Vibhor Steel Tubes Limited IPO - Get Date, Price, Review and Details

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In this article, we will discuss:

• About the company
• Objects of the Offer
• Key Strengths and Opportunities
• Risks
• Financial Snapshot

About the company

Incorporated in 2003, Vibhor Steel Tubes Limited is a manufacturer and exporter of ERW Pipes, Hot-Dipped Galvanized Pipes, Hellow Section Pipes & Painted Pipes Crash Barriers. The company is a 2-decade-old manufacturer, exporter and supplier of steel pipes and tubes to various heavy engineering industries in India.

The company has two manufacturing facilities – Unit I in Raigad, Maharashtra and Unit II in Mahabubnagar District of Telangana.

Objects of the Offer

The company intends to utilize the net proceeds from the fresh issue towards the following objects:

• Funding of working capital requirements of the company; and
• General corporate purposes.

Key Strengths and Opportunities

• Association with Jindal Pipes Limited

The Promoters of Vibhor Steel Tubes and Jindal Pipes Limited (“JPL”) share a common friendship from Hisar origin. The Company benefits from a long-standing relationship with JPL. The company sells all its finished product under brand name “Jindal Star” to JPL and its approved customers based on monthly card rates. As entire procurement and selling is facilitated by JPL, pricing becomes very transparent and passing of variation in raw material prices to the customers is effective.

• Strategic location of manufacturing Units

The manufacturing Unit I of Vibhor Steel Tubes Ltd. is located in Raigad, Maharashtra, which exports 100% of its goods. Unit II is located around seventy (70) km from Hyderabad in the Mahabubnagar District, State of Telangana and is close to the Jadcherla industrial area. This proximity enables the ease of logistics, power, water supply and raw materials for its operations in Unit.

• Well-developed distribution and marketing network

With the help of Jindal Pipes Limited, the company has developed and implemented a wide range of networking channels throughout the industry to strengthen its scope of identifying core customer base and designing the right marketing strategies for procurement and liaising of projects to deliver customized solutions for clients. The distribution and marketing network ensures the product availability to its customers translating into an efficient supply chain, focused customer service and short turnaround times for product delivery.

• Experienced Promoters and senior management team

The promoters of Vibhor Steel Tubes, Mr. Vijay Kaushik and Mr. Vibhor Kaushik are qualified with individual experience of more than 4 & 2 decades respectively in the Steel Pipes & Tubes industry. They have been instrumental in driving the growth since the inception of the business. The management team's experience and understanding of the industry will enable the company to take advantage of both current and future opportunities. Most of the senior management personnel have worked for a significant period, resulting in effective operational coordination and continuity of business strategies.

Risks

• Vibhor Steel Tubes Ltd. has entered into long-term agreements with Jindal Pipes Limited for the purchase of its products. In case of any disruption in the agreement, its business, revenue & results will be affected.
• The company is dependent on and derives a substantial portion of its revenue from a single customer, Jindal Pipes Limited. Over 90% of its revenue is derived from a single customer. Cancellation by Jindal Pipes Limited or delay or reduction in their orders could have a material adverse effect on its business, results of operations and financial condition.
• The company, its Promoters/Director and the group companies are parties to certain legal proceedings. Any adverse decision in such proceedings may have a material adverse effect on the business, results of operations and financial condition.
• Vibhor Steel Tubes Ltd. has entered into long-term agreements with Steel Authority of India Limited & JSW Steel Limited for the supply of raw materials. In case of any disruption in agreement, its cost, revenue & results will be affected accordingly.

Financial Snapshot