Neetu Yoshi Ltd. IPO: Key Details

Neetu Yoshi

• Neetu Yoshi is coming out with an initial public offering (IPO) of 1,02,72,000 equity shares in a price band Rs 71-75 per equity share.
• The issue will open on June 27, 2025 and will close on July 01, 2025.
• The shares will be listed on SME Platform of BSE.
• The face value of the share is Rs 5 and is priced 14.20 times of its face value on the lower side and 15.00 times on the higher side.
• Book running lead manager to the issue is Horizon Management.
• Compliance Officer for the issue is Pranjul Gupta.

Profile of the company

Neetu Yoshi is a foundry with integrated CNC machine shop engaged in the business of manufacturing of customized products in different grades of ferrous metallurgical products. Its product portfolio covers different grades of mild steel, spheroidal graphite iron, cast iron and manganese steel, from as small as 0.2 Kgs to 500 Kgs finished metallurgical products. It is a RDSO certified vendor for manufacturing and supply of over 25 casting products for Indian Railways. It is also ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 accredited company which certifies its quality management, environmental management and occupational health & safety management system respectively, employed by it in its manufacturing facility. It combines modern manufacturing technology and engineering expertise with cost efficient processes, to deliver quality products at competitive prices. Its manufacturing operations are strengthened by its technical capabilities, infrastructure, and process knowledge.

It offers to its customers a comprehensive range of both standard and customised products. It has a diverse product portfolio of over 25 products supplemented by its ability to make customised products for its customers. Currently, the company is majorly catering and serving Indian Railways through its finished metallurgical products which are used for production of critical safety products i.e. braking solutions, suspensions, propulsion aids & coupling attachments for trains of Indian railways and therefore serves as bogie components, LHB bogie component, coupler component for wagons, coach component for coach, locomotive component, railway track component for Indian Railways.

Proceed is being used for:

• Setting up of new manufacturing facility
• General corporate purposes

Industry Overview

The India metal casting market size reached $12,473 Million in 2023 which is expected to reach $21,252 Million by 2032, exhibiting a growth rate (CAGR) of 5.8% during 2024-32. Metal casting is the process of obtaining a desired geometrical shape by pouring hot liquid metal into a mold that

contains a hollow cut out or cavity. This technique is used for the mass production of large and complex components while utilizing alloys with low melting points. Metal casting can be done with non-ferrous metals such as zinc, copper, aluminium, magnesium, lead, pewter and tin-based alloys. In India, metal casting is extensively used as it is cost- efficient and significantly reduces the amount of wasted scrap metal.

Meanwhile, Indian Railway Equipment Market has valued at $12.31 Billion in 2023 and is anticipated to project robust growth in the forecast period with a CAGR of 3.61%. The Indian Railway Equipment market has witnessed significant growth in recent years, driven by the increasing government initiatives aimed at modernizing the railway infrastructure and enhancing passenger safety. With a vast network of over 67000 km of tracks, Indian Railways plays a crucial role in the country’s transportation system. The government’s substantial investments in the railway sector are evident in ambitious projects like the Dedicated Freight Corridor and the High- Speed Rail Project, which are set to revolutionize transportation in India.

Moreover, the demand for advanced signalling systems, train control systems, and the rolling stock is expected to experience a surge, further stimulating the growth of the railway equipment market. These technological advancements will not only improve the efficiency and reliability of train operation but also contribute to a safer and more comfortable journey for passengers. The integration of smart technologies, such as real-time monitoring and predictive maintenance, will enhance the overall performance and reduce downtime.

Pros and strengths

Fully equipped and RDSO approved manufacturing facility: The company operates through its Manufacturing Facility situated on land admeasuring approximately 7,173 Sq. Meters, located in Bhagwanpur, Uttarakhand. It operates a single location unit having installed capacity of 4,493 metric tonnes per annum as on March 31, 2024 and currently, the installed capacity has been expanded to 8,087 metric tonnes per annum (MTPA). Its manufacturing unit is equipped with latest equipment and trained manpower. Its manufacturing technology offers high operational efficiency to manufacture customised products as per customers’ specification. The company’s manufacturing technology, trained work force and managerial expertise results in a consistent level of productivity.

Strategically located manufacturing facility: The company’s Manufacturing Facility is strategically located in close proximity to its raw material sources i.e. Jagdari Railway Workshop from where it procures high-quality alloy, which minimises its transportation costs and provides logistics advantage and cost benefits resulting in improved operating margins. Its manufacturing facility, being situated in the state of Uttarakhand also offers it to avail electricity at lower power tariffs, as the state of Uttarakhand offers one of the lower power tariffs in the Country. The strategic location of its plant has helped it in creating synergies as well as achieving economies of scale and operational efficiencies.

Quality assurance and control: As a 'Class A' foundry certified by Indian Railways, it is recognized for its good quality standards. It is a quality conscious organisation, which focuses in manufacturing quality products. Its products and processes undergo regular quality checks to ensure minimal defects. It follows strict manufacturing practices and standards, and its Manufacturing Facility benefits from the quality benchmarking certifications such as ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018, further validating its commitment to quality management, environmental management, and occupational health and safety, respectively.

Risks and concerns

Business and revenues are substantially dependent on Indian Railways: The company derives majority of its revenues from contracts with a limited number of customers who depend upon Indian Railways for award and execution of the projects awarded to them and therefore its revenues substantially dependent on Indian Railways and Indian Railway Sector. However, the composition of revenue generated from these customers might change as it continues to add new customers in the normal course of business. Its revenues may be adversely affected if there is an adverse development with such customer, including as a result of a dispute with or its disqualification by such major customers, which may result in significant reduction in its orders from such customers, and thereby decline in its revenue, cash flows and liquidity.

Promoters have limited experience in the industry in which it operates: The company’s promoters are young and are associated with the company since incorporation i.e. January 2020. Prior to this, they did have limited business exposure in the industry in which the company is operating. Although they have been successfully running the business operations, lack of vintage experience to address the risks frequently encountered by industry, may adversely affect its operations.

Geographical constrain: The company operates through its manufacturing facility situated on land admeasuring approximately 7,173 Sq. Meters, located in Bhagwanpur, Uttarakhand. The company is dependent on its manufacturing facility for the production of its products. Its manufacturing facility is located in the state of Uttarakhand and events impacting state of Uttarakhand, may disrupt its production and operations. Further, its manufacturing facility is subject to operating risks, such as the breakdown or failure of equipment, disruption in power supply or processes, severe weather conditions, performance below expected levels of efficiency, obsolescence, labour disputes, natural disasters, industrial accidents, infectious diseases (such as COVID-19 pandemic), political instability, the need to comply with the directives of relevant government authorities and the requirement to obtain certain material approvals to operate its manufacturing facility.

Outlook

Neetu Yoshi is engaged in the business of manufacturing customised products in different grades of ferrous metallurgical products. The company offers a product portfolio of mild steel, spheroidal graphite iron, cast iron, and manganese steel, ranging from 0.2 kg to 500 kg. It is an RDSO certified vendor for Indian Railways. The company is fully equipped and RDSO approved manufacturing facility. It also has strategically located manufacturing facility. On the concern side, the company’s manufacturing facility is located in Uttarakhand and any disruption, breakdown or shutdown of its manufacturing facility may have a material adverse effect on its business, financial condition, results of operations and cash flow. Moreover, the company derives majority of its revenues from contracts with a limited number of customers who depend upon Indian Railways. Its revenues may be adversely affected if there is an adverse development with such customer.

The company is coming out with a maiden IPO of 1,02,72,000 equity shares of face value Rs 5 each. The issue has been offered in a price band of Rs 71-75 per equity share. The aggregate size of the offer is around Rs 72.93 crore to Rs 77.04 crore based on lower and upper price band respectively. On performance front, the company’s revenue from operations increased by 191.63% to Rs 4,733.42 lakh in financial year ended March 31, 2024 from Rs 1,623.07 lakh in financial year ended March 31, 2023. Moreover, the company’s profit after tax increased by 2,873.13% to Rs 1,257.72 lakh in financial year ended March 31, 2024 from Rs 42.32 lakh in financial year ended March 31, 2023.

The company proposes to further diversify its product portfolio by introducing new line of products. It intends to accomplish the same by setting up of new manufacturing facility in Kanpur Sadar, Uttar Pradesh for which the company has entered into agreement for sale dated August 14, 2024. The new manufacturing facility is intended for production of complete Bogie and coupler that it will be able to manufacture critical railway assembly and would be in a position to cater other industries as well. Its presence in the market positions will place it in a position to capitalize on the anticipated growth of high value Metallurgical engineering products and increased requirement of Indian Railways. The strategic decision to expand its product portfolio will enable it to create additional revenue streams and diversify its business operations.