In an effort to raise up to Rs 1,000 crore ($137 million), Indian company Jyoti CNC Automation Ltd. is launching an initial public offering (IPO) with a price band of Rs 315–331 per share. The IPO will be open for three days and is set to close on Thursday. Of the total issue size, 75% is reserved for qualified institutional buyers, 15% for non-institutional investors, and 10% for retail individual investors.
Jyoti CNC Automation Ltd. was incorporated in 1991 and is based in Rajkot, India. The company is a manufacturer and supplier of computerised-numerical-control (CNC) machines, including turning centres and machining centres. It has a production capacity of 4,400 machines per year in India and 121 machines per year in France. In the past three financial years, Jyoti CNC Automation has supplied over 7,200 machines to more than 3,000 customers, including the Space Applications Center. It also has 29 sales and service centers in Romania, France, Poland, Belgium, Italy, and the UK.
The net proceeds from the IPO will be used for repayment and/or prepayment of certain borrowings, as well as funding the long-term working capital requirements of the company. The funds will also be allocated to general corporate purposes.
However, there are several risk factors associated with investing in Jyoti CNC Automation. The company does not have long-term agreements with its suppliers for input materials, which means that a rise in costs or shortfall in availability can affect the company’s financials. It is also heavily reliant on third-party logistics service providers for transporting input materials and finished products. Additionally, a large portion of the company’s revenue is dependent on the performance of sectors such as automobile, general engineering, and defense. Any breakdown of the company’s machinery can also impact its operations and financials. Furthermore, there are legal matters amounting to Rs 41.6 crore ($5.7 million) against the company and Rs 4 crore ($548,000) against its subsidiary.