(This is a research note is based only on the Draft Red Herring Prospectus of the Company unless otherwise mentioned. This report summarizes the key points of the DRHP and is not to be construed as a recommendation).
Business – designing, developing, manufacturing, supplying various types of pots and planters.
Incorporation of business – 30 Dec 2022
Predecessor to the company – M/s Harshdeep Agro Products, set up in 2002 by promotor as proprietorship company
Promotor – Hitesh Chunilal Shah
Strengths
Diverse range of products
Focus on quality
Revenue from multiple geographies
In-house manufacturing capabilities
Strategy
Continue to improve quality standards
Increase presence in existing and new markets
Maintain cordial relationships with customers and suppliers
Continue to strengthen existing product portfolio and diversify into new products
Total Reach – 27 states and union territories
Key overseas market - Djibouti, East Africa, UK, Nepal. Export for FY23 contributed to 1.85% of sales
Manufacturing Units – Bhiwandi & Pune
Stores – Delhi, Pune, Rajahmundry
Exclusive Distributors – Hyderabad, Kolkata, Chandigarh, Vishakapatnam
Online presence – Amazon, Flipkart
Select Risk Factors
Price sensitive market with low level of product differentiation.
Working capital is borrowed - due to the limited liquidity of current assets
Top 10 suppliers account for about 85% of procurement of raw materials but the company holds no long term supply contracts with them
Very short span of operating history.
Inventories and trade receivables form a major part of the current assets
Price sensitive industry
Plastic-made products with potential for impact from regulation
Summary of outstanding litigations:
Floriculture Industry (Source : https://www.investindia.gov.in/team-india-blogs/indian-floriculture-sunrise-sector)
Constituents– flowers, foliage, potted plants, nursery plants, micro-propagation, extraction of essential oils
Industry expected to grow to $5.9 billion by 2030
Driver of growth – growing popularity of an environment-friendly lifestyle
States that are leading producers of flowers – Tamil Nadu (16.6%), Andhra Pradesh (19.1%), Madhya Pradesh (11.9%), Karnataka and West Bengal
Downstream industries – Hospitality, Wedding
Export in FY21 - $77.4 million
Key overseas markets – USA, Netherlands, UAE, UK, Germany, Japan, Canada
Key challenges – environment, infrastructure, marketing, lack of awareness on new varieties and cultivation techniques
Government support – implementation of CSIR floriculture mission in 21 states and union territories where in available knowledge of CSIR Institutes will be used to help farmers and industry re-position themselves to meet import requirements; allowing of 100% FDI in the sector.
Select financials of Harshdeep Hortico from DRHP
Objects of the issue:
The funds utilized to meet working capital requirements would be spread across FY24 (Rs 600 lakhs) and FY25 (Rs 300 lakhs).
Shareholding pattern:
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