|Mr. Dineshkumar Musalekar, Group CEO, Mr. Narendra Goliya, CMD and Mr. Nitinkumar Deshpande, Head – Marketing, Business Development of Rishabh Instruments Limited with product display at IPO Press Conference, Mumbai|
• Price Band of ₹418 – ₹441 per equity share bearing face value of ₹10 each (“Equity Shares”)
• Bid/Offer Opening Date – Wednesday, August 30, 2023 and Bid/Offer Closing Date – Friday, September 01, 2023.
• Minimum Bid Lot is 34 Equity Shares and in multiples of 34 Equity Shares thereafter.
• The Floor Price is 41.8 times the face value of the Equity Share and the Cap Price is 44.1 times the face value of the Equity Share.
Risks to Investors
1. Concentration risk: We are dependent on our Poland Manufacturing Facility II and in Fiscals 2023, 2022 and 2021, it manufactured 62.73%, 58.25% and 59.18%, respectively, of the total products with a capacity utilisation of 73.70%, 64.81% and 66.95%.
2. Our business is dependent on our Manufacturing Facilities. In Fiscals 2023, 2022 and 2021, our Nashik Manufacturing Facility I manufactured 17.45%, 19.67% and 14.30% and our Poland Manufacturing Facility II manufactured 62.73%, 58.25% and 59.18%, respectively, of the total products.
3. We propose to utilise ₹ 628.86 million of the Net Proceeds of the Offer towards Expansion of Nashik Manufacturing Facility I and we have not entered into any definitive arrangements to utilise certain portions of the Net Proceeds of the Offer.
4. Customer concentration risk: In Fiscals 2023, 2022 and 2021, revenue from our top 10 customers were ₹ 1,817.91 million, ₹ 1,128.04 million and ₹1,030.39 million, respectively, representing 31.92%, 23.99% and 26.42%, respectively, of our total revenue from operations.
5. Product Liability: We may lose our customers and may be subject to product liability claims or claims alleging deficiency in service. One of our customers, in April 2022, issued a legal notice to our Company for alleged failure to adhere to their quality standard and technical hurdles faced in relation to the certain products supplied by our Company and have thereafter, ended their association/ relationship with us.
6. We are yet to capitalise on the development of the American National Standards Institute current transformers in the United States and/or acquire new customers in the United States pursuant to such product development.
7. Dependence on Subsidiaries: Our Subsidiaries contributed ₹ 3,995.57 million, ₹ 3,391.27 million and ₹ 2,793.55 million representing 67.09%, 72.12% and 71.64% of our total revenue from operations in Fiscals 2023, 2022 and 2021, respectively.
8. Dependence on semiconductors availability: We source microcontroller semiconductor chips as an input for our manufacturing operations. Shortages in the supply of semiconductors have had, and may continue to have, a material adverse effect on the industry and on our results of operations and financial condition.
9. The three BRLMs associated with the Offer have handled 20 public issues in the past three years, out of which 7 issues closed below the IPO price on listing date.
Name of the BRLMs Total public issue Issues closed below IPO price on listing date
DAM Capital Advisors Limited* 12 4
Mirae Asset Capital Markets (India) Private Limited* NIL NIL
Motilal Oswal Investment Advisors Limited* 7 2
Common issues handled by the BRLMs 1 1
Total 20 7
*Issues handled where there were no common BRLMs
10. The Offer Price, our Market Capitalization to Revenue, Market Capitalization to Earnings and Enterprise value to EBITDA of our Company and return on net worth may not be indicative of the market price of the Equity Shares on listing or thereafter.
Market Capitalization to revenue from operations (Fiscal 2023) multiple at the Cap Price (number of times) Price to Earnings Ratio (based on Fiscal 2023 diluted EPS) at the Cap Price (number of times) Nifty Fifty P/E ratio* Weighted average return on networth for the last three financial years (%)
2.94 34.56 22.39 12.36
*As on August 17, 2023
Particulars (for Fiscal 2023) Ratio vis-à-vis Floor Price of ₹ 418 Ratio vis-à-vis Cap Price of ₹ 441
(In multiples, unless otherwise specified)
Market capitalization to revenue from operations 2.79 2.94
Market capitalization to earnings (profit after tax) 32.01 33.69
Enterprise value to EBITDA 18.39 19.36
Price-to-earnings ratio (Basic EPS) 32.55 34.35
Price-to-earnings ratio (Diluted EPS) 32.76 34.56
11. Details of weighted average cost of acquisition of all Equity Shares transacted in last 3 years, 18 months and one year, preceding the date of RHP:
Period prior to date of filing of the Red Herring Prospectus Weighted Average Cost of Acquisition (₹)* Cap Price is ‘X’ times the Weighted Average Cost of Acquisition Range of acquisition price: Lowest Price –Highest Price (₹)*
Last One year 29.02 15.20 0-174.10
Last 18 months 29.02 15.20 0-174.10
Last Three years 29.02 15.20 0-174.10
*As certified by Shah & Mantri, Chartered Accountants by the way of their certificate dated August 23, 2023.
12. Weighted average cost of acquisition compared to Floor Price and Cap Price:
Past transactions WACA (in ₹) Floor Price in ₹ 418 Cap Price in ₹ 441
WACA of Primary Issuances during 18 months prior to RHP (excluding issuance of bonus shares) 89.56* 4.67 times 4.92 times
WACA of Secondary Transactions during 18 months prior to RHP (excluding gifts) Not applicable Not applicable Not applicable
* 3,606,110 CCPS were acquired by SACEF on September 17, 2013 at a price of ₹ 174.10 per CCPS. Pursuant to a resolution passed by the Board of Directors of the Company dated July 24, 2023, and a resolution passed by the shareholders of the Company dated July 25, 2023, the CCPS have been converted into 7,010,278 Equity Shares of ₹ 10 each. Hence, for the purposes of the table above, the date of conversion of the CCPS into Equity Shares has been considered as the date of acquisition and the original cost of acquiring the CCPS has been considered towards determining the acquisition price.
Mumbai, August 25, 2023: Nashik head quartered Rishabh Instruments Limited, a global energy efficiency solution company, with its corporate office in Nashik, Maharashtra, focused on electrical automation, metering and measurement, precision engineered products and aluminium high pressure die castings with diverse applications across industries including power, automotive and industrial sectors has fixed the price band at ₹418 to ₹441 per Equity Share for its initial public offer. The initial public offering (“IPO” or “Offer”) of the Company will open on Wednesday, August 30, 2023, for subscription and closes on Friday, September 01, 2023. Investors can bid for a minimum of 34 Equity Shares and in multiples of 34 Equity Shares thereafter.
The IPO of face value of ₹10 per Equity Share comprises of fresh issuance of equity shares worth Rs 75 crore and an Offer for Sale (OFS) up to 9.43 million equity shares.
Narendra Joharimal Goliya founded Rishabh Instruments in the year 1982 and has over 4 decades of experience in the electrical and electronic instruments industry. The company supplies a wide range of electrical measurement and process optimization equipment and engages in the design, development, manufacturing, and sale of devices significantly under its own brand across several sectors.
It is a vertically integrated player involved in designing, developing, manufacturing and supplying electrical automation devices; metering, control and protection devices; portable test and measuring instruments; and solar string inverters. Additionally, through its subsidiary, Lumel Alucast, it manufactures and supplies high pressure die cast aluminum components to the automation and automotive industry mainly in Europe.
According to the F&S report mentioned in the Red Herring Prospectus (“RHP”), the Company is a global leader in the manufacture and supply of analog panel meters and is also one of the leading global manufacturers and suppliers of low voltage current transformers. For meters, controllers, and recorders, Lumel is the most popular brand in Poland, and Lumel Alucast is one of the leading non-ferrous pressure casting players in Europe.
Rishabh Instruments’ revenue from operations increased by 21.11% from Rs 470.25 crore in Fiscal 2022 to Rs 569.54 crore in Fiscal 2023, primarily driven by increase in revenue from sale of goods and from sale of services, whereas profit grew to Rs 49.69 crore in Fiscal 2023, as compared to Rs 49.65 crore in Fiscal 2022.
In case of any revision in the Price Band, the Bid/ Offer Period shall be extended for at least three additional Working Days after such revision of the Price Band, subject to the total Bid/Offer Period not exceeding 10 Working Days. In cases of force majeure, banking strike or similar circumstances, our Company in consultation with the BRLMs, for reasons to be recorded in writing, extend the Bid / Offer Period for a minimum of three Working Days, subject to the Bid/ Offer Period not exceeding 10 Working Days. Any revision in the Price Band, and the revised Bid/ Offer Period, if applicable, shall be widely disseminated by notification to the Stock Exchanges by issuing a press release and also by indicating the change on the websites of the BRLMs and at the terminals of the Members of the Syndicate and by intimation to Designated Intermediaries and the Sponsor Bank(s). The Offer is being made in terms of Rule 19(2)(b) of the Securities Contracts (Regulation) Rules, 1957, as amended (the “SCRR”), read with Regulation 31 of the SEBI ICDR Regulations. The Offer is being made through the Book Building Process in accordance with Regulation 6(1) of the SEBI ICDR Regulations wherein not more than 50% of the Offer shall be available for allocation on a proportionate basis to Qualified Institutional Buyers (“QIBs”) (the “QIB Portion”), provided that our Company and Selling Shareholders in consultation with the BRLMs may allocate up to 60% of the QIB Portion to Anchor Investors and the basis of such allocation will be on a discretionary basis by our Company and Selling Shareholders, in consultation with the BRLMs, in accordance with the SEBI ICDR Regulations (the “Anchor Investor Portion”), of which one-third shall be reserved for domestic Mutual Funds, subject to valid Bids being received from the domestic Mutual Funds at or above the price at which allocation is made to Anchor Investors (“Anchor Investor Allocation Price”). In the event of under-subscription or non-allocation in the Anchor Investor Portion, the balance Equity Shares shall be added to the QIB Portion (other than the Anchor Investor Portion) (the “Net QIB Portion”). Further, 5% of the Net QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, subject to valid Bids being received at or above the Offer Price, and the remainder of the Net QIB Portion shall be available for allocation on a proportionate basis to all QIBs, including Mutual Funds, subject to valid Bids being received at or above the Offer Price. Further, not less than 15% of the Offer shall be available for allocation to Non-Institutional Investors (“Non-Institutional Category”) of which one-third of the Non-Institutional Category shall be available for allocation to Bidders with an application size of more than ₹200,000 and up to ₹1,000,000 and two-thirds of the Non-Institutional Category shall be available for allocation to Bidders with an application size of more than ₹1,000,000 and under-subscription in either of these two sub-categories of the Non-Institutional Category may be allocated to Bidders in the other sub-category of the Non-Institutional Category in accordance with the SEBI ICDR Regulations, subject to valid Bids being received at or above the Offer Price. Further, not less than 35% of the Offer shall be available for allocation to Retail Individual Investors (“Retail Category”), in accordance with the SEBI ICDR Regulations, subject to valid Bids being received from them at or above the Offer Price. All Bidders (except Anchor Investors) shall mandatorily participate in this Offer only through the Application Supported by Blocked Amount (“ASBA”) process and shall provide details of their respective bank account (including UPI ID (defined hereinafter) in case of UPI Bidders (defined hereinafter) in which the Bid Amount will be blocked by the Self Certified Syndicate Banks (“SCSBs”) or pursuant to the UPI Mechanism, as the case may be. Anchor Investors are not permitted to participate in the Anchor Investor Portion through the ASBA process. For details, see “Offer Procedure” on page 463 of the RHP.
DAM Capital Advisors Limited, Mirae Asset Capital Markets (India) Private Limited and Motilal Oswal Investment Advisors Limited are the book running lead managers to the Offer and KFin Technologies Limited is the Registrar to the Offer. The Equity Shares are proposed to be listed on the main board platform of the stock exchanges i.e., BSE Limited (“BSE”) and National Stock Exchange of India Limited (“NSE")
DISCLAIMERS: RISHABH INSTRUMENTS LIMITED is proposing, subject to applicable statutory and regulatory requirements, receipt of requisite approvals, market conditions and other considerations, to undertake an initial public offer of its Equity Shares and has filed the RHP with RoC on August 23, 2023. The RHP shall be available on the website of SEBI at www.sebi.gov.in, websites of the Stock Exchanges i.e., BSE at www.bseindia.com and NSE at www.nseindia.com and is available on the websites of the BRLMs, i.e. DAM Capital Advisors Limited at www.damcapital.in, Mirae Asset Capital Markets (India) Private Limited at https://cm.miraeasset.co.in/ and Motilal Oswal Investment Advisors Limited at www.motilaloswalgroup.com. Any potential investors should note that investment in equity shares involves a high degree of risk and for details relating to such risk, please see the section titled “Risk Factors” of the RHP. Potential investors should not rely on the DRHP filed with SEBI for making any investment decision. Specific attention of the investors is invited to “Risk Factors” beginning on page 31 of the RHP. This announcement does not constitute an offer of securities for sale in any jurisdiction, including the United States, and any securities described in this announcement may not be offered or sold in the United States absent registration under the U.S. Securities Act or an exemption from such registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer or the selling security holder and that will contain detailed information about the company and management, as well as financial statements. No offering or sale of securities in the United States is contemplated.
DISCLAIMER CLAUSE OF SEBI: SEBI only gives its observations on the offer documents and this does not constitute approval of either the Offer or the specified securities stated in the Offer Document. The investors are advised to refer to pages 443 of the RHP for the full text of the disclaimer clause of SEBI
DISCLAIMER CLAUSE OF BSE: It is to be distinctly understood that the permission given by BSE Limited should not in any way be deemed or construed that the RHP has been cleared or approved by BSE Limited nor does it certify the correctness or completeness of any of the contents of the RHP. The investors are advised to refer to the pages 446 of the RHP for the full text of the disclaimer clause of BSE.
DISCLAIMER CLAUSE OF NSE (The Designated Stock Exchange): It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that the Offer Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the Offer Document. The investors are advised to refer to page 446-447 of the RHP for the full text of the disclaimer clause of NSE
For further details in relation to the Company, BRLMs, Company Secretary and Compliance Officer of the Company, availability of application forms and RHP, please refer to statutory advertisement published on 25th August, 2023.