IKIO Lighting Limited is an Indian manufacturer of light-emitting diode ("LED") lighting solutions. The company is focused on sustainability and providing low-energy LED products to help India meet its sustainability goals has filed its draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India to raise funds via initial public offering (IPO).
The public issue consists of a fresh issue of equity shares worth up to Rs 350 crore and an offer-for-sale (OFS) up to 7,500,000 equity shares by Promoter and selling shareholders, which comprises of up to 6,000,000 by promoter Hardeep Singh, up to 1,500,000 by Surmeet Kaur ("Selling Shareholders").
The Offer is being made through the Book Building Process, wherein not more than 50% of the Offer shall be available for allocation to Qualified Institutional Buyers, not less than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and not less than 35% of the Offer shall be available for allocation to Retail Individual Bidders.
Additionally, the company in consultation with merchant bankers to the issue may consider a preferential issue or any other method aggregating up to Rs. 50 crore. If such placement is completed, the fresh issue size will be reduced.
The proceeds from the fresh issuance worth Rs 50 crores will be used for repayment / prepayment, in full or part, of certain borrowings availed by the company and its subsidiaries on a consolidated basis, Rs 236.68 crore will be used as an investment in company's wholly owned subsidiary, IKIO Solutions Private Limited, for setting up a new facility at Noida, Uttar Pradesh, and general corporate purposes.
IKIO Lighting Limited is an Indian manufacturer of light-emitting diode ("LED") lighting solutions. The company is focused on sustainability and providing low-energy LED products to help India meet its sustainability goals. They are primarily an original design manufacturer ("ODM") and design, develop, manufacture and supply products to customers who then further distribute these products under their own brands.
IKIO also works with its customers to develop, manufacture and supply products that are designed by our customers. Its products are categorised as LED lighting; refrigeration lights; ABS (acrylonitrile butadiene styrene) piping; and other products. The company's LED lighting offerings focus on the premium segment and include lighting, fittings, fixtures, accessories and components. We provide lighting solutions (lights, drivers, and controls) to commercial refrigeration equipment suppliers under our refrigeration light segment.
The company's largest customer is Signify Innovations India Limited, erstwhile Philips Electronics India Limited ("Signify (Philips)"), which according to Frost & Sullivan in Fiscal 2022 had a 50% market share in India's functional decorative lighting category (including LED spotlights, LED downlights and cove lights) and a 10% market share in India's true-blue decorative lighting segment (including chandeliers, wall lights, pendants, outdoor lights). (Source: F&S Report, September 2022).
IKIO has a history of high customer retention. In Fiscal 2022, the derived approximately 93.56% of its restated revenues from operations from repeat customers (defined as customers from which we have had revenues in the past three fiscal years). In Fiscal 2022, IKIO derived 78.81% of its proforma consolidated revenues from operations from repeat customers (defined as customers from which we have had revenues in the past three fiscal years). In Fiscal 2022, IKIO enjoyed relationships of over three years with seven out of these top ten customers. In addition, the company is building an international customer base, primarily in the United States.
IKIO's manufacturing operations are a key driver of its business. The company has four manufacturing facilities with one located in the SIDCUL Haridwar industrial park in Uttarakhand and three in Noida in the National Capital Region. The company's focus is to provide end-to-end product solutions and to develop better control of its supply chain and improve its margins, the company is backward integrated with its major manufacturing processes. They have developed in-house capabilities so that we manufacture all mechanical components inhouse (save diodes and resistors).
In Fiscal 2022, IKIOs top twenty customers accounted for 85.02%, of consolidated revenue from operations; the top ten customers accounted for 80.13% of consolidated revenue from operations; our top five customers accounted for 73.12%, respectively, of consolidated revenue from operations; and Signify (Phillips) accounted for accounted for 60.45%, respectively.
The company's revenue from operations increased by 55.47% to Rs 331.84 crore for the Financial Year 2022 from Rs 213.45 crore for the Financial Year 2021, which is largely attributable to a surge in demand following the easing of COVID-19 restrictions and the resumption of normal business growth in terms of revenue, which resulted in higher sales volume of LED lights, and the introduction of ABS pipes for export. The company experienced sharp increases in sales of LED Strip Lights, LED Spot Lights and LED Downlights in Fiscal 2022. However, profit after tax grew 75.37% to Rs 50.52 crore for the financial year 2022 against Rs 28.81 crore from the previous year. The company incurred a CAPEX of Rs 124.6 cr in FY22.
Motilal Oswal Investment Advisors Limited is the book running lead managers and KFin Technologies Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.