Archit Nuwood IPO: Aggressive Cautionary Tale?

Archit Nuwood Industries Introduction

Archit Nuwood Industries Limited, founded in 2017, specializes in manufacturing Medium Density Fiber (MDF) and High-Density Fiber (HDF) boards, as well as pre-laminated sheets. These products are widely used in furniture, cabinets, and interior design due to their durability and sleek finish

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Brief about Archit Nuwood

Summary of the business of Archit Nuwood

Archit Nuwood Industries Limited is engaged in the business of manufacturing of MDF & HDF boards, and Prelaminated Sheets in various textures like Solid Shades, Wood Grain Shades, Fabric & Stone décors, crafted caul plates to the Prelaminated board surface from Mat. Our product range of Prelaminated MDF/HDF uses the décor paper sourced from the Europe, Asia & India with a 65-110 GSM range. Our facility is located in Dashmesh Nagar, Village Chander Kallan, Tehsil Tohana, District Fatehbad, Haryana-125120 equipped with 2 Laminate presses capable of producing laminates in 2440mm x 1220mm (8ft x 4ft) & 3050mm x 1297mm (10ft x 4.25ft).

Archit Nuwood History

Our Company was originally incorporated on September 26, 2017 as a Private Limited Company as “Archit Nuwood Industries Private Limited” vide Registration No. 070923 under the provisions of the Companies Act, 2013 with the Registrar of Companies, National Capital Territory of Delhi & Haryana. Pursuant to a special resolution passed by the Shareholders at their Extra ordinary General Meeting held on December 22, 2023, our Company was converted from a Private Limited Company to Public Limited Company and consequently, the name of our Company was changed to ‘Archit Nuwood Industries Limited’ and a Fresh Certificate of Incorporation consequent to Conversion was issued on December 27, 2023 by the Registrar of Companies, National Capital Territory of Delhi & Haryana. The Corporate Identification Number of our Company is U20295HR2017PLC070923.

Archit Nuwood Promoters & Board of Directors

The promoters of our Company are Mr. Prem Chand; Mr. Vineet Kumar and Mr. Vinod Kumar Singla.

Archit Nuwood Board of directors

Archit Nuwood Share Holding pattern

Archit Nuwood Strength

• In-house Manufacturing capabilities;
• Large base of dealers and client relationship;
• Wide Range of Products;
• Stringent quality control mechanism ensuring standardized product quality;
• Synergy of young and experienced management team with a committed employee base

Archit Nuwood Strategies

• Capacity expansion and manufacture of new products
• To continue brand building and strengthening of the distributor network
• Tapping large real estate developers and corporate bodies

Industry Outlook

Summary of Industry

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The Indian wood-based panels sector is steadily growing due to rapidly developing local economics and a stable demand for quality panels from local customers. In addition, the growth of retail, hospitality and healthcare sectors have raised the demand for the commercial real estate. This has increased the demand for panels in the local market.

According to Indian analysts in the field of boards and timber business, rapid urbanisation will also contribute to the further growth of the sector (with over 40% of the local population expected to be settled in urban areas by 2030). Many of those people would strive for a better standard of living as their per capita income increases, which will lead to the decline of the replacement cycle for furniture from the current 8-10 years to five to seven years.

MDF has been an investment area for the Indian boards market in recent years, accounting for the bulk of investments from major players. In recent years its growth rates have varied in the range of 18-23%, though it is to be noted that particleboard and hybrid products have been gaining momentum in Asia, generally due to it being more cost-effective and less energy intensive. As the industry has achieved a significant growth of revenue in recent years it has been able to expand its capacities by installing some new modern equipment. Most of this equipment, along with machinery, has been supplied by global players, which have significantly strengthened their presence in the Indian market in recent years.

The global market size for MDF is estimated at 105.16 million CBM (USD 50.2 billion) in 2021. It is expected to witness a CAGR of 9.6% in the period of 2021-2026.

Medium-density fiberboard (MDF) is an engineered wood panel that is formed by coalescing wood fibers obtained from breaking down hardwood and softwood in a defibrillator. It has a non- directional grain structure, making it an ideal wooden material for cutting, machining drilling processes without the production of chips or splinters. Furthermore, the absence of knot makes it easier for finishing, making it suitable for application in the interior decoration of houses and offices. MDF are usually denser than plywood, along with being considerably inexpensive. These factors make it an excellent alternative material for application wherein moisture resistant and very high impact resistance are not
obligatory attributes. For instance, MDF is largely utilized in the assembly of furniture cabinetry and wood flooring subsurface.

• Raw Materials in MDF
  • MDF is typically made up of 82% wood fibre, 9% urea- formaldehyde resin glue, 8% water, and 1% paraffin wax Rising Rising trend in the cost of raw materials is a cause of worry for the MDF manufacturers. In the last 6 months, cost of chemicals/resins has increased by 70- 80% due to sharp rise in Brent crude oil price which has gone up by 70% in last 6 months. Raw material prices are also impacted by higher container freight rates, strong dollar and price increase in origin countries. MDF 82% WOOD FIBER1% PARAFFIN WAX8% WATER9% UREA- FORMALDEHY DE RESIN
  • GLUE Recent spurt in raw material prices and strong demand condition have encouraged the MDF manufacturers to go for price hike in the last few months. For example, Greenpanel hiked prices by 3% in South India and 6.5% in the rest of India between December 2020 and January 2021 due to an increase in raw material cost. Similarly, other manufacturers, including Century Ply, have hiked prices by 3-8% in last few months.
• Uses of MDF
  • It is used in furniture such as in cabinets due to its strong surface,
  • It is used as fire resistant material in building construction
  • MDF boards are used as insulation and obstacle to vapors in many commercial as well as in residential buildings
  • They are used for decorative purposes owing to its flexibility due to which it can be bend into any desired shape etc.
• Advantages of MDF
  • MDF has become a preferred choice for furniture manufacturers because:
  • It gives very high-quality finishing
  • It is suitable for precise machining techniques
  • It is apt for manufacturing modern, branded, low-maintenance furniture
  • It is suitable for the entire range of home furniture such as modular kitchen, wardrobes and others
  • It is priced 50% cheaper than premium quality plywood and 25% to 30% cheaper than mid-range plywood

Growth Opportunity Size

The use of Medium Density Fibreboard (MDF) is increasingly finding market acceptance over plywood and India is no exception. Its global market size is estimated at 105.16 million CBM (USD 50.2 billion) in 2021. It is expected to witness a CAGR of 9.6% in the period of 2021-2026. In India, the MDF market size is estimated to be 2.8 million CBM (i.e., Rs. 3000 crores) in 2021. It is expected to grow at CAGR of 15-20% to Rs. 6000 crores by 2026.

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HDF INDUSTRY

High density fiberboard (HDF) is made of wood fibers or other plant fibers along with urea formaldehyde or other synthetic resins through a process of compressing in pressurized heating conditions. Demand for HDF is expected to increase due to a rise in demand for different hardboard with HDF in interior décor, furniture, toys and game boards, as well as in other application sectors.

Moreover, increase in use of HDF for construction, furniture, consumer goods, packaging, etc., is also estimated to propel the high density fiberboard (HDF) market growth.
High density fiberboard (HDF) is made of wood fibers or other plant fibers along with urea formaldehyde or other synthetic resins through a process of compressing in pressurized heating conditions. Demand for HDF is expected to increase due to a rise in demand for different hardboard with HDF in interior décor, furniture, toys and game boards, as well as in other application sectors.
Moreover, increase in use of HDF for construction, furniture, consumer goods, packaging, etc., is also estimated to propel the high density fiberboard (HDF) market growth.

High Density Fiberboard Market Size is Expected to Reach US$ 10.7 Bn by 2031, Rising at a Market Growth of 5.7%

Regional Outlook

Region-wise analysis of the global high density fiberboard (HDF) market research report reveals that Asia Pacific held prominent share in 2022. Rise in the use of HDF in various applications is anticipated to offer significant business opportunities in high density fiberboard (HDF) market for manufacturers in Asia Pacific. China is one of the prominent market for HDF in Asia Pacific.
According to the global high density fibreboard (HDF) market forecast, North America accounted for the second-largest market share, after Asia Pacific, in 2022. Moreover, technological advancements in manufacturing process of HDF in North America are expected to propel the demand for HDF in the region in the near future. Furthermore, Europe, Middle East & Africa and Latin America were relative’ minor markets for high density fiberboard (HDF).

High Pressure Laminate (HPL)

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Decorative High-Pressure Laminates Market Size was valued at USD 11.5 Billion in 2022. The Decorative High-Pressure Laminates market industry is projected to grow from USD 11.9 Billion in 2023 to USD 15.7 Billion by 2032, exhibiting a compound annual growth rate (CAGR) of 3.53% during the forecast period (2023 – 2032). There are more attractive high-pressure laminates being used in construction, and they are also less expensive to install and maintain, are the key market drivers enhancing the market growth.

Decorative High-Pressure Laminates Market Trends

• Increasing End Uses of decorative high-pressure laminates in the construction industry is driving the market growth
  • The expansion of the construction sector in the Asia-Pacific region’s growing economies will probably promote the expansion of the world market. Due to their simplicity in End Use and cleaning, these laminates are employed in the production of cabinets, tabletops, case goods, countertops, wood panels, and flooring in both residential and commercial buildings. Due to their excellent durability decorative high-pressure laminates are also becoming more and more necessary in the production of ready-to-assemble (RTA) furniture, laboratory tables, toilet cubicle systems, and kitchen tops. They can replace expensive flooring materials like marble, granite, and slate and act as a cheap alternative to natural materials. However, due to high manufacturing costs, they are more expensive than low-pressure laminates. Additionally, due to the expanding population and quick urbanization, more homes and businesses are being built in both established and developing nations.
  • In comparison to hardwood floors and other alternatives, decorative high-pressure laminates are simple to install and have superior mechanical and functional qualities. Additionally, they provide a great alternative for flat top surfaces like wall panelling, counters, and tables and benches in classrooms. These laminates are extremely robust and tear-resistant. They can endure shock and impact since they are shock and abrasion resistant, making them ideal for installation in high-traffic locations. They demand less money for installation because they may be installed using laminate adhesive or resin without the assistance of a professional.
  • The rise in demand for these laminates in the housing industry is another factor driving the decorative laminates market. In significant and developing areas including real estate, furniture, and modular kitchens, decorative laminates have emerged as a key component. The market for decorative laminates is anticipated to grow over the coming years as a result of decorative laminates’ low installation and maintenance costs. According to estimates, the residential sector will grow quickly in urban and semi-urban areas, and there will also be an increase in construction and restoration projects in North America and Europe. Strong rise in the GDP has been attributed to the industrial and services sectors’ significant expansion. The market for ornamental laminates has benefitted as a result. Thus, driving the Decorative High-Pressure Laminates market revenue.

Decorative High-Pressure Laminates Market Segment Insights

• Decorative High-Pressure Laminates Application Insights
  • The Decorative High-Pressure Laminates market segmentation, based on application, includes interior and exterior. The interior segment holds the largest market share in the market. Companies in the decorative laminates industry are expanding their output capacity in synchronized laminates and PVC (Poly Vinyl Chloride) laminates in addition to high pressure and low pressure laminates to increase their revenue streams. Synchronized laminates are widely advertised as enhancing overlays that look like real wood. These overlays are being created by manufacturers with imprinted surfaces that simulate real wood grain.
• Decorative High-Pressure Laminates End Use Insights
  • The Decorative High-Pressure Laminates market segmentation, based on end use, includes residential, commercial, and others. The residential category held the largest share in 2022. Manufacturers are diversifying their sources of income in the retail and office sectors. Modern 1mm laminates are becoming more and more popular in Indian offices since they provide a calm and relaxing environment. Zero finish laminates are more popular with consumers in busy areas like offices. The use of laminate in cabinets and countertops is expanding in the domestic remodeling and design sector. Manufacturers in the decorative laminates industry are making more affordable laminates available so that consumers can spend on other necessary items for home remodeling projects. As a result, producers are becoming more aware of laminates with a matte, high-gloss, or stone texture that provide a contemporary appearance in residential applications.
• Decorative High-Pressure Laminates Market, by End Use, 2022 & 2032 (USD Billion)

Decorative High-Pressure Laminates Regional Insights

By region, the study provides the market insights into North America, Europe, Asia-Pacific and Rest of the World. The Asia Pacific Decorative High-Pressure Laminates market, dominated the market in 2022 (45.80%). Due to rising demand from nations like China, India, and Japan, the Asia-Pacific region is anticipated to dominate the decorative laminates market and to have the quickest growth during the projected period. The need for furniture, wall panels, cabinets, etc. is anticipated to increase along with the demand for decorative laminates in the upcoming years due to rising construction activities in nations like China, India, Japan, and others. Numerous airport construction projects are either in the planned or development stages in China. Among these are Guangzhou Baiyun International Airport, Beijing Capital International Airport, Chengdu Shuangliu International Airport, and Chongqing Jiangbei International Airport. Moreover, China’s Decorative High-Pressure Laminates market held the largest market share, and the Indian Decorative High-Pressure Laminates market was the fastest growing market in the Asia-Pacific region.

Further, the major countries studied in the market report are The US, Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Archit Nuwood industries Business Data

Archit Nuwood Verticals

• Medium Density Fibreboard (MDF)
• High Density Fiberboard (HDF)
• Plain California Air Resources Board (CARB)
• High Pressure Laminate (HPL)

Archit Nuwood Product wise break-up

(₹ In Lakhs except percentages and ratios)

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Archit Nuwood Revenue contribution from Geography presence

(in %)

Archit Nuwood Supplier dependency

• for the seven months period ended October 30, 2023 and year ended March 31, 2023, 2022 and 2021, top 10 suppliers contributed around 73.30%, 41.20 %, 35.01 % and 66.02% respectively of purchases.

Archit Nuwood Machinery/Plants/Factory

Archit Nuwood Peer companies comparison

(₹ In Lakhs except percentages and ratios)

Archit Nuwood Subsidiary companies

• Archit Panels Private Limited

Archit Nuwood SWOT ANALYSIS

• STRENGTH
  • Production facilities close to availability of Raw material
  • High Quality Products
  • Serving Quality conscious customer base
  • Varied product mix to serve different customer segments
  • Satisfied customers with repeat purchase order
• WEAKNESS
  • Restricted Capital availability has led to restricted business
  • Lacks pricing advantage being a commodity product
• OPPORTUNITY
  • Ability to tie up with other players
  • Large Business house in the region and build on their existing reputation and service capability
  • Backward and Forward Integration feasible due to increasing demand for the inputs and products
• THREAT
  • Climatic Conditions affects business model
  • New Players entering in the same market
  • Changes in Government Policies

Archit Nuwood Business risk factors

• Archit Nuwood wholly owned Subsidiary i.e. Archit Panels Private Limited has applied for the Factory License to facilitate the business of manufacturing unit.
• Archit Nuwood is dependent upon few suppliers for the material requirements of our business. Further, we do not have definitive agreements or fixed terms of trade with most of our suppliers. Failure to successfully leverage our relationships with existing suppliers or to identify new suppliers could adversely affect our business operations.
  • for the seven months period ended October 30, 2023 and year ended March 31, 2023, 2022 and 2021, top 10 suppliers contributed around 73.30%, 41.20 %, 35.01 % and 66.02% respectively of purchases.
• If Archit Nuwood is unable to attract new clients or our existing clients do not renew their contract or default in payments, the growth of our business and cash flows will be adversely affected.
  • However, our top 10 customers contributed 38.15 %, 22.08%, 29.12 % and 44.70 % of our revenues from operations for the seven months period ended October 31, 2023 and for the year ended March 31, 2023, 2022 and 2021, respectively.

Archit Nuwood Financials

Archit Nuwood Key Financial Ratios

Archit Nuwood Key Performance Indicators

(₹ In Lakhs except percentages and ratios)

Archit Nuwood Balance Sheet

(₹ In Lakhs)

Archit Nuwood Profit & Loss

(₹ In Lakhs except percentages and ratios)

Archit Nuwood Capital structure

IPO Details

Archit Nuwood IPO Details

Archit Nuwood Object of the issue

Litigation involved

Gray Market Premium

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