Indo Farm Equipment Limited IPO: Check IPO Date, Lot Size, Price & Details

About the Company:

Incorporated in 1994, Indo Farm Equipment Limited is a well-established, fully integrated manufacturer with over two decades of experience in producing tractors and pick-and-carry cranes and farm equipment. As of Fiscal 2024, the company’s revenue from product sales is primarily derived from tractors (52.16%), pick-and-carry cranes (47.77%), and other products (0.07%). Over the past three financial years, approximately 93% of its total sales have been derived from the domestic market, and around 7% contributed by exports.

Additionally, Indo Farm Equipment Limited operates an asset financing business focused on retail financing of tractors through its wholly owned subsidiary, Barota Finance Limited, an RBI-registered Non-Banking Financial Company (NBFC).

The company currently produces tractors ranging from 16 HP to 110 HP and pick-and-carry cranes with capacities ranging from 9 tons to 30 tons. Its ISO 9001:2015 certified manufacturing facilities are spread across 127,840 sq. meters of industrial land in Baddi, Himachal Pradesh. As of September 30, 2024, the production facilities have an annual manufacturing capacity of 12,000 tractors and 1,280 pick-and-carry cranes.

It has recently acquired industrial land adjacent to its existing facility with plans to establish a dedicated manufacturing unit for pick-and-carry cranes, aiming to increase production capacity by an additional 3,600 units per year.

The Promoter, Promoter Group hold 93.45% stake in the company pre-issue which will reduce to 69.44% post-issue.

IPO Details:

Objects of the Offer:

The company proposes to utilise the Net Proceeds of the Fresh Issue for funding the following objects: 

Key Strengths and Opportunities:

• Fully Integrated and Established Manufacturing Setup: Its manufacturing facility is equipped with advanced infrastructure such as induction furnaces, pneumatic molding machines, automatic molding lines, a sand plant, gear and hydraulic shops, etc. The facility enables in-house production of critical components, control over the manufacturing process and delivery, reduction in dependence on third parties and improvement in operational efficiencies.
• In-House NBFC Setup: To support and expand its business, the company established an in-house NBFC under its subsidiary, Barota Finance Limited, to offer tractor financing solutions to its customers. As of June 30, 2024, the NBFC has built a vehicle finance loan portfolio totalling ₹1,271.55 million and is currently serving approximately 5,900 active customers. Easy in-house finance facilities enable customers to purchase with ease of finance.
• Manufacturing Wide Range of Products: The company offers a diverse range of tractors, spanning from 16 HP to 110 HP, available in both 2WD and 4WD configurations. This product lineup caters to approximately 80% of global market demand. Additionally, it manufactures Pick & Carry Cranes, extensively utilized across the engineering, construction, and infrastructure sectors. With an established setup and a robust portfolio of operational products, the company is strategically positioned for rapid scalability.
• Product acceptability in multiple countries and wide variety of financial institutions: The company's strong track record of product acceptance across numerous countries highlights its impressive international presence and underscores its capability to deliver world-class products. Currently, the company operates in several countries, including Afghanistan, Algeria, Bangladesh, Belgium, Brazil, Chile, Germany etc. When it comes to Pick & Carry Cranes, the products are widely supported by financing from nearly all private banks as well as most public sector banks.

Risk factors:

• Factors impacting demand for its products:

Demand for tractors and farm equipment is dependent on –

• Monsoons and agriculture related natural factors which affects farmers discretionary incomes
• Availability of credit to farmers
• Government incentives
• Launch of newer technologies by competitors etc.

 Demands for Pick & Carry Cranes is dependent on –

• Level of Infrastructure development
• Product Acceptance in other countries
• Technological innovations in Infra field etc.

• License renewal: It has submitted renewal application for consent to Operate under Section 25/26 of the Water (Prevention & Control of Pollution) Act, 1974, and under Section 21 of the Air (Prevention & Control of Pollution) Act, 1981, for the Foundry Unit. If the company fails to obtain, renew, or maintain the necessary statutory and regulatory licenses, registrations, and approvals required for its operations, it could significantly impact its operational results.
• Underutilisation of tractor manufacturing capacity: Average Capacity utilization for FY 2022 to FY 2024 is 32% for tractors; and for the three months ended June 30, 2024, it was at 13.90%. The low rate is due to low mainly because of (a) dependency upon the retail financing availability from banks and NBFCs for the tractors division, (b) Stiff competition from the major players and (c) Brand recognition due to lower business promotions & advertisement expenses.
• Sluggish Financial Performance Trends: The company and its subsidiary have experienced modest revenue growth, PAT (Profit After Tax) and PAT margins over the past three fiscal years. The PAT margins stood at 3.27% for the quarter ended June 30, 2024, and were 4.16% in Fiscal 2024, 4.15% in Fiscal 2023, and 3.90% in Fiscal 2022.

Financial Snapshot and Key Performance Indicators:

* - Not annualised

The issue is not rated.