Table of content
Associate Coaters Ltd Introduction:
Associated Coaters Ltd. is a company based in India specializing in pre-treatment and powder coating of aluminium extrusions used in the architectural and real estate industries. They’ve been in operation for over 22 years and have established themselves as a prominent player in eastern India for aluminium extrusion coating.
Here’s a quick summary about Associated Coaters Ltd.:
- Services: Pre-treatment and powder coating of aluminum extrusions.
- Industries Served: Architectural and Real Estate.
- Experience: 22 years .
- Key Clients: Approved Applicator for Akzonobel, Jotun, and Asian Paints in Architectural Coatings.
They emphasize quality and innovation in their work, and their commitment is reflected in their certifications and partnerships with major paint brands. If you’re looking for a company specializing in coating aluminum extrusions in India, Associated Coaters Ltd. seems like a strong contender.
Overview of Associate Coaters Ltd:
Company is engaged in the business of providing services by way of pre-treatment and powder coating of aluminium extrusions in Architect and Real Estate Industry. The process begins with a comprehensive cleaning, where the targeted surface of aluminium extrusions is thoroughly cleansed of any dirt, grease, or contaminants that might impede the subsequent coating process. Following this, a strategic chemical solution is applied to enhance the adhesion of the powder coating. This involves the application of an acidic solution for surface etching or the use of a specialized pretreatment agent to optimize surface wettability.
The application of powder coating itself is a precision art. Executed with an electrostatic spray gun, this method involves imparting a negative charge to the powder particles. These charged particles are then irresistibly drawn to the positively charged surface, creating a magnetic-like adhesion. The subsequent step involves the melting and fusion of these particles, resulting in a flawlessly even coating.
To fortify the durability of the coating, a carefully calibrated heating process follows. This involves subjecting the coated surface to elevated temperatures, the specifics of which depend on the unique characteristics of the powder coating employed. This curing process not only enhances durability but also ensures a lasting finish.
Post-curing, a meticulous inspection is conducted to guarantee uniform application and adherence to specified thickness standards. Any detected defects or imperfections are rectified at this stage, showcasing our unwavering commitment to delivering a flawless product. Only after passing our stringent quality checks does the coated item move to the final stages of packaging and shipment. Our dedication to precision and quality underscores every step of our process, ensuring that our customers receive nothing short of excellence in every coated aluminium extrusion.
History of Associate Coaters Ltd
Associate Coaters Ltd (ACL) is a relatively young company, incorporated on December 22, 2017 as a private limited company under the Companies Act, 2013.
Here’s a timeline of their milestones:
- December 22, 2017: Incorporated as Associated Coaters Private Limited.
- 2021: The company commenced its operations.
- 2023:
- Expanded its business operations by setting up a new coating line for PVDF (Polyvinylidene fluoride).
- Converted from a private limited company to a public limited company on October 24. Their name was changed to Associated Coaters Limited and a fresh certificate of incorporation was issued on December 19.
- Achieved compliance with ISO 9001:2015 standards.
Although their website claims 22 years of expertise, information from the Ministry of Corporate Affairs (MCA) records indicate they are a relatively new company . It’s possible they have prior experience in the field through the founders or as a different business entity.
Director of Associate Coaters Ltd
| Name | Designation |
| Jagjit Singh Dhillon | Managing Director |
| Harbhajan Singhthethi | Whole Time Director |
| Chetna Gupta | Additional Independent Director |
| Jay Kumar Shaw | Additional Independent Director |
Promoters of Associate Coaters Ltd
- Jagjit Singh Dhillon
- Navneet Kaur
| Particulars | Pre-Issue | |
| No. of Shares | % Holding | |
| Promoters | ||
| Navneet Kaur | 3,10,000 | 33.33 |
| Jagjit Singh Dhillon | 6,19,814 | 66.65 |
| Total (A) | 9,29,814 | 99.98 |
| Promoter Group | ||
| Jaswinder Singh | 31 | 0.00 |
| Sarabjit Kaur | 31 | 0.00 |
| Palwinder Kaur | 31 | 0.00 |
| Paramjit Singh | 31 | 0.00 |
| Harwinder Kumar | 31 | 0.00 |
| Bhupinder Singh | 31 | 0.00 |
| Total (B) | 186 | 0.02 |
| Promoters and Promoter Group(A+B) | 9,30,000 | 100.00 |
Strategy
- Sustained Emphasis on Resource Optimization
- Attracting and Nurturing Talent: A Priority
- Expanding Horizons and Broadening Customer Reach
- Elevating Operational Controls for Timely Service Delivery
Industry Outlook:
Strong economic growth in the first quarter of FY23 helped India overcome the UK to become the fifth-largest economy after it recovered from the COVID-19 pandemic shock. Real GDP at constant prices (2011-12) in the first quarter of 2023– 24 is estimated at Rs. 40.37 trillion (US$ 484.94 billion), showing a growth of 7.8% as compared to the first quarter of 2022-23 estimated at Rs. 37.44 trillion (US$ 449.74 billion). Given the release of pent-up demand and the widespread vaccination coverage, the contact-intensive services sector will probably be the main driver of development in 2022–2023. In 2023-24 (April-September), India’s service exports stood at US$ 164.89 billion. Furthermore, India’s overall exports (services and merchandise) in 2023-24 (April-September) were estimated at US$ 376.29 billion. Rising employment and substantially increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months.
Market size:
The services sector of India remains the engine of growth for India’s economy and contributed 53% to India’s Gross Value Added at current prices in FY22 (as per advance estimates). The services sector’s GVA increased by 6.5% in the third quarter (2022-23), and it was the main driver of aggregate GVA growth (accounting for approximately 84% of total GVA growth). The services industry performed well in H2:2022- 23, boosted by contact-intensive services and building activities. India’s services sector GVA increased at a CAGR of 11.43% to Rs. 101.47 trillion (US$ 1,439.48 billion) in FY20, from Rs. 68.81 trillion (US$ 1,005.30 billion) in FY16. Between FY16 and FY20, financial, real estate and professional services augmented at a CAGR of 11.68% (in Rs. terms), while trade, hotels, transport, communication and services related to broadcasting rose at a CAGR of 10.98% (in Rs. terms). India‘s IT and business services market is projected to reach US$ 19.93 billion by 2025. In March 2023, the Manufacturing Purchasing Managers’ Index (PMI) in India stood at 57.8. With the fastest growing (9.2%) service sector globally, the sector accounts for a 66% share of India’s GDP and generates about 28% of the total employment in India. As per the First Advance Estimates, Gross Value Added (GVA) in the services sector is estimated to grow at 9.1% in FY23, driven by 13.7% growth in the contact-intensive services sector.
Vision of Associate Coaters Ltd:
To lead the architectural coatings industry with innovative solutions, setting new standards in quality, sustainability, and client satisfaction. Through constant evolution and collaboration, we aim to be the forefront choice for exceptional coating excellence, transforming surfaces and elevating products to new heights.
TRENDS:
- On August 6th, 2023, Amrit Bharat Station Scheme was launched to transform and revitalize 1309 railway stations across the nation. This scheme envisages development of stations on a continuous basis with a long-term vision.
- On June 28th, 2023, the Ministry of Environment, Forests, and Climate Change introduced the ‘Draft Carbon Credit Trading Scheme, 2023’.
- From April 1st, 2023, Foreign Trade Policy 2023 was unveiled to create an enabling ecosystem to support the philosophy of ‘AtmaNirbhar Bharat’ and ‘Local goes Global’.
- In order to enhance India’s manufacturing capabilities by increasing investment and production in the sector, the government of India has introduced the Production Linked Incentive Scheme (PLI) for Pharmaceuticals.
- Prime Minister’s Development Initiative for North-East Region (PM-DevINE) was announced in the Union Budget 2022-23 with a financial outlay of Rs. 1,500 crore (US$ 182.35 million).
- Prime Minister Mr Narendra Modi has inaugurated a new food security scheme for providing free food grains to Antodaya Ann Yojna (AAY) & Primary Household (PHH) beneficiaries, called Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) from January 1st, 2023.
- India is expected to attract investment of around US$ 100 billion in developing the oil and gas infrastructure during 2019-23.
- The Government of India is expected to increase public health spending to 2.5% of the GDP by 2025.
- The Amrit Bharat Station scheme for Indian Railways envisages the development of stations on a continuous basis with a long-term vision, formulated on December 29th, 2022 by the Ministry of Railways.
- On October 7th, 2022, the Department for Promotion of Industry and Internal Trade (DPIIT) launched Credit Guarantee Scheme for Start-ups (CGSS) aiming to provide credit guarantees up to a specified limit by start-ups, facilitated by Scheduled Commercial Banks, Non-Banking Financial Companies and Securities and Exchange Board of India (SEBI) registered Alternative Investment Funds (AIFs).
- Telecom Technology Development Fund (TTDF) Scheme was launched in October 2022 by the Universal Service Obligation Fund (USOF), a body under the Department of Telecommunications. The objective is to fund R&D in rural- specific communication technology applications and form synergies among academia, start-ups, research institutes, and the industry to build and develop the telecom ecosystem.
- Home & Cooperation Minister Mr. Amit Shah laid the foundation stone and performed Bhoomi Pujan of Tanot Mandir Complex Project under Border Tourism Development Programme in Jaisalmer in September 2022.
Challenges involved in Associate Coaters Ltd:
- Ability to acquire and retain clients for our services;
- Services, products or pricing policies introduced by our competitors;
- Capital expenditure and other costs relating to our operations;
- The timing and nature of, and expenses incurred in, our marketing efforts;
- Recruiting, training and retaining sufficient skilled technical and management personnel;
- Adhering to our high quality and process execution standards;
- Maintaining high levels of customer satisfaction;
- Developing and improving our internal administrative infrastructure, particularly our financial, operational, communications, and other internal systems.
QUALITATIVE FACTORS of Associate Coaters Ltd:
- Experienced Promoters and Management Team
- Scalable Business Model
- Wide and Diverse Range of Product Offering
- Marketing & Branding Efforts
- Focus on Increase in Volume of Sales
- Increasing the number of Clients
- Building-up as on Professional Organization
- Continue to attract and retain talent
Share holding pattern of Associate Coaters Ltd:
| Particulars | Pre-Issue | |
| No. of Shares | % Holding | |
| Promoters | ||
| Navneet Kaur | 3,10,000 | 33.33 |
| Jagjit Singh Dhillon | 6,19,814 | 66.65 |
| Total (A) | 9,29,814 | 99.98 |
| Promoter Group | ||
| Jaswinder Singh | 31 | 0.00 |
| Sarabjit Kaur | 31 | 0.00 |
| Palwinder Kaur | 31 | 0.00 |
| Paramjit Singh | 31 | 0.00 |
| Harwinder Kumar | 31 | 0.00 |
| Bhupinder Singh | 31 | 0.00 |
| Total (B) | 186 | 0.02 |
| Promoters and Promoter Group(A+B) | 9,30,000 | 100.00 |
Business outlook of Associate Coaters Ltd
Verticals
- POWDER COATING
- PVDF COATING
- WOOD FILM COATING
- INDUSTRIAL FABRICATION
REVENUE FROM OUR TOP 10 CUSTOMERS
(₹ in lakhs)
| Sr.No. | Particulars | Period ended September 30, 2023 | March 31,2023 | March 31,2022 | March 31,2021 |
| 1. | Top 5 customers | 205.17 | 288.50 | 136.72 | 0 |
| 2. | Top 10 customers | 231.71 | 354.57 | 158.85 | 0 |
Capacity utilisation of Associate Coaters Ltd
| Capacity Utilization from 1st April2023 –30th September 2023 | ||
| Product Family | Automatic Coating Plant | Manual Coating Plant |
| Installed Capacity (MT) | 840 | 360 |
| Production (MT) | 625 | 220 |
| Capacity Utilization | 74.40% | 61.11% |
Business risk factors of Associate Coaters Ltd
- Registered Office from where company operate is not owned
- All the factory from where company operates business operations are not owned
- company had bought assets from our Promoter Mr. Jagjit Singh Dhillon and had not taken the valuation report to determine the price of the assets and also the price for such assets has not yet been paid.
- Ability to grow our business depends on our relationships with our dealers and customers, and any adverse changes in these relationships, or our inability to enter into new relationships, could negatively affect our business and results of operations.
- top five customers contribute majority of revenues (84.75 % of revenues) from operations. Any loss of business from one or more of them may adversely affect our revenues and profitability.
- There may be potential conflict of interests between our Company and other venture or enterprises promoted by our promoter.
- company purchases raw materials from proprietorship firm of promoter.
- business is capital intensive. If we experience insufficient cash flows to meet required payments on our debt and working capital requirements, there may be an adverse effect on our operations.
- Promoters and Promoter Group will continue to retain majority control over the Company after the Issue, which will allow them to influence the outcome of matters submitted to shareholders for approval.
- Company has a negative cash flow in its Investing activities of the Company in period ended on September 30, 2023 and the Financial year ended on March 31, 2023 and March 31, 2022 and Financing Activities in the Financial year ended on March 31, 2022. Sustained negative cash flow could impact our growth and business
(₹ in lakh)
| Particulars | For The period Ended on | For The Financial Year Ended On | ||
| September 30,2023 | March 31,2023 | March 31,2022 | March 31,2021 | |
| Net Cash used in Operating Activities | 20.74 | 62.81 | 51.56 | 0.0 |
| Net Cash used in Investing Activities | (46.45) | (3.33) | (55.97) | 0.0 |
| Net Cash from Financing Activities | 24.97 | (0.74) | 9.89 | 0.0 |
Competitive strength of Associate Coaters Ltd
- Robust Project Execution Capabilities and Proven Industry Expertise
- Nurturing Strong Customer Relationships for Sustained Business Success
- Quality Assurance Excellence
- Seasoned Leadership at the Helm
Road map for future
In the second quarter of FY24, the growth momentum of the first quarter was sustained, and high-frequency indicators (HFIs) performed well in July and August of 2023. India’s comparatively strong position in the external sector reflects the country’s generally positive outlook for economic growth and rising employment rates. India ranked 5th in foreign direct investment inflows among the developed and developing nations listed for the first quarter of 2022.
India’s economic story during the first half of the current financial year highlighted the unwavering support the government gave to its capital expenditure, which, in 2023-24, stood 37.4% higher than the same period last year. In the budget of 2023- 24, capital expenditure took lead by steeply increasing the capital expenditure outlay by 37.4 % in BE 2023-24 to Rs.10 lakh crore (US$ 120.12 billion) over Rs. 7.28 lakh crore (US$ 87.45 billion) in RE 2022-23. The ratio of revenue expenditure to capital outlay increased by 1.2% in the current year, signalling a clear change in favour of higher-quality spending. Stronger revenue generation because of improved tax compliance, increased profitability of the company, and increasing economic activity also contributed to rising capital spending levels.
Financials:
Key Financial Ratios
| Key Financial Performance | For Period ended September 30,2023 | FY 2022-23 | FY 2021-22 | FY 2020-21 |
| Revenue from operations | 232.96 | 358.94 | 139.41 | 0.00 |
| EBITDA | 51.62 | 81.48 | 22.42 | (0.14) |
| EBITDA Margin | 22.16% | 22.70% | 16.08% | – |
| PAT | 33.22 | 54.30 | 13.67 | (0.14) |
| PAT Margin | 14.26% | 15.13% | 9.80% | – |
| Networth | 103.57 | 70.34 | 16.05 | 2.38 |
| RoE % | 38.21% | 125.69% | 148.34% | (5.55)% |
| RoCE% | 32.44% | 91.11% | 70.66% | (5.27)% |
Balance Sheet
| (Rs. in Lakhs) | |||||||
| Particulars | As at 30.09.2023 | As at 31.03.2023 | As at 31.03.2022 | As at 31.03.2021 | |||
| I. | EQUITY AND LIABILITIES | ||||||
| 1 | Shareholders’ Funds | ||||||
| (a) | Share Capital | 3.00 | 3.00 | 3.00 | 3.00 | ||
| (b) | Reserves and Surplus | 100.57 | 67.34 | 13.05 | (0.62) | ||
| 2 | Non-Current liabilities | – | |||||
| (a) | Long-term Borrowings | 34.90 | 9.90 | 10.10 | 0.20 | ||
| (b) | Deferred Tax Liabilities (Net) | – | – | – | – | ||
| (c) | Long-term Provisions | 1.60 | 1.00 | 0.36 | |||
| 3 | Current Liabilities | ||||||
| (a) | Short-term Borrowings | – | – | – | – | ||
| (b) | Trade Payable | ||||||
| (I) | Dues payable to MSME Creditors | 16.38 | 7.03 | 9.68 | – | ||
| (II) | Dues payable to other than MSMECreditors | 97.17 | 94.60 | 87.93 | – | ||
| (c) | Other Current Liabilities | 92.91 | 93.98 | 72.84 | 0.14 | ||
| (d) | Short-term Provisions | 24.18 | 19.28 | 4.84 | – | ||
| TOTAL | 370.71 | 296.12 | 201.81 | 2.72 | |||
| II. | ASSETS | ||||||
| 1 | Non-current Assets | ||||||
| (a) | Property, Plant & Equipment & IntangibleAssets | ||||||
| (i) | Property, Plant & Equipment | 87.55 | 47.80 | 52.03 | – | ||
| (ii) | Capital Work-in-progress | – | – | – | – | ||
| (b) | Deferred Tax Assets (Net) | 0.27 | 0.07 | 0.04 | – | ||
| (c) | Non- Current Investments | – | – | – | – | ||
| (d) | Long-term Loans and Advances | – | – | – | – | ||
| (e) | Other Non- Current Assets | – | – | – | 0.07 | ||
| 2 | Current Assets | ||||||
| (a) | Inventories | 29.15 | 3.93 | 2.85 | – | ||
| (b) | Trade Receivables | 149.24 | 150.91 | 135.87 | – | ||
| (c) | Cash and Cash Equivalents | 66.14 | 66.87 | 8.14 | 2.65 | ||
| (d) | Short Term Loans & Advances | 15.09 | 19.58 | 0.02 | – | ||
| (e) | Other Current Assets | 23.28 | 6.97 | 2.86 | – | ||
| TOTAL | 370.71 | 296.12 | 201.81 | 2.72 | |||
Profit & Loss
| (Rs. in Lakhs) | ||||
| Particulars | For the Half year ended 30.09.2023 | For the year ended 31.03.2023 | For the year ended 31.03.2022 | For the year ended 31.03.2021 |
| Revenue from operations | 232.96 | 358.94 | 139.41 | – |
| Other income | – | – | – | – |
| Total Income | 232.96 | 358.94 | 139.41 | – |
| Expenses: | ||||
| Cost of Materials Consumed | 161.91 | 236.57 | 103.57 | – |
| Employee Benefit Expenses | 5.53 | 22.17 | 10.36 | – |
| Finance Cost | 0.03 | 0.54 | 0.01 | – |
| Depreciation and Amortization Expenses | 6.69 | 7.56 | 3.94 | – |
| Other Expenses | 13.89 | 18.73 | 3.07 | 0.14 |
| Total Expenses | 188.06 | 285.57 | 120.94 | 0.14 |
| Profit before Exceptional Items | 44.90 | 73.37 | 18.47 | (0.14) |
| Exceptional Items | – | – | – | – |
| ‘ -Loss on Sale of Investment | ||||
| Profit/(Loss) before Tax | 44.90 | 73.37 | 18.47 | (0.14) |
| Tax Expenses: | ||||
| Current Tax | 11.87 | 19.11 | 4.84 | – |
| Mat Credit Entitlement | – | – | – | – |
| Deferred Tax | (0.20) | (0.03) | (0.04) | – |
| Profit/(Loss) for the year | 33.22 | 54.30 | 13.67 | (0.14) |
| Earnings per equity share: | ||||
| Basic (inRs.) | 3.57 | 5.84 | 1.47 | – 0.01 |
| Diluted (inRs.) | 3.57 | 5.84 | 1.47 | (0.01) |
Cash Flow
(₹ in lakh)
| Particulars | For The period Ended on | For The Financial Year Ended On | ||
| September 30, 2023 | March 31 ,2023 | March 31 ,2022 | March 31, 2021 | |
| Net Cash used in Operating Activities | 20.74 | 62.81 | 51.56 | 0.0 |
| Net Cash used in Investing Activities | (46.45) | (3.33) | (55.97) | 0.0 |
| Net Cash from Financing Activities | 24.97 | (0.74) | 9.89 | 0.0 |
Share capitalisation
| STATEMENT OF CAPITALISATION | |
| PARTICULARS | Pre-Offer 30.09.2023 |
| Debt | |
| – Short Term Debt | – |
| – Long Term Debt | 34.90 |
| Total Debt | 34.90 |
| Shareholders ‘Fund (Equity) | |
| – Share Capital | 3.00 |
| – Reserves & Surplus | 100.57 |
| Total shareholders’ Fund(Equity) | 103.57 |
| Long Term Debt/ Equity(In Ratio) | 0.34 |
| Total Debt/ Equity(In Ratio) | 0.34 |
SWOT
STRENGTHS
- Specialized Services:
- The company specializes in the pre-treatment and powder coating of aluminium extrusions, showcasing a high level of expertise in its niche.
- Strategic Location:
- Situated strategically in Kolkata, with a strong presence in eastern India, the company has positioned itself as a key player in the region.
- Approved Applicator:
- The status of being the first approved applicator of Akozonobel, Jotun, and Asian Paints in architectural coating in eastern India establishes a strong competitive advantage.
- Diverse Coating Lines:
- The company has invested in various coating lines, including automatic powder coating, wood finish, and PVDF coating, showcasing versatility in its services.
WEAKNESSES
- Limited Geographic Presence:
- While the company has a strong presence in eastern India, there might be opportunities for expansion in other regions that are yet to be explored.
- Dependence on Specific Suppliers:
- Reliance on specific suppliers for raw materials may pose a vulnerability in the supply chain if any disruptions occur.
OPPORTUNITIES
- Market Expansion:
- Exploring untapped markets in other Indian states and international regions can provide avenues for business growth.
- Diversification of Services:
- The company can explore diversifying its services further, potentially expanding into related segments within the coating industry.
- Growing Industry:
- The increasing demand for powder coating and architectural coating presents opportunities for capturing a larger market share.
THREATS
- Intense Competition:
- Competing with both organized and unorganized players in the powder coating sector may pose challenges, necessitating continuous innovation and differentiation.
- Raw Material Price Fluctuations:
- The fluctuation in prices of raw materials, such as powder and chemicals, can impact the company’s cost structure and profitability.
- Economic Downturn:
- Economic uncertainties and downturns can impact the construction and manufacturing sectors, affecting the demand for powder coating services.
- Environmental Regulations:
- Stringent environmental regulations may necessitate investments in eco-friendly practices, impacting operational costs.
IPO details
Issue Details
| Issue Type | Fresh Issue |
| Offer Size | ₹5.11 Crore |
| Issue Price | ₹121 per Share |
| Lot Size | 1000 Shares |
| Open Date | May 30, 2024 |
| Close Date | June 3, 2024 |
| Allotment Date (Tentative) | June 4, 2024 |
| Listing Date (Tentative) | June 6, 2024 |
| Listing Exchange | BSE SME |
Why need funds
(₹in lakhs)
| Sr.No. | Particulars | Total Estimated Expenditure to be funded from IPO Proceeds | Estimated deployment of Net Proceeds by the Financial Year ended March 31, 2024 | Estimated deployment of Net Proceeds by the Financial Year ended March 31, 2025 |
| 1 | Funding Capital Expenditure towards installation of Plant &Machinery in our existing premises | 148.65 | 50.00 | 98.65 |
| 2 | Working Capital Requirements | 200.00 | 50.00 | 150.00 |
| 3 | General Corporate Purposes | |||
| Total |
Litigation involved
Refer DRHP page no.s of 154-159
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