Aeroflex Industries IPO opens on August 22 with a price band of ₹102-108

• The Navi Mumbai based producer of metallic flexible flow solution products is backed by ace investor Ashish Kacholia.
• It raised ₹103.68 crore from anchor investors like Societe Generale, Nippon Mutual Fund, Invesco and more.
• The company intends to use the net proceeds towards loan payments, working capital needs, general corporate purposes and unidentified inorganic acquisitions.

Mumbai-based Aeroflex Industries is opening its maiden public offer on August 22 and closes on August 24, with a price band of ₹102-108 per equity share. The company which makes metallic flexible flow solution products is backed by ace investor Ashish Kacholia.

The ₹351 crore initial public offer (IPO) is a combination of fresh issue and offer-for-sale (OFS) with promoters and other shareholders offloading stake via the share sale.

The net proceeds of the fresh issue will be utilised towards full or part repayment and/or prepayment of outstanding borrowings; funding working capital requirements and for general corporate purposes and unidentified inorganic acquisitions.

Investors can subscribe to the issue with a minimum lot size of 130 shares, and in multiples thereof. Not more than 50% of the shares of the issue Qualified Institutional Buyers (QIB), not less than 15% to non-institutional investors and 35% reserved for retail investors.

It raised ₹103.68 crore from anchor investors like Societe Generale, Nippon Mutual Fund, Invesco Mutual Fund, White Oak Mutual Fund, BOI Mutual Fund, and more.

Apart from Kacholia, Jagdish Master and Vikas Khemani led Carnelian Fund and certain other investors bought approximately 7% stake in Aeroflex Industries before the IPO.

Pantomath Capital Advisors is the book running lead manager while Link Intime India is the registrar of the issue.

About the company

The Navi Mumbai based company manufactures and supplies environmentally-friendly metallic flexible flow solution products to global as well as domestic markets. It has a single manufacturing facility situated in Taloja, Navi Mumbai spread across 3.59 lakh square feet of area.

The flexible flow solutions include braided hoses, unbraided hoses, solar hoses, gas hoses, vacuum hoses, braiding, interlock hoses, hose assemblies, lancing hose assemblies, jacketed hose assemblies, exhaust connectors, exhaust gas recirculation (EGR) tubes and more.

These solutions are used for transfer of substances be it air, liquid and solid — in any industrial or commercial ecosystem. They connect the origin and end points of various processes. For example, flow solution products are required in fire sprinklers, gas supply, fueling and hydraulics in aircrafts.

These products replace flow solutions made of rubber and polymers. Flexible flow solutions made with stainless steel corrugation are becoming a preferred solution because of their numerous advantages, the company said.

Financials & risk factors

Source: DRHP

The company said that it has no listed peers in India, but the segment it operates in is fragmented and diversified. It can face competition from other large and small global and domestic players.

“Our Company is not a wilful defaulter however, we went into settlement process and our Company was categorised as wilful defaulter in the past, before the takeover of our Company by the present management,” the company said listing the risk factors.

This is in relation to default of payment in 2011 with respect to consortium finance availed from State Bank of India, Axis Bank and others. Subsequently, in 2018, it was taken over by the present promoter under the settlement process, and all the outstanding amounts were paid off by them.

“Our company has no dues payable to any lender forming part of the consortium including BoI and we have no dues certificate obtained from BoI and other lenders forming part of the consortium,” the company said.

Mustafa Abid Kachwala, its whole-time director and CFO was on the board when the company was categorised as a ‘wilful defaulter’. “However, Mustafa Abid Kachwala has not been declared or categorised as a ‘Wilful Defaulter’. Considering his expertise in the field of accounts and finance, he was retained on our board even after the takeover,” the company said.

In addition, the company said its exports are subject to duties or restrictions; and dependent on China for a significant portion of raw material and others as risk factors.