Jyoti CNC Automation IPO To Hit The Markets Soon

Jyoti CNC Automation (JCA), an India-based engineering company is coming up with an initial public offering (IPO) to be listed on the BSE and NSE. The company is offering 1.34 crore fresh equity shares at a face value of Rs 10 per share through this issue. The price band and minimum bid lot size has not been declared by company in the DRHP. The book running lead managers for this offering are Avendus Capital and SBI Capital Markets. Currently, the company has 2.87 crore equity shares and this IPO will make it 4.21 crore equity shares. 

The engineering company JCA is a global player in the machine tools industry. It is engaged in the manufacturing and marketing of metal cutting CNC machines. The company provides one-stop shop for metal cutting operations, from the entry level to high end machines. They offer 24 products in 81 variants, which include CNC turning centres, CNC vertical machining centres, CNC horizontal machining centres, vertical line CNC machines and multitasking machines. 

Moreover, the company operates in 37 countries apart from India, mostly from Asia, Europe, Middle East, North America, South America and Africa. At present, JCA has 5 manufacturing facilities, among which 3 are in India and 2 in France. The company's finished products are used in various industries including Agriculture, Aerospace, Bearings, Consumer Durables, Diamond Jewellery, Defence, General Engineering, Plastic Processing, Medical Equipment Railways etc. Along with this, it has a long customers’ list such as Volkswagen, Peugeot, Solomon, auto component manufacturer like Amtek Auto, Sona Steering, Delphi- TVS, Ordnance Factory etc. 

JCA has a number of direct, indirect and associate group companies. Jyoti SAS (France) is the direct subsidiary of JCA, while its indirect subsidiary list includes Huron Graffenstaden SAS (France), Huron Franmascchinen (Germany) and Huron Canada Inc. (Canada). It also has an associate company, Rolo & Huron with a 47% holding in it at present.   

On the financial front, JCA reported Rs 416.74 crore topline on a consolidated basis in 9MFY13 against Rs 601.67 crore in FY12. The company's bottomline reached Rs 20.96 crore in 9MFY13 as compared to Rs 16.17 crore in FY12. The net margin for the 9MFY13 period stood at 5%. 

The funds raised through this issue will be utilised for the expansion of manufacturing capacity, extension of office building, R & D centre, prepayment of indebtedness, funding long-term working capital requirements and equity investment in its subsidiary, Jyoti SAS. The company intends to expand its plant in Rajkot and wants to increase its production capacity from the existing 2,500 machines per annum to 4,000 machines per annum. The amount required for the proposed expansion is approximately Rs 126.77 crore. Further, the extension of the office building and R & D centre will have proposed expenses of Rs 9.02 crore. An amount of Rs 28.53 crore will be utilised for prepayment of indebtedness, while Rs 40 crore will be used for long-term working capital. 

The export of CNC machines to over 37 countries is the main source of the company’s revenues. However, due to the slowdown in traditional markets like Europe and US, the global demands are likely to decline in the upcoming fiscal year. This probability will put pressure on the JCA's revenue and hence will influence its growth.  

However, the price band and bid lot size for this public offering are not disclosed in the DRHP by the company. So, keep watching this space for more details related to this offering.