Visaman Global Sales Limited IPO: A Recipe for Disaster?

Visaman Global Sales Limited Introduction

Visaman Global Sales Limited is a company that offers a diverse range of products, including round pipes, square pipes, rectangle pipes, various structural steel specifications, BGL coils, GP (GI) coils, HR loops, CR curls, variety-covered curls, MS sheets, GP and GC sheets, variety-covered sheets, material PUF board, and wall PUF board

Brief about Visaman Global Sales Limited

Summary of the business of Visaman Global Sales Limited

Company is engaged in the business of supply of round pipes, square pipes, rectangle pipes, various specification of structural steels, BGL coils, GP(GI) coils, HR coils, CR coils, colour coated coils, MS sheets, GP and GC sheets, CR sheets, HR sheets and plates, colour coated sheets, roofing PUF panel, wall PUF panel etc. Further, we also provide the credit facility to our existing customers as value added service. In addition, we provide the facility of customization to meet the specific requirement of our customers. We outsource the process of modification and alteration to the third party. Additionally, we facilitate onsite delivery of our products to the customers. We are one of the dealers of APL Apollo Tubes Limited.

History of Visaman Global Sales Limited

Company was originally incorporated on June 27, 2019 under the name “Visaman Global Sales Limited”

Mr. Sureshchandra Gulabchand Vasa, Mr. Mitulkumar Sureshchandra Vasa, Ms. Avni M. Vasa, Ms. Ilaben Sureshchandra Vasa, Mr. Kular Brijesh N., Mr. Talsaniya Bhavesh D. and Mr. Kaushik Shah were the initial subscriber to the Memorandum of Association of our Company. Mr. Sureshchandra Gulabchand Vasa, Mr. Mitulkumar Sureshchandra Vasa, Ms. Avni M Vasa, Ms. Ilaben Sureshchandra Vasa and Mr. Kular Brijesh N. are current promoters of the company.

Company is engaged in the business of supply of round pipes, square pipes, rectangle pipes, various specification of structural steels, BGL coils, GP(GI) coils, HR coils, CR coils, colour coated coils, MS sheets, GP and GC sheets, CR sheets, HR sheets and plates, colour coated sheets, roofing PUF panel, wall PUF panel etc. Further, we also provide the credit facility to our existing customers as value added service. In addition, we provide the facility of customization to meet the specific requirement of our customers. We outsource the process of modification and alteration to the third party. Additionally, we facilitate onsite delivery of our products to the customers. We are one of the dealers of APL Apollo Tubes Limited.

Promoters & Board of Directors of Visaman Global Sales Limited

The promoters of our company are Mr. Mitul kumar Sureshchandra Vasa, Mr. Suresh chandra Gulab chand Vasa, Ms. Avni M. Vasa, Ms. Ilaben Suresh chandra and Mr. Kular Brijesh N

Board of directors of Visaman Global Sales Limited

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Share Holding pattern of Visaman Global Sales Limited

Qualitative Factors of Visaman Global Sales Limited

• Strong Customer Base
• Wide range of our products
• Leveraging the experience of our Promoters and Management Team
• Comprehensive solution for logistics requirement
• Existing Supplier Relationship
• Location Advantage
• ISO Certified Organization
• In depth understanding of customers’ requirements

Strategy of Visaman Global Sales Limited

• Reduction of operational costs and improving operational efficiencies
• Focus on cordial relationship
• Strengthen our brand value
• Focus on increase in volume of sales
• Entering into manufacturing activities

Industry Outlook (Visaman Global Sales Limited)

One of the primary forces behind industrialization has been the use of metals. Steel has traditionally occupied a top spot among metals. Steel production and consumption are frequently seen as measures of a country’s economic development because it is both a raw material and an intermediary product. Therefore, it would not be an exaggeration to argue that the steel sector has always been at the forefront of industrial progress and that it is the foundation of any economy. The Indian steel industry is classified into three categories – major producers, main producers and secondary producers.

India is the world’s second-largest producer of crude steel, with an output of 125.32 MT of crude steel and finished steel production of 121.29 MT in FY23.

India’s steel production is estimated to grow 4-7% to 123-127 MT in FY24.
The growth in the Indian steel sector has been driven by the domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India’s manufacturing output.
The Indian steel industry is modern, with state-of-the-art steel mills. It has always strived for continuous modernisation of older plants and up-gradation to higher energy efficiency levels.

Market Size

In the past 10–12 years, India’s steel sector has expanded significantly. Production has increased by 75% since 2008, while domestic steel demand has increased by almost 80%. The capacity for producing steel has grown concurrently, and the rise has been largely organic.

• In FY23, the production of crude steel and finished steel stood at 125.32 MT and 121.29 MT respectively.
• In FY24 (until November 2023), the production of crude steel and finished steel stood at 94.01 MT and 88.81 MT respectively.
• In FY23, crude and finished steel production stood at 125.32 MT and 121.29 MT respectively. In July 2023, crude steel production in India stood at 11.52 MT. In July 2023, finished steel production stood at 10.53 MT.
• In FY24 (until November 2023), the consumption of finished steel stood at 86.97 MT.

Government Initiatives

Some of the other recent Government initiatives in this sector are as follows:

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• In October 2021, the government announced guidelines for the approved specialty steel production-linked incentive (PLI) scheme.
• In October 2021, India and Russia signed an MoU to carry out R&D in the steel sector and produce coking coal (used in steel making).
• In July 2021, the Union Cabinet approved the production-linked incentive (PLI) scheme for specialty steel. The scheme is expected to attract investment worth ~Rs. 400 billion (US$ 5.37 billion) and expand specialty steel capacity by 25 million tonnes (MT), to 42 MT in FY27, from 18 MT in FY21.
• In June 2021, Minister of Steel & Petroleum & Natural Gas, Mr. Dharmendra Pradhan addressed the webinar on ‘Making Eastern India a manufacturing hub with respect to metallurgical industries’, organised by the Indian Institute of Metals. In 2020, ‘Mission Purvodaya’ was launched to accelerate the development of the eastern states of India (Odisha, Jharkhand, Chhattisgarh, West Bengal and the northern part of Andhra Pradesh) through the establishment of an integrated steel hub in Kolkata, West Bengal. Eastern India has the potential to add >75% of the country’s incremental steel capacity. It is expected that of the 300 MT capacity by 2030-31, >200 MT can come from this region alone.
• In June 2021, JSW Steel, CSIR-National Chemical Lab (NCL), Scottish Development International (SDI) and India H2 Alliance (IH2A) joined forces to commercialise hydrogen in the steel and cement sectors.
• Under the Union Budget 2023-24, the government allocated Rs. 70.15 crore (US$ 8.6 million) to the Ministry of Steel.
• In addition, an investment of Rs. 75,000 crore (US$ 9.15 billion) (including Rs. 15,000 crore (US$ 1.83 billion) from private sources) has been allocated for 100 critical transport infrastructure projects for last and first mile connectivity for various sectors such as ports, coal, and steel.
• In January 2021, the Ministry of Steel, Government of India, signed a Memorandum of Cooperation (MoC) with the Ministry of Economy, Trade and Industry, Government of Japan, to boost the steel sector through joint activities under the framework of India–Japan Steel Dialogue.
• The Union Cabinet, Government of India approved the National Steel Policy (NSP) 2017, as it intends to create a globally competitive steel industry in India. NSP 2017 envisage 300 million tonnes (MT) steel-making capacity and 160 kgs per capita steel consumption by 2030-31.
• The Ministry of Steel is facilitating the setting up of an industry driven Steel Research and Technology Mission of India (SRTMI) in association with the public and private sector steel companies to spearhead research and development activities in the iron and steel industry at an initial corpus of Rs. 200 crore (US$ 30 million).
• The Government of India raised import duty on most steel items twice, each time by 2.5% and imposed measures including anti-dumping and safeguard duties on iron and steel items.

Road Ahead

The steel industry has emerged as a major focus area given the dependence of a diverse range of sectors on its output as India works to become a manufacturing powerhouse through policy initiatives like Make in India. With the industry accounting for about 2% of the nation’s GDP, India ranks as the world’s second-largest producer of steel and is poised to overtake China as the world’s second-largest consumer of steel. Both the industry and the nation’s export manufacturing capacity have the potential to help India regain its favourable steel trade balance.

Business Data of Visaman Global Sales Limited

Products of Visaman Global Sales Limited

Products are used in Aviation, Bridge, Bus Stand, Fire Protection, Statues, Towers & Wind Farms

• PIPES
  • Round Tubes (MS/GI)
  • Square Pipe
  • Rectangle Pipe (MS)
• Rectangle Pipe (MS)
  • MS Angle
  • MS Channel
  • MS Beam
  • MS Plate
  • MS Chequered Plate
  • MS Flats
  • MS Round Bar
  • MS TMT Bar
  • MS Square Bar
  • MS Rails
  • MS T Bar
• COILS
  • BGL Coils (Bare Galvalume Coils)
  • GP (GI) Coils (Galvanized Plain & Iron Coils)
  • HR Coils (Hot Rolled Coils)
  • CR Coils (Cold Rolled Coils)
  • Colour Coated Coils
• SHEETS
  • MS Sheet
  • GP & GC Sheets
  • CR Sheets
  • HR Sheets & Plates
  • Roofing PUF Panel
  • Colour Coated Sheets
  • Wall PUF Panel

Product wise break-up of Visaman Global Sales Limited

(₹ in lakhs)

Revenue contribution from Geography presence of Visaman Global Sales Limited

State wise revenue breakup of Visaman Global Sales Limited

(₹ in lakhs)

Industry wise revenue breakup

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Customer dependency of Visaman Global Sales Limited

(Figures in percentages)

Peer companies comparison of Visaman Global Sales Limited

(₹ in Lakhs, otherwise mentioned)

Subsidiary companies

Group companies of Visaman Global Sales Limited

• Visaman Sales Private Limited
• Visaman Infra Projects Private Limited

Business risk factors

• The demand and pricing in the steel industry is volatile and are sensitive to the cyclical nature of the industries it serves. A decrease in steel prices may have adverse effect on our business, results of operations margins and financial condition
• Generate a substantial portion of revenue from the region of Gujarat. Any adverse developments affecting our operations in Gujarat region could have an adverse impact on our revenue and results of operations.
  • Revenue are majorly dependent on the one State i.e., Gujarat. We generate almost 90.33%, 83.50%, 82.04% and 91.94% of the total revenue from operation generated for the stub period ended December 31, 2023 and for the financial year ended March 31, 2023, 2022 and 2021 respectively
• Revenue supply of Pipes contribute significantly to our revenue from operation. Any loss of business from such products may adversely affect our revenues and profitability.
  • Revenue from supply of Pipes, contributes 72.23%,77.39%, 82.97% and 82.42% of our total revenue from operations for the stub period ended December 31, 2023 and for the financial year ended March 31, 2023, 2022 and 2021, respectively
• Business is a High Volume-Low Margin Business.
• Company had negative cash flows in the past years, details of which are given below. Sustained negative cash flow could impact our growth and business.
• depend on the success of our relationships with our customers. Our top ten customers contribute majority of our revenues from operations. If one or more of such customers choose not to source their requirements from us, our business, financial condition and results of operations may be adversely affected.
• Company is heavily dependent on one of suppliers, M/s. APL Apollo Tubes Limited for whom we are distributors for procurement and sale of our traded goods. Any disruption of supply from such entities may affect our business operations.
• operate in a highly competitive industry. Any inability to compete effectively may lead to a lower market share or reduced operating margins
• Company has higher debt-equity ratio which requires significant cash flows to service our debts obligations, and this, together with the conditions and restrictions imposed by our financing arrangements, fluctuations in the interest rates may limit our ability to operate freely and grow our business.

Competition

operate in a competitive atmosphere. Some of our competitors may have greater resources than those available to us. While product quality, brand value, distribution network, etc are key factors in client decisions among competitors, however, reliability and competitive pricing is the deciding factor in most cases. We face fair competition from both organized and unorganized players in the market. We believe that our experience, and reliability record with our customers will be key to overcome competition posed by such organized and unorganized players. Although, a competitive market, there are not enough number of competitors offering services similar to us. We believe that we are able to compete effectively in the market with our quality of services and our reputation. We believe that the principal factors affecting competition in our business include client relationships, reputation, and the relative quality and price of the services. We foresee this competition to continue to grow as the demand for our products increases. We intend to continue competing vigorously to capture more market share and manage our growth in an optimal way. Further we believe that our competition also depends on several factors which include changing business framework, competitive price, established relationship with suppliers and customers, brand recognition etc.

Financials

Key Financial Ratios

Balance Sheet

(₹ in Lakhs)

Profit & Loss

(₹ in lakhs other than share data)

Cash Flow

(₹ in Lakhs)

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Capital structure

(Rs. in lakhs)

SWOT

• Strengths (Internal Factors):
  • Diverse Product Range: Visaman offers a wide variety of products, including pipes, coils, and sheets, catering to different customer needs.
  • Customization: The company’s ability to customize products based on customer requirements provides a competitive edge.
  • Established Stockyards and Warehouses: Having stockyards in Gujarat and warehouses in Gujarat and Madhya Pradesh ensures efficient distribution.
  • Employee Strength: With 41 employees, Visaman has a dedicated workforce.
• Weaknesses (Internal Factors):
  • Relatively New: Founded in 2019, Visaman is still a relatively young company.
  • Limited Geographic Presence: The company’s operations are primarily focused in Gujarat and Madhya Pradesh.
  • Dependency on Steel Industry: As a steel products supplier, Visaman’s fortunes are tied to the steel market.
• Opportunities (External Factors):
  • IPO Launch: The upcoming IPO can raise capital for expansion and growth.
  • Market Expansion: Visaman can explore new regions and markets beyond its current footprint.
  • Industry Growth: The steel industry is expected to grow, presenting opportunities for Visaman.
• Threats (External Factors):
  • Competition: The steel industry is competitive, with established players and new entrants.
  • Market Volatility: Fluctuations in raw material prices and demand can impact profitability.
  • Regulatory Changes: Changes in government policies or regulations may affect the business.

IPO Details

Visaman Global Sales Limited IPO Details

Ipo funds utilisation for

(₹ in Lakhs)

Litigation involved

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