Bizotic Commercial IPO: All You Need To Know

Bizotic Commercials Ltd. will launch its initial public offering on Monday, June 12th. The readymade garment manufacturer will raise Rs 42.1 crore from a fresh issue of 24.1 lakh shares.

The Ahmadabad-based company is eyeing a market value of Rs 98.49 crore at a fixed price band of Rs. 175 apiece. 50% of the offer will be alloted to retail individual investors and the other 50% to non- institutional investors.

• Issue opens: June 12.

• Issue closes: June 15.

• Issue size: Rs 42.2 crore.

• Face value: Rs 10 apiece.

• Fixed price: Rs 175 per share.

• Lot size: 800 shares.

• Listing: BSE Ltd.

The company is engaged in wholesale trading of clothes. It manufactures, designs and markets readymade garments. The company's products includes men's formal, casual, party, comfort, winter, ethnic and sports wear.

The company's distribution channel includes self-owned retailed outlets, franchisees and e-commerce platforms. All the products of the company are sold under the brand 'Urban United'.

Bizotic currently has 20 stores in different cities of Rajasthan and one in Bihar. Of these 17 are on franchisee basis and four are company- owned.

The funds raised will be employed for the following purposes by the company:

• Setting up the company’s retail network by establishing company-owned and operated stores: Rs 4.50 crore

• Repayment of outstanding loan: Rs 1.80 crore

• Long-term working capital requirement: Rs 22.70 crore

• General corporate purposes: Rs 9.61 crore

The balance amount of Rs 3.6 crore will be used for issue-related expenses.

• The company derives a substantial amount of revenue from a few of its customers. For the six-month period ending Dec. 31, 2022, Bizotic's top 10 customers accounted for approximately 80.05% of their gross revenue from operations. The loss of any of these significant customers can have a material effect on the financial results.

• The company's debtors outstanding as of December of Rs. 62.27 lakh are more than 1,095 days. The company’s incorrect collection policy causes slow recovery of debt.

• The debtors outstanding of Rs 13.62 lakh are also disputed. If the company fails to recover the amount from the outstanding debtor, the cash flow and financial position will be affected adversely.

• The company doesn't have agreements or contracts with all of its franchisees. In absence of any written contract, guaranteed continuation of operations are unpredictable and not legally enforceable.

• The company is involved in eight criminal litigations involving a total amount of Rs 49.50 lakh.

• The business operations are dependent on renewal of licences, registration and permits. Failure to maintain such registrations or comply with applicable conditions, may affect the business adversely.

• The company has unsecured loans, which are repayable on demand. Any repayment demand from lenders may affect the financial condition of the company.