RETAIL RESEARCH

IPO Snapshot

16 Mar 2016

Bharat Wire Ropes Limited

Issue Snapshot:
Issue Open: March 18 - March 22 2016
Price Band: Rs. 40 45
*Issue Size: 15555556 Equity Shares
(including Employee reservation of
777778 Equity Shares)
Offer Size: Rs.70 crs
QIB
atleast 75% eq sh
Retail
upto 10% eq sh
Non Institutional upto 15% eq sh
Face Value: Rs 10
Book value: Rs 24.10. (Nov 30, 2015)
Bid size: - 300 equity shares and in
multiples thereof
100% Book built Issue
Capital Structure:
Pre Issue Equity:
Post issue Equity:

Rs. 29.39 cr
Rs. 44.95 cr

Background & Operations:

Wire rope and Wires manufacturing company Bharat Wire Ropes Limited (BWRL) is
engaged in manufacturing and sales of wire ropes, structural strands, slings and wires
which find its application in general engineering, fishing, elevators, cranes, material
handling, power transmission, suspension bridges, onshore / offshore oil exploration,
ports and shipping, mining, defence, railways etc. It is also engaged in the business of
trading of the steel related products.
Wire ropes are a value-added product, formed from wire rods, which falls in the long
steel category of steel products. Over the years, with significant improvement in the
strength of wire ropes manufactured, the usage of these wire ropes has significantly
increased in various diverse applications.
BWRLs existing steel wire ropes manufacturing facility with an installed capacity of
12,000 MTPA is located at Atgaon and has a Pyrolysis plant with an installed capacity
of 1,260 MTPA at Chalisgaon, Maharashtra for production of oil, which is used as fuel
in its current manufacturing process. It is proposing to further enhance its capacity to
manufacture wire ropes, structural strands and slings by setting up a fully integrated
manufacturing facility with an installed capacity of 66,000 MTPA at Chalisgaon,
Maharashtra.
The company is an ISO 9001:2008 certified company by the British Standards
Institution (BSI) for the manufacture and supply of steel wire ropes, stainless steel
wire ropes, non-ferrous wire ropes, slings, relevant conductors, wire for specialized
applications and rope fittings in domestic and international market.

Listing: BSE & NSE

Book Running Lead Manager: Intensive
Fiscal Services Private Limited, BOB
Capital Markets Limited
Registrar to issue: Karvy Computershare
Pvt Ltd
Shareholding Pattern
Pre issue *Post issue
Shareholding
%
%
Pattern
Promoters &
Promoter Group
Public (incl
institutions &
employees)
Total

87.34

57.11

12.66

42.89

100.0

100.0

Total revenue for financial year 2013, financial year 2014 and financial year 2015 of
BWRL was Rs. 7439.73 lacs, Rs. 8,229.48 lacs and Rs.7672.21 lacs, respectively. Its
EBITDA for financial year 2013, financial year 2014 and financial 2015 was Rs. 924.24
lacs, Rs. 897.13 lacs and Rs.924 lacs, respectively. Its profit after tax for financial year
2013, financial year 2014 and financial year 2015 was Rs. 147.54 lacs, Rs. 150.34 lacs
and Rs. 197.53 lacs, respectively. For the eight month period ended November 30,
2015, its net sales amounted to Rs. 4374.18 lacs, its EBITDA was Rs 574.08 lacs and its
profit after tax was Rs. 108.71 lacs.
Objects of Issue:
BWRL intends to use the proceeds of the Issue for the following purposes:
To set up a proposed project of 66,000 MTPA wire ropes at MIDC Zone, at
Chalisgaon, Dist: Jalgaon, Maharashtra
To meet General Corporate Expenses; and
To meet Issue Expenses
Means of Finance

Particulars

Means of
finance as per
Management
Estimate

Term loans

33,000.00

Amount proposed to be financed from the net proceeds

6,000.00

*assuming pricing at the high end of price band

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Amount already deployed as on January 31, 2016 from Internal
Accrual/Networth/ICD*

6,219.71

Internal Accrual / Net worth /ICD/non convertible Preference share

5,497.99

Total

50,717.70

Competitive Strengths:
Experienced Management Team
Diversified Product Mix
Established Player in the Indian Wire Rope Industry
Diversified client base
Pan-India Customer Base
Global Reach
Business Strategy:
Expansion of presence in the domestic markets
Focus on development of international markets for products
Strengthening of product portfolio and developing capabilities to manufacture a wider range of products
Meeting Quality Standards and developing customer focus
Key Concerns:
Underutilization of capacity of Existing Manufacturing Facilities or Proposed Project may adversely affect the business, results
of operations and financial condition.
Any failure on the part of Promoters to fund their portion of Project Cost may adversely affect BWRLs growth plans and the
implementation of Proposed Project may be jeopardized.
Delay in schedule of implementation may subject BWRL to risks related to time and cost overrun may have a material adverse
effect on its business, results of operations and financial condition.
Promoters do not have the experience of operating in the wire ropes sector.
BWRL require number of approvals, licenses, registrations and permits for its business and its Proposed Project and failure to
obtain or renew them in a timely manner may adversely affect its operations
BWRL derives a significant portion of its revenues from its top 10 (ten) customers. The loss of, or a significant reduction in the
revenues it receive from, one or more of these customers, may adversely affect its business
The total revenues and profit after tax of the Company have decreased in the past years.
Some of the Group Companies have incurred losses in the past years. Sustained losses by Group Companies could adversely
affect Promoters financial condition
BWRL has high working capital requirements. Its inability to meet its working capital requirements may have a material
adverse effect on its business, financial condition and results of operations
Business is dependent on BWRLs continuing relationships with its customers, with whom it has not entered into long term
arrangements Part of its business comes from tenders and failure to procure such tenders on a continuous basis could
adversely impact its revenues and profitability
Delays or defaults in customer payments could result in a reduction of BWLs profits and cash flows.
Indebtedness and the conditions and restrictions imposed by financing and other agreements could adversely affect BWLs
ability to conduct the business and operations.
Business prospects and continued growth depends on BWRLs ability to access financing at competitive rates and competitive
terms, which amongst other factors is dependent on its credit rating
Product liability claims could adversely affect BWRLs operations Increased competition for skilled employees and salary
increases for its employees may reduce profit margin.
The wire rope industry is capital intensive in nature and factors affecting the demand for the products manufactured by the
company could affect its results of operations.
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Any increase in interest rates would have an adverse effect on BWRLs results of operations and will expose the Company to
interest rate risks.
General economic and business conditions in the markets in which BWRL operates and in the local, regional and national
economies;
BWRLs ability to successfully implement its growth strategy and expansion plans, and to successfully launch and implement
various projects and business plans for which funds are being raised through this Issue;
BWRLs ability to attract and retain qualified personnel;
Changes in political and social conditions in India or in countries that it may enter, the monetary and interest rate policies of
India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;
The performance of the financial markets in India and globally;
Any adverse outcome in the legal proceedings in which BWRL is involved;
Occurrences of natural disasters or calamities affecting the areas in which BWRL has operations;
Market fluctuations and industry dynamics beyond BWRLs control;
BWRLs ability to compete effectively, particularly in new markets and businesses;
Changes in foreign exchange rates or other rates or prices;
BWRLs ability to anticipate global outsourcing trends and suitably expand its current service offerings;
BWRLs ability to protect its intellectual property rights and not infringing intellectual property rights of other parties;
Realization of Contingent Liabilities;
Changes in domestic and foreign laws, regulations and taxes and changes in competition in its industry;
Termination of customer contracts without cause and with little or no notice or penalty;
Failure of BWRLs infrastructure and equipment;
Failure to obtain and retain approvals and licenses or changes in applicable regulations

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