The IPO

Gemini Engi-Fab Private Limited proposes an IPO of 55,00,000 equity shares of face value of Rs 10 each, at a price which will be determined through the book building process.

About the Company

GEFL was incorporated as a private limited company on January 12, 1998 and later converted into a public limited company “Gemini Engi-Fab Limited” (GEFL) in January 2007.

Promoters

Promoted by the members of the Panchal family, the company is in the business of manufacturing and salvaging of process equipment through fabrication for various process industries. GEFL manufactures spares, channel heads, tube sheets and tube bundles for refineries.

Business

GEFL also manufactures heat exchangers for refineries and dairy plants, pressure vessels, storage vessels, tanks, heat exchangers, distillation and absorption columns. The company has also entered into salvaging of equipment in 2006-07.

The company currently has a weight handling capacity of 27 tonnes. The existing workshop of the company is located at Umbergaon in Valsad and it proposes to build a new workshop near its existing facilities with higher technical capabilities so as to move up the value chain.

Use of IPO funds

The proceeds from the proposed issue of shares are intended to be deployed for setting up a new manufacturing workshop at Umbergaon, meeting working capital requirements, general corporate purposes and issue expenses. As per the organizational structure of GEFL, Mr. Dalpatram J. Panchal, Chairman & Executive Director, is supported by a team of senior executives headed by Mr. Rakesh Panchal, Managing Director of GEFL.

Concerns

The company has three legal cases pending against it as on July 07, 2008. They include a case in relation to payment of back wages of Rs.1.84 lakh, another case in relation to transfer of duty paid goods from one industrial plot to another owned by GEFL without the permission of Central Excise Authorities and the third case of compounding applications filed by GEFL with the Company Law Board (CLB) in relation to non increment of paid-up capital upto one lakh and non appointment of company secretary during the period October 2007 to February 2008.

Financials

With an increase in the manufacturing facility and due to manufacturing of specialized equipment, salvaging and trading operations during the period FY 2005-08, the company has reported a CAGR of 74.21% for the above period.

In future, the demand for the fabrication and salvaging from various sectors is likely to provide good growth opportunities to the company therefore, the growth projected and the margins expected appear reasonable considering the track record of the company. Post IPO, the company will be moving up the value chain and competing against established players.

Grading

CARE has assigned ‘CARE IPO Grade 2’ to the proposed (Initial Public Offer) IPO of Gemini Engi–Fab Limited (GEFL). CARE IPO Grade 2 indicates below average fundamentals.

CARE assigns IPO grades on a scale of Grade 5 to Grade 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals. CARE’s IPO grading is an opinion on the relative assessment of the fundamentals of that issuer.