business generally requires the services of third party manufacturers and suppliers of machine parts, capital items and materials. The timing and quality of the machinery parts it installs, depends on the availability and skill of those third parties, as well as contingencies affecting them, including labour and material shortages and industrial action, such as strikes and lockouts. Though these third party manufacturers are approved manufacturers by it which it approves considering the timelines in which they can execute the contracts given by it to avoid any delays in execution of its principal contract, it cannot assure that skilled third parties will continue to be available at reasonable rates and in the areas in which it needs to execute its projects. As a result, it may be required to make additional investments or provide additional services to ensure the adequate performance and delivery of contracted services, and any delay in project execution could adversely affect its profitability.

Outlook

Cryogenic OGS manufactures and assembles high-quality measurement and filtration equipment for industries such as oil, gas, chemicals, and related fluid sectors. The company has strong and unique product technology. The company has Established Relationships with suppliers coupled with stable customer base. On the concern side, the company’s top five customers contribute majority of its revenues from operations and any loss of business from one or more of them may adversely affect its revenues and profitability. Moreover, majority of its Revenue from Operation (RFO) is generated from state of Gujarat and Maharashtra and any adverse development affecting its operations in this region could have an adverse impact on its business, financial condition and results of operations.

The company is coming out with a maiden IPO of 37,80,000 equity shares of Rs 10 each. The issue has been offered in a price band of Rs 44-47 per equity share. The aggregate size of the offer is around Rs 16.63 crore to Rs 17.77 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operation has increased from Rs 2,425.41 lakh in FY24 to Rs 3,290.46 lakh in FY25 showing an increase of 35.67% from previous year i.e. FY24. Moreover, the company recorded increase in its profit after tax from Rs 534.50 lakh in the FY24 to Rs 612.26 lakh in the FY25.

The company has a sales and marketing team focusing on customer development and maintaining customer relationship. This team is also responsible for the marketing of its products, negotiating prices, procuring repeat orders and ensuring timely dispatch and deliveries. Its sales team has built long-term relationships with a number of its customers. As a B2B manufacturer, its channels of marketing are such that it needs to reach and target its clients of various sectors to offer its diversified products. Meanwhile, the company operates in a highly competitive market, with participants in the organised and unorganised sector. There are no entry barriers in the industry which puts it to threat of competition from new entrants as well. It faces competition from other manufacturers of oil and gas, petrochemical, chemicals and liquor equipment. The company’s cost effective and integrated offerings, its focus on customer satisfaction and its reliability combined with quality consciousness, provide it with a competitive advantage in its business.