About the Company:
Company is engaged in the business of manufacturing welding consumables, wear plates and wear parts and heavy engineering machinery for core industries.
With over four decades of experience, Company is dedicated to providing specialized repairs and reconditioning services for heavy machinery and equipment. Additionally, company is also involved in trading of anti-wear powders and welding and cutting machinery.
Company provides super conditioning process at our manufacturing facilities, a surface treatment solution for machine components that enhances wear resistance, eliminates stress and improves their repairability ultimately extending their lifespan and reducing production costs.
Company has developed a synergistic system of forward integration whereby we manufacture special purpose electrodes and flux cored wires which are utilized for manufacturing wear resistance plates (commonly known as wear plates).
These wear plates then become an integral part of majority of large industrial equipment which are made in our heavy engineering division and are significant contributor in manufacturing of industrial equipment used in core industries like cement, steel, power, mining, engineering, oil & gas, sugar, etc.
This forward integration helps us in achieving efficiency in the production process and gaining competitive advantage, reducing product costs, enhancing supply chain control and reducing our dependency on third-party suppliers for our operations.
Company intends to expand the portfolio of welding consumables by manufacturing of powders for corrosion and abrasion resistance to be used in welding applications into our product line.
Company’s Promoter:
Prashant Garg, Company’s Promoter and Managing Director, has been instrumental in steering the Company towards forward integration from manufacturing welding consumables to heavy engineering equipment and adding new product lines to our business. He has paved the way for the concept of total wear solutions.
Company’s Product Portfolio:
Company’s History:
Company was incorporated in the year 1982. Company initially started trading in welding electrodes for super-conditioning. From the year 1993, we started manufacturing welding electrodes. In the year 1994, we acquired our Unit I for manufacturing welding electrodes.
Subsequently, Company acquired Unit II as a dedicated unit for manufacturing wear plates and flux cored wires. In the year 2015, we acquired our Unit III for manufacturing coatings for abrasion and corrosion resistances.
In the year 2016, we set up and commenced operations at Unit IV for manufacturing heavy engineering equipment. Subsequently, company also started production of flux cored wires and wear plates from Unit IV for which we have received consent to operate dated July 26. 2024 from MPCB.
Company also has overseas presence through Subsidiaries in Singapore, Turkey and Philippines, and Joint Ventures/ Associates in United Kingdom and Malaysia.
Company’s Revenue from Domestic & International: (in millions)
Welding Consumables Market in India.
Welding consumables market in India is estimated at around Rs 51 billion in fiscal 2024, with fiscal 2027 projections around Rs 64-66 billion. Due to the rise in demand for improved infrastructure, a lot of
investment is happening in infrastructure development, such as construction of roads, bridges, ports and airports.
The wear plates market in India is estimated at around Rs 22 billion in fiscal 2024 and is expected to grow at a CAGR of 8-9% to ~Rs 28 billion in fiscal 2027. Wear plates are essential part of the industries such as power plants, steel mills, quarrying, cement etc., as these plates protect key components of these industry.
As India continues to undergo rapid industrialization, each of these industries would grow and require wear plates to protect their equipment and machinery. India’s heavy engineering capital goods industry is estimated to be Rs 3,100-3,200 billion as of fiscal 2024,and is projected to clock a CAGR of 7.5-8.5% over fiscals 2023-27 to reach Rs 3,800-3,900 billion.
Heavy electrical engineering, earthmoving, construction and Mining Machinery, and Process Plant Equipment are the largest segments of the industry.
Company Industry-wise revenues generated from the sale of products: (in millions)
Management Team:
- Mr. Prashant Garg (Designation: Managing Director)
- Dr. Nitin Garg (Designation: Non – Executive Director)
Objectives of the Issue:
Fresh issue: (Rs.158 cr)
- Funding capital expenditure requirements towards expansion of our existing manufacturing facility at Khasra No. 36, 38/1, 38/2, 38/3, Khapri (Uma), Nagpur- 441 501, Maharashtra, India (“Proposed Expansion”).
- Setting up of a new manufacturing facility located at Plot Nos. 33-B/1/1/ & 33-B/1/1/Part, MIDC, Hingna, Sonegaon District, Nagpur – 440 016, Maharashtra (“Proposed Facility”).
- Funding working capital requirements of the Company.
- General Corporate Purposes.
Fund Utilization:
| Particulars | Amount (Rs. in Crores) |
|---|---|
| Funding capital expenditure requirements towards Proposed Expansion of our existing manufacturing facility at Unit IV | 71.3 cr |
| Setting up of a new manufacturing facility at Hingna, Sonegaon District, Nagpur, Maharashtra (“Proposed Facility”) | 30.3 cr |
| Funding working capital requirements of the Company | 22 cr |
Schedule of Implementation of Proposed Expansion:
Positives for the Company:
Experienced promoters and strong management team.
- Prashant Garg, Promoter and Managing Director of our Company and a second-generation entrepreneur has been associated with our Company since 2003. He has a rich experience of nearly two decades in the industry we operate.
- Company has grown rapidly over the last few years primarily due to the vision, commitment and dynamism demonstrated by our promoter and he continues to be the driving force for our Company.
Synergistic business models focused on forward integration.
- In 1993, Company started manufacturing welding electrodes, gradually expanding our offerings to include flux cored wire in the year 1997. Subsequently, we also started manufacturing wear plates and wear parts using flux cored wire. These wear plates are further being utilized for manufacturing of wear parts and heavy engineering equipment.
- Company has embarked on forward integration journey, transitioning from a manufacturer of welding electrodes to producing flux-cored wires, wear plates, wear parts, and now to heavy engineering, broadening our scope and expertise in the industry.
- Over the years, Company has expanded our capabilities to offer not only quality welding consumables but also comprehensive welding services for core industries.
Company is Serving industry major players directly as well as through OEMs.
- Company serves diverse clientele, which includes both OEMs who service major players in the cement, steel, and power sectors, as well as direct customers. These OEMs, in turn, service major players of their respective industry. This intricate network positions us as a vital link in the OEM ecosystem of some of the major players in core industries.
- In addition to company’s relationships with OEM customers, we also directly engage with the end customers in these core sectors. This direct interaction with established customers in cement, steel, and power industries underscores our capability to serve and meet the distinctive needs of major players in these industries.
Long-standing relationships with customers across industries.
- Company has, through over 4 decades of business operations, established long-standing relationships with several Indian and global customers across industries.
- Company has a diversified customer base and have served 503, 500 and 444 customers for the Fiscals 2024, 2023 and 2022, respectively. We believe our focus on quality, providing customized solutions to our customers and timely delivery of our product offerings have helped us establish and maintain long term relationships with our customers, retain existing customers and attract new customers.
Strategic expansion by venturing into nickel, cobalt and iron-based powder manufacturing for enhanced welding consumables portfolio.
- In a strategic move to diversify and enhance the portfolio of welding consumables, Company intends to venture into manufacturing of nickel, cobalt and iron-based powders to cater to the growing demand for these powders within our customer base and the industry at large.
Financials of the Company:
| (in Crores) | FY 22 | FY 23 | FY 24 |
|---|---|---|---|
| Revenue | 208.7 | 258.6 | 285.5 |
| Net Profit | 17.0 | 22.1 | 30.80 |
Valuation of Peer Group Companies:
| Company Name | Face Value | EPS | PE Ratio | RoNW | NAV |
|---|---|---|---|---|---|
| Diffusion Engineers Ltd | 10 | 10.94 | 15.35 | 18.52% | 68.06 |
| Ador Wel Ltdding | 10 | 46.46 | 29.01 | 18.43% | 266.49 |
| AIA Engineering Ltd | 2 | 120.4 | 35.88 | 18.41% | 705.86 |
*other Listed Peer Group Companies are Esab India Ltd, ISGEC Heavy Engineering Ltd and Ewac Alloys Ltd
IPO Details:
| Details | Info |
|---|---|
| Issue Opens on | 26th September 2024 |
| Issue Closes on | 30th September 2024 |
| Issue Price | Rs.159-168 |
| Face Value | Rs.10 |
| Retail Category Allocation | 35 % |
| Minimum Lot | 88 Shares |
| Minimum Investment | Rs. 14,784 |
| Issue Constitutes | 25.12 % |
| Issue Size | Rs.158 cr ($ 19 million) |
| Market Cap | Rs.629 cr ($ 75 million ) |
| Listing at | NSE & BSE |
| Equity Shares Offered (Fresh) | 94,05,000 (Rs.158 cr) |
| Equity Shares Prior to the Issue | 2,80,21,259 |
| Equity Shares after the Issue | 3,74,26,259 |
IPO Valuation Parameters:
| Earnings Per Share (EPS) | Price To Earnings ratio (PE) | Return on Net Worth (RoNW) | Net Asset Value (NAV) | Debt Equity Ratio (D/E) |
|---|---|---|---|---|
| 10.94 | 15.35 | 18.52% | 68.06 | 0.18 |
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| Should You Subscribe or Not ? (Markets Guruji’s View) |
|---|
| The Company specializes in manufacturing welding consumables, wear plates, wear parts, and heavy engineering machinery for core industries. With over four decades of experience, it offers specialized repairs and reconditioning services for heavy machinery and equipment. Additionally, the Company is engaged in the trading of anti-wear powders, welding, and cutting machinery.
Under the leadership of Prashant Garg, the Promoter and Managing Director, the Company has expanded from manufacturing welding consumables to producing heavy engineering equipment, emphasizing forward integration and the concept of total wear solutions. Backed by experienced promoters and a strong management team, the Company operates with synergistic business models focused on forward integration. It serves industry leaders directly and through OEMs, maintaining long-standing relationships with its customers. In a strategic move to diversify its portfolio, the Company plans to venture into the production of nickel, cobalt, and iron-based powders to meet growing industry demands. With a promising outlook for both decent listing gains and long-term investment, the Company presents a compelling opportunity for investors looking to capitalize on its growth and industry presence. |
Important Dates:
| Finalization of Basis of Allotment | on or Before 1st October 2024 |
| Initiation of Refunds | on or Before 3rd October 2024 |
| Credit of Equity Shares: | on or Before 3rd October 2024 |
| Listing Date: | on or Before 4th October 2024 |
| Company Contact Info: |
|---|
| Diffusion Engineers Ltd T-5 & T-6, Nagpur Industrial Area, MIDC, Hingna, Nagpur – 440016 Maharashtra. Telephone: +91 9158317943 Email: cs@diffusionengineers.com Website: www.diffusionengineers.com |
| Registrar to the Issue: |
|---|
| BIGSHARE SERVICES PRIVATE LIMITED S6-2, 6th Floor, Pinnacle Business Park, Next to Ahura Centre, Mahakali Caves Road, Andheri (East), Mumbai –400 093, Maharashtra, India. Telephone:022-62638200 Facsimile:022-63638280 Email: ipo@bigshareonline.com; Website: www.bigshareonline.com |
