Resourceful Automobile’s IPO Overvalued or Undervalued?

Resourceful Automobile Introduction

Resourceful Automobile Limited is a dealership firm specializing in Yamaha two-wheelers, operating under the showroom name “Sawhney Automobiles.” Founded in 2018, the company offers a comprehensive range of motorcycles and scooters to meet diverse customer needs.

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Brief about Resourceful Automobile

Summary of the business of Resourceful Automobile

The Company is engaged in the business as per Memorandum of Association of the company of buying, selling, dealing in, automobiles, motorcars, lorries, buses, vans, motorcycles, cycle-cars, motor, scooters, carriages, amphibious vehicles, and vehicles suitable for propulsion on land, sea or in the air or in any combination thereof and vehicles of all descriptions, whether propelled or assisted by means of petrol, diesel, spirit, steam, gas, electrical, animal, or other power, and of internal combustion and other engines, chassis-bodies and other components, parts and accessories and all machinery, implements, utensils, appliances, apparatus, lubricants, solutions enamels and all things capable of being used for, in, or in connection with maintenance, and working of motors.

History of Resourceful Automobile

Resourceful Automobile Company was originally incorporated as Private Limited, under the Companies Act, 2013 (“Companies Act”) in the name and style of “Resourceful Automobile Private Limited” on February 21st, 2018, vide Certificate of Incorporation issued by the Registrar of Companies, Delhi & Haryana. Later on, company was converted into public limited company, the name of the Company has changed to “Resourceful Automobile Limited” and for the same fresh Certificate of Incorporation dated October 25th, 2023 was issued by the Registrar of Companies, Delhi & Haryana.

Promoters, Mr. Rahul Sawhney, Mrs. Bindu Sawhney and Mrs. Megha Chawla laid down the foundation of Resourceful Automobile company in the year 2018 as a Private Limited in the name of “M/s Resourceful Automobile Private Limited” with a vision to establish itself as a one of the most trusted and reliable company in delivering premium bikes. The Company is engaged in the business as per Memorandum of Association of the company of buying, selling, dealing in, automobiles, motorcars, lorries, buses, vans, motorcycles, cycle-cars, motor, scooters, carriages, amphibious vehicles, and vehicles suitable for propulsion on land, sea or in the air or in any combination thereof and vehicles of all descriptions, whether propelled or assisted by means of petrol, diesel, spirit, steam, gas, electrical, animal, or other power, and of internal combustion and other engines, chassis-bodies and other components, parts and accessories and all machinery, implements, utensils, appliances, apparatus, lubricants, solutions enamels and all things capable of being used for, in, or in connection with maintenance, and working of motors.

Its object is also to carry on the business of trading of sale, import, export, distribution, and dealership in automobile parts of all kinds and descriptions, automotive and other gears, transmission and other axles, universal joints, springs, leaves, head lamps, sealed beams, induction hardened pins, axles, alloy springs, accessories and fittings of all kinds and to act as brokers and marketing agents for aforesaid items.

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Promoters & Board of Directors of Resourceful Automobile

• The Promoters of Resourceful Automobile Company are Mr. Rahul Sawhney, Mrs. Bindu Sawhney and Mrs. Megha Chawla.

Board of directors of Resourceful Automobile

Share Holding pattern of Resourceful Automobile

Strength of Resourceful Automobile

• Experienced Promoter and Management Team
• Product Range and Quality Service
• Locational Advantage
• Brand Partnerships
• Online Presence.

Strategies of Resourceful Automobile

• Enhance customer base by opening New Showrooms
• Strengthen Brand Value
• Expanding our product range to add more value-added products

Industry Outlook

The Indian two-wheeler industry has witnessed a steady increase in and production over the years contributing to this growth include rising disposable incomes, expanding middle- class, improving infrastructure, and increasing urbanization Additionally, the easy availability of financing options has made two-wheelers more accessible to a broader consumer base

In order to meet the diverse demands and tastes of its customers, major local and foreign businesses compete in the Indian two-wheeler industry by offering a variety of models. Intense rivalry on the market drives ongoing product innovation, technical improvements, and aggressive marketing tactics.

In India, motorcycles account for a sizeable percentage of the two-wheeler market, with commuter and luxury models enjoying widespread customer appeal. In recent years, scooters have also gained a lot of popularity, especially among female riders and urban commuters.

Government laws and rules have a big influence on the business world. Technology developments and the adoption of cleaner, safer automobiles are results of the introduction of tighter emission standards and safety requirements.

Additionally, the government has started a number of programs and incentives to encourage the use of electric two- wheelers and lessen pollution.

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Fuel costs fluctuation, shifting customer tastes, escalating competition from alternative forms of transportation, and the need for sustainable mobility solutions are all issues that the business must deal with. In order to address environmental concerns and satisfy upcoming regulatory requirements, manufacturers are concentrating on releasing electric and hybrid cars.

In India, the two-wheeler market is still thriving, thanks to a number of developments in technology, customer behaviour, government policies, and economic growth. The sector is positioned for more growth and transformation in the upcoming year due to changing trends and market needs.

PARTICIPANTS IN THE TWO- WHEELER MARKET IN INDIA

India’s two-wheeler industry is home to several major companies that dominate the market. Here are some of the prominent two-wheeler manufacturers in India:

• Hero MotoCorp: Hero MotoCorp is India’s top two-wheeler producer. It provides a wide selection of motorcycles and scooters to meet the needs of various market sectors. The Splendor, Passion, HF Deluxe, Maestro, and Pleasure are some of its well-known models.
• Bajaj Auto: Bajaj Auto is another leading two-wheeler manufacturer in India. It is known for its diverse portfolio of motorcycles, including commuter bikes, sport bikes, and performance bikes: The popular models from Bajaj Auto include the Pulsar, Platina, Domineer, and CT.
• TVS Motor Company: TVS Motor Company is a prominent player in the Indian two- wheeler market. It offers motorcycles, scooters, and mopeds. TVS Jupiter, Apache, Star City Plus, and XL 100 are some of the well-known models from TVS Motor Company.
• Honda Motorcycle and Scooter India (HMSI): HMSI is a subsidiary of Honda Motor Company, Japan. It is known for its wide range of scooters and motorcycles. Some popular models from HMSI include Activa, Dio, CB Shine, CB Unicorn, and Hornet
• Yamaha Motor India: Yamaha Motor India is a renowned manufacturer of motorcycles and scooters. It offers a diverse lineup of models ranging from entry-level bikes to high- performance motorcycles. Yamaha FZ. YZF R15, Fascino, and Ray-Z are among its popular models.
• Suzuki Motorcycle India: Suzuki Motorcycle India is renowned for its fashionable and motorbikes that are focused on performance. It provides a variety of bikes, such as sports bikes, cruisers, and commuter cycles. Popular scooters made by the business include the Suzuki Access and Bergman Street.
• Others: These are only a few of India’s top two-wheeler manufacturers. There are further participants who add to the industry’s competitive environment, such as Piaggio, Mahindra Two Wheelers, and Royal Enfield.

GROWTH AND DEVELOPMENT OF TWO -WHEELER INDUSTRY IN INDIA

The growth and development of the two-wheeler industry in India have been remarkable over the years. Here are some key factors and trends that have contributed to its progress:

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• Growing Demand: The demand for two-wheelers in India has increased as a result of urbanization, a growing middle class, and increased affordability. Two-wheelers are seen as an affordable and practical means of transportation, especially in crowded metropolitan areas.
• Supportive governmental initiatives: The two-wheeler sector of the automotive industry, as well as other policies and initiatives, have been supported by the Indian government. Measures including decreased excise taxes, tax breaks, and loosened license requirements have boosted manufacturing and investment in the industry.
• Product Innovation: To keep up with changing consumer demands, two-wheeler manufacturers constantly release cutting-edge and new models. The development of the industry has been aided by features including increased fuel economy, safety improvements, enhanced design, and networking possibilities.
• Diversification of Product Portfolio: Manufacturers have expanded their product portfolios to cater to a wide range of customer segments. This includes motorcycles, scooters, and electric two-wheelers, offering a variety of options in terms of design, performance, and price range.
• Market Competition: There are many domestic and foreign competitors seeking for market dominance in India’s two-wheeler business, making it quite competitive. Better product quality, better customer service, and competitive pricing have all resulted from this rivalry, customers gain from it.
• Rural Market Penetration: Given the high potential for two-wheeler sales in rural regions, manufacturers have concentrated on growing their presence there. Further aiding the industry’s expansion have been more financing choices and upgraded infrastructure in rural areas.
• Export Opportunities: By exporting their goods to several foreign countries, Indian two-wheeler producers have widened their market reach. This has helped build worldwide brand awareness, technology partnerships, and income generating.
• A shift toward electric two-wheelers: With a focus on sustainability and environmental issues, electric two- wheelers are becoming more popular in India. To keep up with changing consumer tastes and governmental requirements, manufacturers are investing in the research and development of electric cars.

TWO-WHEELER INDUSTRY ANALYSIS

The two-wheeler industry analysis involves examining various aspects of the industry, including market trends, competitive landscape, growth drivers, challenges, and future prospects. Here are some key components typically included in a two-wheeler industry analysis:

• Market Size and Growth: Assessing the overall size of the two-wheeler market in terms of sales volume, revenue, and market share. Analyzing historical data and projecting future growth rates based on factors such as population growth, urbanization, and economic indicators.
• Market Segmentation: Dividing the market into several categories depending on the kind of product (motorcycles, scooters, mopeds), price range, engine size, target market, and geographic areas. knowing each segment’s market share and potential for expansion.
• Analyzing the industry’s top companies: Market shares, product portfolios, price tactics, distribution networks, and branding efforts. Determining each player’s main SWOT analysis strengths, weaknesses, opportunities, and threats.
• Customer Behaviour and Preferences: Investigating customer purchasing patterns, preferences, and the elements that influence decisions to buy, including cost, brand reputation, features, appearance, fuel efficiency, and after-sales support, recognizing new trends and changes in customer tastes.
• Regulatory Environment: Analysing the effects of governmental policies and regulations on the market, including import/export laws, safety standards, tax laws, and incentives for electric car use. evaluating the impact of regulatory changes on market dynamics, price, and product development.
• Technological Advancements: Analysing technological innovations in the industry, such as engine technology, hybrid and electric vehicles, connectivity features, and safety enhancements. Understanding the impact of technology on product differentiation, competitive advantage, and consumer demand.
• Supply Chain and Distribution: Analyzing the industry’s supply chain management techniques, dealership networks, and distribution channels, evaluating the effectiveness of inventory management, aftermarket services, and logistics.
• Opportunities and Difficulties: Finding chances for growth, such as underserved market niches, geographic expansion, product diversification, or strategic alliances evaluating obstacles such rising competition and changing raw material prices, compliance with regulations and shifting customer expectations.
• Future Outlook: Offering information on the two-wheeler industry’s potential growth areas. such as new trends, technological changes, industry consolidation, and future growth sectors. predicting market trends and suggesting competitive and long-term growth plans.

Overall, a comprehensive two-wheeler industry analysis combines qualitative and quantitative research to provide a holistic understanding of the industry’s current state, challenges, and opportunities for stakeholders.

MAJOR FACTORS AFFECTING THE INDUSTRY

• Economic Factors: Consumer purchasing power and demand for two-wheelers are greatly influenced by income levels, inflation rates, and interest rates. Predicting market trends and consumer behaviour requires an understanding of these economic forces.
• Social Factors: Changing lifestyles, urbanization, and population demographics play a crucial role in shaping consumer preferences and mobility patterns. Identifying the social factors that influence the two-wheeler industry helps in developing targeted marketing strategies and product innovations.
• Technological Factors: Product innovation and customer preferences are influenced by improvements in engine technology, safety features, and fuel efficiency. Understanding the technology drivers of the two-wheeler market may help businesses remain competitive and satisfy changing customer wants.
• Regulatory Factors: The operational environment and market dynamics of the two-wheeler sector are significantly impacted by emission standards, taxation laws, and government initiatives. Regulation adherence and making use of government initiatives may have an impact on the industry’s development and profitability.
• Others: Possibilities for growth in the two-wheeler sector, such as the potential for electric two-wheelers or market expansion in particular locations, may be identified by the research, along with associated difficulties. To assist industry stakeholders successfully manage issues, such as shifting fuel costs or growing competition, challenges should also be emphasized.

GOVERNMENT INITIATIVES AND POLICIES

• Production-linked Incentive (PLI) Scheme
  • In September 2021, the Indian government issued a notification regarding a PLI scheme for automobile and auto components worth Rs. 25,938 crore (US$ 3.49 billion). This scheme is expected to bring investments of over Rs. 42,500 (US$ 5.74 billion) by 2026.
  • The Union Cabinet outlaid Rs. 57,042 crore (US$ 7.81 billion) for the automobiles & auto components sector under the Department of Heavy Industries.
  • In November 2021, under the production-linked incentive (PLI) scheme for automobiles, the Union Government added >100 advanced technologies, including alternate fuel systems such as compressed natural gas (CNG), Bharat Stage VI compliant flexfuel engines, electronic control units (ECU) for safety, advanced driver assist systems and e-quadricycles.
  • In May 2021, the Central Government approved a PLI scheme for manufacturing Advanced Chemistry Cells (ACC) with a budget of Rs. 18,100 crore (US$ 2.33 billion).
• The Automotive Mission Plan 2016-26 (AMP 2026)
  • AMP 2026 targets a four-fold growth in the automobile sector in India which include manufacturers of automobiles, auto components and tractors over the next 10 years.
• NATRIP
  • Setting up of R&D centres at a total cost of US$ 388.5 million to enable the industry to be on par with global standards.
  • Under National Automotive Testing and R&D Infrastructure Project (NATRIP), five testing and research centres have been established in the country since 2015.
• FAME
  • The Government approved FAME and plans to cover all vehicle segments and all forms of hybrid & pure EVs. FAME-I was extended until March 31, 2019.
  • In February 2019, the Government of India approved FAME-II scheme with a fund requirement of Rs. 10,000 crore (US$ 1.2 billion) for FY20-22. The Centre approved US$ 97.77 million (Rs. 800 crore) for 7,432 public fast charging stations under the FAME Scheme Phase II. The FAME Scheme was extended for a further period of 2 years up to March 31st, 2024.
• Clean Tech Scheme
  • The Indian government has planned ~US$ 3.5 billion in incentives over a five-year period until 2026 under a revamped scheme to encourage production and export of clean technology vehicles.
• Flex-fuel Engines
  • In September 2021, Minister of Road Transport and Highways, Mr. Nitin Gadkari, announced that government is planning to make it mandatory for car manufacturers to produce flex-fuel engines after getting the required permissions from the Supreme Court of India.
• Ethanol Blending
  • In July 2022, the Government amended the National Policy on Biofuels – 2018. The target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030 was brought forward to 2025-26.
• Battery Waste Management Rules, 2022
  • Ministry of Environment, Forest and Climate Change, Government of India published the Battery Waste Management Rules, 2022 on August 24th, 2022 for environmentally sound management of waste batteries, including EV batteries.

GROWTH DRIVERS

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• Policy support
  • Initiatives like Make in India, the Automotive Mission Plan 2026, and NEMMP 2020 will give a huge boost to the sector.
  • The government introduced a battery swapping policy, which will allow drained batteries to be swapped with charged ones at designated charging stations, thus making EVs more viable for potential customers.
  • To install electric vehicle supply equipment (EVSE) infrastructure for EVs, various public sector firms, ministries, and railways have come together to create infrastructure, and manufacture components.
• Growing demand
  • Rising income and a growing young population.
  • Greater availability of credit and financing options.
  • Demand for commercial vehicles increasing due to the high level of activity in the infrastructure sector.
• Support infrastructure and high investment
  • In April 2023, Power Finance Corporation Ltd (PFC) approves US$ 76.39 million (Rs.633 crore) loan for 5,000 passenger EVs and 1,000 cargo EVs.
  • In March 2023, the Central government sanctions US$ 72.41 million (Rs. 800 crore) under FAME India Scheme Phase II to Indian Oil (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), for setting up 7,432 public fast charging stations across the country.
  • In November 2022, Mahindra & Mahindra announced that they had tied up with three electric vehicle infrastructure partners – Jiobp, Statiq, and Charge+Zone – to offer charging solutions for their range of passenger electric vehicles.
  • In July 2021, India inaugurated the national automotive test tracks (NATRAX), which is Asia’s longest high-speed track to facilitate automotive testing.
  • From April 2000-December 2022, the automobile sector received around 5.45% (US$ 34.11 billion) of the total equity FDI inflows to India.

Business Data of Resourceful Automobile

Verticals of Resourceful Automobile

• Buying, selling, dealing in, automobiles, motorcars, lorries, buses, vans, motorcycles, cycle-cars, motor, scooters, carriages, amphibious vehicles,

Customer dependency of Resourceful Automobile

• Resourceful Automobile total portion (100%) of our business operations are concentrated in the states of Delhi and any adverse developments in these states could have an adverse effect on business, results of operations and financial condition.

Machinery/Plants/Factory of Resourceful Automobile

Capacity Utilisation of Resourceful Automobile

• As Resourceful Automobile do not have any own manufacturing facility and we are mainly engaged in trading business, thus any specific data relating to capacity and capacity utilization does not applicable to Company. (Source DRHP)

Competition

Resourceful Automobile business operates within a market characterized by intense competition, with numerous unlisted players in the dealership segment. The primary determinant for clients in choosing products is often pricing. It may encounter competition from peers who share similarities in one or more divisions of our business. The competitive landscape spans across small, regional, national, and international players, adding to the complexity of market. Despite the challenges posed by formidable competitors, our extensive experience in the industry positions us well to deliver high-quality products, meeting the discerning demands of customers. Notably, the industry features minimal entry barriers, potentially leading to increased competition, especially with any expansion in the capacity of existing producers. Resourceful Automobile commitment to excellence extends beyond the point of sale, as we pride ourselves on offering exceptional after-sales service, further enhancing the overall customer experience.

Peer companies comparison of Resourceful Automobile

• There are no listed companies in India whose business portfolio is comparable with that of Resourceful Automobile business and comparable to scale of operations. (Source DRHP)

SWOT ANALYSIS of Resourceful Automobile

• STRENGTH
  • Experienced Management Team
  • Quality Products
  • Locational Advantage
• WEAKNESS
  • Working Capital Intensive Business
  • Limited Geographical Reach
  • Inability to adopt technology advancement
• OPPORTUNITY
  • Growing domestic demand
  • Increase in per capita income of Indian residents
• THREATS
  • High level competition
  • Technological Change

Business risk factors involved in Resourceful Automobile

• The automotive industry is sensitive to changing economic conditions and various other factors. Any decline in demand for vehicles by individuals or entities may adversely impact business prospects and results of operations.
• A large portion of business revenue is derived from dealership of Yamaha (Commercial). Any adverse developments in the growth, demand or sales for these OEMs could have an adverse effect on business, results of operations and financial condition.
• Increasing competition among automotive dealerships through online and offline marketing reduces profit margins on vehicle sales and related businesses.
• Resourceful Automobile may fail to successfully implement growth strategy, which includes acquiring existing dealerships, diversifying portfolio and penetrating deeper into existing geographic locations which may adversely affect financial condition and results of operations.
• Resourceful Automobile total portion (100%) of business operations are concentrated in the states of Delhi and any adverse developments in these states could have an adverse effect on our business, results of operations and financial condition.
• Resourceful Automobile vehicles and commercial vehicles sale is subject to seasonality, which may contribute to fluctuations in results of operations and financial condition.
  • Sale of bikes and commercial vehicles is subject to seasonality as we typically see a dip in sales during the first quarter of each financial year. Sales are considerably higher during the second and third quarter of the year due to the festival season like Diwali, Navratri, Dussehra etc.

Financials of Resourceful Automobile

Key Performance Indicators of Resourceful Automobile

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Balance Sheet of Resourceful Automobile

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Profit & Loss of Resourceful Automobile

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Cash Flow of Resourceful Automobile

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Capital structure of Resourceful Automobile

IPO Details of Resourceful Automobile

Resourceful Automobile IPO Details

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Litigation involved

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