Epack Durable Ltd

About the Company:

Epack Durable Ltd is the second largest room air conditioner original design manufacturer (“ODM”) in India in terms of number of units (indoor units + outdoor units) manufactured in Fiscal 2023 through the ODM route.

Company is a customer-centric business driven by a focus on continuing innovation and operational efficiency. Since 2003, company been on a journey of evolution, where we initially started as an OEM for RAC brands.

Company has capitalised on its existing manufacturing infrastructure to strategically expand the operations in the small domestic appliances (“SDA”) market, particularly considering the seasonality of the demand for RACs, and currently design and manufacture induction cooktops, mixer-grinders, and water dispensers.

Company’s Product portfolio currently comprises the following:

Room air conditioners:

Company designs and manufactures complete RACs, comprising (i) window air conditioners (“WACs”), including window inverter air conditioners, (ii) indoor units (“IDUs”) and (iii) outdoor units (“ODUs”, which combined with IDUs form split air conditioners (“SACs”)) with specifications ranging from 0.75 ton to 2 ton, across a range of energy ratings and types of refrigerants.
Company also manufactures split inverter air conditioners.

Small domestic appliances:

Company currently design and manufacture induction cooktops, mixer-grinders, and water dispensers.

Components:

Company manufactures heat exchangers, cross flow fans, axial fans, sheet metal press parts, injection moulded components, copper fabricated products, PCBAs, universal motors and induction coils for captive consumption as well to customers.

Company’s Customers:

Company’s Manufacturing facilities:

Company commenced its operations with a single manufacturing unit in Dehradun, Uttarakhand in 2003, and have since expanded the manufacturing operations with Dehradun Unit II, Dehradun Unit III and Dehradun Unit IV, Bhiwadi Manufacturing Facility and Sri City Manufacturing Facility.

Installed Capacity of Manufacturing Facilities:

Company’s Dehradun Manufacturing Facility and Bhiwadi Manufacturing Facility have an aggregate installed annual manufacturing capacity as on March 31, 2023 to manufacture (i) 0.90 million IDUs, 0.66 million ODUs, 0.36 million ODU Kits and 0.42 million WACs, and (ii) 0.11 million water dispensers, 1.2 million induction cooktops and 0.30 million mixer grinders, and components thereof.

Company also commenced operations at the Sri City Manufacturing Facility in December 2023. The annual manufacturing capacity of the Sri City Manufacturing Facility as on December 15, 2023, is (i) 0.66 million IDUs and 0.66 million ODUs, and (ii) 0.65 million induction cooktops, and components thereof.

Company’s Key Performance Indicators:

Competitors in the Business:

RACs: Key Competitors in the manufacturing of Room air conditioner include Amber Enterprises (India) Limited and PG Electroplast Limited, among others.

Mixer grinders: Key Competitors in the manufacturing of mixer grinders include Elin Electronics, Suvidha Appliances, Vardhman, RS Polymers and MVM.

Induction cooktops: Key Competitors in the manufacturing of induction cooktops include Suvidha Appliances, Agilitive, Vardhman, MVM, and Kaser.

Water dispensers: Key Competitors in the manufacturing of Water dispensers include Veeline and Vending Updates.

Management Team:

Mr. Bajrang Bothra (Designation: Chairman and Whole-time Director)
Mr. Ajay DD Singhania (Designation: Managing Director and Chief Executive Officer)

Objectives of the Issue:

Offer for Sale: (Rs.240 cr)

Company will not receive any proceeds from the Offer for Sale by the Selling Shareholders.Each of the Selling Shareholders will be entitled to their respective portion of the proceeds of the Offer for Sale.

Fresh Issue: (Rs.400 cr)

Funding capital expenditure for the expansion / setting up of manufacturing facilities.
Repayment and / or prepayment, in part or in full, of certain outstanding loans of the Company.
General corporate purposes.

Fund Utilisation:

Particulars	Amount (Rs. Crores)
Funding capital expenditure for the expansion / setting up of manufacturing facilities	230 cr
Repayment and / or prepayment, in part or in full, of certain outstanding loans of the Company	80 cr
General corporate purposes	90 cr
Net Proceeds	400 cr

Positives for the Company:

Vertically integrated manufacturing facilities enable Low cost of operations:

Three vertically integrated manufacturing facilities, enable company to maintain its operational costs and logistics management.
Company also benefits from a single site manufacturing capabilities, where the manufacturing of components and product assembly takes place in one location.
Company has the highest amount of backward integration for RACs at a single location, that has been grown within the same company organically in India.

Long-standing relationships with established customers, with potential to expand the customer base.

Company over the course of business operations established long-standing relationships with several well known Indian and global customers.
Some of company’s customers for RAC (Room air conditioner) products include Blue Star Ltd, Daikin Airconditioning India Pvt Ltd, Carrier Midea India Pvt Ltd, Voltas Ltd etc.
Some of company’s customers for SDA (Small domestic appliance) products include Bajaj Electricals Ltd, BSH Household Appliances Manufacturing Pvt Ltd, and Usha International Ltd
Company has gained the confidence of customers by initially supplying lower volumes and then proceeding to supply higher volumes and expanding the product offerings, once the relationship has been established.
Company has established relationship with existing customers also presents company with cross selling opportunities.

Among the key manufacturers in the fast-growing RAC (Room air conditioner)and SDA (Small domestic appliance) manufacturing industries.

Company is the second largest RAC ODM manufacturer in India in terms of number of units (indoor units + outdoor units) manufactured in Fiscal 2023 through the ODM route.
In a bid to promote domestic manufacturing, the Indian government has banned the import of completely built units of air-conditioners with refrigerants from Fiscal 2021.
Air conditioner imports had been identified among the priority sectors for reduction of imports in line with the government’s ‘Atmanirbhar Bharat Abhiyan’ initiative.
Further, considering the potential of the Indian SDA industry, company has capitalised on existing manufacturing infrastructure to strategically expand the operations in the SDA market, and currently design and manufacture induction cooktops, mixer-grinders, and water dispensers.

Company has highest amount of backward integration for RACs at a single location.

Company has the highest amount of backward integration for RACs at a single location, that has been grown within the same company organically in India.
Company’s products and corresponding components are manufactured within the same location, which helps eliminate costs typically incurred in transportation of parts between facilities.

Company plans to expand its existing product portfolio.

Company plans to strengthen its existing RAC product portfolio, we intend to further diversify our SDA product portfolio with products with a focus on increased growth and profitability.
For instance, company intends to expand product portfolio beyond room air conditioner products to semi commercial air conditioner products and domestic air coolers.
In addition, company intends to expand the SDA product portfolio with products such as hair dryers, induction water heaters and nutriblenders, tower fans, kitchen chimneys and dual ICTs.
This is intended to also help company diversify its business and reduce dependence on RAC products, the demand of which is seasonal unlike SDAs, the demand of which remains relatively consistent through the year.

Financials of the Company:

(in Crores)	FY 21	FY 22	FY 23	Upto 30th Sept 23
Revenue	739.6	927.3	1540.2	616.3
Net Profit	7.8	17.4	31.9	2.6

Valuation of Peer Group Companies:

Company Name	Face Value	EPS	PE Ratio	RoNW	NAV
EPACK Durable Ltd	10	4.64	49.56	14.68%	46.21
Amber Enterprises India Ltd	10	46.66	66.28	8.79%	579.94
PG Electroplast Ltd	10	33.77	67.27	21.88%	174.09
Dixon Technologies (India) Ltd	2	42.62	139.96	22.36%	215.69
Elin Electronics Ltd	5	6.29	24.28	6.73%	99.30

IPO Details:

Details	Info
Issue Opens on	19th January 2024
Issue Closes on	23rd January 2024
Issue Price	Rs.218 – 230
Face Value	Rs.10
Retail Category Allocation	35%
Minimum Lot	65 Shares
Minimum Investment	Rs.14,950
Issue Constitutes	29.04%
Issue Size	Rs.640 cr ($ 77 million)
Market Cap	Rs. 2203 cr ($ 265 million)
Listing at	NSE & BSE
Equity Shares Offered (Fresh)	1,73,91,304 (Rs.400 cr)
Equity Shares Offered (OFS)	1,04,37,047 (Rs.240 cr)
Total Equity Shares Offered (Fresh + OFS)	2,78,28,351 (Rs.640 cr)
Equity Shares Prior to the Issue	7,84,07,387
Equity Shares after the Issue	9,57,98,691 (Rs.2203 cr)

Also Read : List of Upcoming IPO’s in India.

Important Dates:

Finalization of Basis of Allotment	on or Before 24th January 2024
Initiation of Refunds	on or Before 25th January 2024
Credit of Equity Shares:	on or Before 25th January 2024
Listing Date:	on or Before 29th January 2024

IPO Valuation Parameters:

Earnings Per Share (EPS)	Price To Earnings ratio (PE)	Return on Net Worth (RoNW)	Net Asset Value (NAV)
4.64	49.56	14.68%	46.21

Company Contact Info:
Epack Durable Ltd 61-B, Udyog Vihar, Surajpur, Kasna Road, Greater Noida, Gautam Buddha Nagar 201 306, Uttar Pradesh, India. Telephone: +91 120 4969771 Email: investors_ed@epack.in Website: www.epackdurable.com