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Indobell Insulations 

• Indobell Insulations is coming out with an initial public offering (IPO) of 22,05,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 46 per equity share.
• The issue will open on January 6, 2025 and will close on January 8, 2025.
• The shares will be listed on SME Platform of BSE.
• The share is priced 4.60 times higher to its face value of Rs 10. 
• Book running lead manager to the issue is Finshore Management Services.
• Compliance Officer for the issue is Sanjay Agarwal.

Profile of the company

Indobell Insulations stands as a Manufacturer and Contractor of Insulation Products like Nodulated/Granulated Wool (Mineral and Ceramic Fibre Nodules) and Prefabrication Thermal Insulation Jackets which are used to insulate a variety of applications, including homes, commercial buildings, and industrial plants and all other related insulations materials which are the parts of the designs of insulations of the company. Core business is carried out in power industry which requires full range of insulation and lining Services, scaffolding, surface protection, refractory, passive fire protection and borosilicate lining in chimneys.

The primary source of revenue of the company is through the sales of the Insulations products manufactured i.e. Mineral Fibre Nodules, Ceramic Fiber Nodules and Thermal Insulation Jacket which is done in customized process according to the demand of the customer requirements which consists 61.23% of its total revenue from operation for Fiscal 2024. The company offers tailored insulation solutions to meet specific customer requirements. This includes providing customized sizes, shapes, and densities of insulation materials based on the client's projects which include 3D design, 2D designs, manufacturing drawings, and doing a Thermal analysis of the insulation. Apart from this, it also offers installation services to clients who prefer a one-stop solution for their insulation needs. It also fulfils overseas requirements of the Customers by exporting its tailor-made Jackets which are designed as per the Customer's specifications. 

The company’s manufacturing facility has been strategically located in West Bengal and Maharashtra. West Bengal Manufacturing unit is generally engaged in production of Nodulated wool prepare from Mineral and Ceramic Fibre Nodules whereas Maharashtra Manufacturing unit is engaged in production of Ceramic Fibre Nodules. This process is carried out by processing bulk fibers through a series of stages, including slicing, slitting, and surface rotation. These units have integrated manufacturing process in which entire activity of production process is carried out in -house. It has been awarded ISO 9001:2015 (Quality Management System), ISO 14001:2015 (Environmental Management System) and ISO 45001:2018 (Occupational Health & Safety Management System) for manufacture of Nodulated Fibers and Design, Supply and Application of Thermal Insulation Materials. It also has been awarded as one of the best Service providers in the year 2013 by The Bengal Chamber of Commerce and Industry. 

Proceed is being used for:

• Funding capital expenditure towards purchase of additional plant and machinery
• Meeting the working capital requirements
• General corporate purposes

Industry Overview

The India thermal insulation market is expected to reach Rs 3,674.98 crore by 2028 from Rs 2,189.81 crore in 2020. The market is estimated to grow at a CAGR of 7.4% from 2021 to 2028. India has emerged as a manufacturing hub. The 'Make in India' campaign places India on the world map as a manufacturing centre and gives global recognition to the Indian economy. India's manufacturing sector has the potential to cross $1 trillion by 2025; also, according to the Indian Brand Equity Foundation, India is projected to rank among the top three growing economies and manufacturing destinations in the world. India's astonishing growth would drive the deployment of thermal insulation in heavy industry, oil & gas industry, and power generation industry. Further, the government of India is focused on enhancing the country's electrification rate coupled with technological advancements, which is also likely to increase the demand of thermal insulation during the forecast period.

The India thermal insulation market is segmented on the basis of material type and industry vertical. Based on material type, the market is segmented into fiber glass, plastic foam, stone wool, calcium silicate, cellular glass, and others. The stone wool segment dominated the market in 2020. In terms of industry vertical, the India thermal insulation market is segmented into oil and gas, chemical, aerospace and defense, automotive, pharmaceutical, and others. The chemical segment is a crucial industry for thermal insulations market. The use of Polyurethane (PU) foam is an effective and advanced method for the thermal insulation of buildings. It is applied on the building by spraying, to reach even in the smallest gaps. It offers the damage-resistant and permanent insulation for house to improve living comfort and lower heating bills of building. The most significant advantages and disadvantages of other insulation methods substantiate that the PU foam is one of the most-effective methods to retain heat inside a building. The PU foam insulation is described by a high efficiency and short application time. The government legislation coupled with rising awareness about the advantages of thermal insulation is boosting the demand for insulation products.

The overall India thermal insulation market size has been derived using both primary and secondary sources. To begin the research process, exhaustive secondary research has been conducted using internal and external sources to obtain qualitative and quantitative information related to the market. The process also serves the purpose of obtaining an overview and forecast for the India thermal insulation market with regard to all the segments. Also, primary interviews were conducted with industry participants and commentators to validate data as well as to gain more analytical insights into the topic. The participants of this process include industry experts such as VPs, business development managers, market intelligence managers, and national sales managers, along with external consultants such as valuation experts, research analysts, and key opinion leaders, specializing in the India thermal insulation market. 

Pros and strengths

Diversified product portfolio: The company manufactures different types of Mineral Fibre Nodules, Ceramic Fibre Nodules and Prefabricated Thermal Insulation Jackets. The company manufactures products on the basis of needs and requirements as per its customer demand. The company has necessary resources, experience and network to launch additional products. It also makes sure that all its products are in working condition to the satisfaction of its customers.

Well established manufacturing facility: The company has two manufacturing units situated at West Bengal and Maharashtra State i.e. (i) Trenching Ground Road, off Taratala Road Garden Reach, Kolkata, West Bengal; and (ii) Dewan & Sons Industrial Estate, Vevoor, Palghar, Maharashtra, are equipped with requisite machineries to manufacture Mineral Fibre Nodules, Ceramic Fibre Nodules and Prefabricated Thermal Insulation Jackets.

Quality assurance and accreditations: Quality plays one of the most vital roles in the success of any organization. It is focused on providing high quality products and services. It constantly strives to improve its industrial processes at every step in the production chain. Its focus on quality is evidenced by the quality certifications and accreditations that its facility has obtained from various local and international accreditation agencies. It has been awarded ISO 9001:2015 (Quality Management System), ISO 14001:2015 (Environmental Management System) and ISO 45001:2018 (Occupational Health & Safety Management System) for manufacture of Nodulated Fibers and Design, Supply and Application of Thermal Insulation Materials. It also has been awarded as one of the best Service providers in the year 2013 by The Bengal Chamber of Commerce and Industry.

Risks and concerns  

Maximum revenue comes from limited customers: Substantial portion of the company’s revenues has been dependent upon a few customers. For six months’ period ended September 30, 2024 and for the financial year ended March 31, 2024, March 31, 2023 and March 31, 2022, its top ten customers accounted for around 83.58%, 94.04%, 92.47% and 85.80% of its revenue from operations. However, the loss of any significant customer would have a material effect on its financial results. While the company is constantly striving to increase its customer base and reduce dependence on any particular customer, there is no assurance that it will be able to broaden its customer base in any future periods or that its business or results of operations will not be adversely affected by a reduction in demand or cessation of its relationship with any of its major customers.

Topline is significant dependent on single business segment: The company’s revenue is dependent on single business segment i.e. Thermal Insulation Products which consists of Mineral Fibre Nodules, Ceramic Fibre Nodules and Prefabricated Thermal Insulated Jackets. For six months’ period ended September 30, 2024 and for the financial year ended March 31, 2024, March 31, 2023 and March 31, 2022, Mineral Fibre Nodules, Ceramic Fibre Nodules and Prefabricated Thermal Insulated Jackets accounted for around 52.76%, 61.23%, 68.59% and 49.52% respectively. Its continued reliance on single business segment for substantial portion of its revenue exposes it to risks, including but not limited to, reduction in the demand of the products in the particular segment in the future; increased competition from regional and national players; the invention of superior and cost- effective technology; fluctuations in the price and availability of the raw materials; changes in regulations and import duties and the general economic conditions. Any occurrences of such event could significantly reduce its revenues, thereby materially adversely affecting its results of operations and financial condition.

High working capital requirement: The company’s business requires significant amount of working capital and major portion of its working capital is utilized towards debtors and inventories. The company’s trade receivables for the period ended September 30, 2024, March 31, 2024, March 31, 2023, March 31, 2022 were Rs 286.43 lakh, Rs 658.74 lakh, Rs 385.12 lakh and Rs 255.96 lakh respectively and its inventories for the period ended September 30, 2024, March 31, 2024, March 31, 2023, March 31, 2022 were Rs 388.85 lakh, Rs 253.53 lakh, Rs 283.05 lakh and Rs 501.11 lakh respectively. The company’s inability to maintain sufficient cash flow, credit facility and other sourcing of funding, in a timely manner, or at all, to meet the requirement of working capital or pay out debts, could adversely affect its financial condition and result of its operations.

Outlook

Indobell Insulations  manufactures insulation products, including nodulated and granulated wool (mineral and ceramic fibre nodules) and prefabricated thermal insulation jackets. The company's products are used in residential, commercial, and industrial applications alongside various related insulation materials. The company has well established manufacturing facility and diversified product portfolio. On the concern side, the company’s top 10 customers contribute majority of its revenues from operations. Any loss of business from one or more of them may adversely affect its revenues and profitability. Moreover, substantial portion of its revenues has been dependent upon few customers. The loss of any one or more of its major customers would have a material effect on its business operations and profitability. Moreover, the company’s revenue is dependent on single business segment i.e. Thermal Insulation Products. An inability to anticipate or adapt to evolving upgradation of these products or inability to ensure product quality or reduction in the demand of these products may adversely impact its revenue from operations and growth prospects.

The company is coming out with an IPO of 22,05,000 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 46 per equity share to mobilize Rs 10.14 crore. On performance front, the total revenue consist of revenue from operation and other income has decreased to Rs 1,798.57 lakhs in FY 2023-24 from Rs 2,105.22 lakh in FY 2022-23 i.e. total revenue decreased by Rs 306.65 lakh (14.57% for the said period) primarily due to decrease in export revenue from operations of the company. Moreover, the company’s restated profit after tax for FY 2023-24 has been increased to Rs 103.42 lakh (5.75% of total income) as against Rs 90.01 lakh (4.28% of total income) in the FY 2022-23. As a part of its growth strategy, the company’s focus is on increasing sales volume through expansion, diversification and spread in geographical outreach. Its growth in domestic market as well as international market can fetch it to new business expansion and opportunities. It looks to further strengthen its relationship with its existing customers and meet their requirements. Going forward, the Goodwill it has created in the market commands a recall amongst the consumers in the areas where it operates due to the image and goodwill established over the years. It intends to leverage this goodwill and increase its market base. The company is in constant pursuit towards newer avenues for sustainable growth.