V-Guard Industries Ltd, a company based in Kerala, is engaged in the manufacturing and marketing of electrical and electronic products today announced a price band of Rs 80 to Rs 85 for its forthcoming Initial Public Offer (IPO) of 80,00,000 equity shares of Rs 10 each for cash at a premium. The net issue to the public comprises of 76,00,000 equity shares and 4,00,000 equity shares have been reserved for the employees. The issue will constitute 26.80% of the fully diluted post issue paid up equity share capital of the company. The face value of equity shares of Rs. 10 and the floor price is 8 times of the face value and the cap price is 8.5 times of the face value. The company will raise Rs.68 crores at the upper end of the price band.

CRISIL has assigned a CRISIL IPO Grade “3/5” (pronounced “three on five”) to the proposed initial public offering of V-Guard Industries Ltd.

The capital raised from the issue will be deployed to set up Cable manufacturing facilities in Coimbatore and Uttaranchal, Enameling Plant at Coimbatore, Development and Pilot Productions Plants for water Heaters, Fans and Pumps at Himachal Pradesh and Coimbatore, Service and Distribution Centers at Bangalore, Hubli and Vijaywada.

Financials:

During the year 2006-07, V-Guard achieved a total turnover of Rs. 22227.48 lakhs. The Sales of the Company has grown from Rs. 11061.46 Lakhs as on March 2003 to Rs. 22227.48 Lakhs as on March 2007 at a CAGR of 19.06 %. The Company has been making profits and been paying dividends consistently since last 5 years. The Profit after tax of the Company has grown from Rs.489.97 Lakhs on March 2003 to Rs.1349.69 Lakhs in March 2007 at a CAGR of 28.83 %.

Promoters:

The promoters have been present in this industry for the last three decades. Their experience and understanding of changing needs and demands of customers helped to achieve long-standing presence in the Indian market and with constant improvement in performance of the products, augmented with quality and recognition of brand, V-Guard enjoy considerable brand equity and reliability in the market. According to a recent IMRB study the total market size for Voltage Stabilizers is estimated at around Rs 700-750 crore. This corresponds to 5-6% of the total consumer durable market in India. The organized market contributes only 25-30% of the market and V-Guard accounts for 15% of the organized market and stands 3 times in value terms to the second largest player and 15 times to the third largest player.

Unique Business Model:

The company follows a very unique business model wherein products are sourced from SSI units/ small manufacturers across South India. The company contracts with third parties for the manufacture of Voltage Stabilizers, Pumps, UPS, Electric Water Heaters and Electric Fans which are manufactures according to the company’s specifications. Most of these units are attached to Charitable Institutions/Social welfare organizations. Through this arrangement, V -Guard is able to attain social objective of generating maximum employment to women and rural unemployed.

Anand Rathi Securities Limited is the Book Running Lead Manager to the IPO and Intime Spectrum Registry Limited is the registrar to the issue.

The shares will be listed on Bombay Stock Exchange and National Stock Exchange of India.

Sourced From: Hanmer & Partners Communications Pvt. Ltd

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