Cello World files for ₹1,750 crore IPO

Mumbai-based pen manufacturer Cello World Ltd has filed a draft red herring prospectus (DRHP) with capital market regulator Sebi to raise funds through an initial public offering (IPO), according to a regulatory filing.

The IPO is a complete offer for sale (OFS), where promoters and other shareholders will sell shares of ₹5 face value totalling ₹1,750 crore. The offer includes a reservation of up to ₹10 crore for subscription by eligible employees.

The offer for sale comprises up to ₹300 crore by Pradeep Ghisulal Rathod, up to ₹670 crore by Pankaj Ghisulal Rathod, up to ₹380 crore by Gaurav Pradeep Rathod, up ₹200 crore by Sangeeta Pradeep Rathod, up to ₹100 crore by Babita Pankaj Rathod and up to ₹100 crore by Ruchi Gaurav Rathod.

The offer is being made via book building process, and not more than 50% of offer will be available for allocation on a proportionate basis to qualified institutional buyers, not less than 15% of the offer will be available for allocation to non-institutional bidders and not less than 35% of offer will be available for allocation to retail individual bidders.

As of 31 March 2023, the company offered a wide range of 15,841 stock-keeping units (”SKUs”) spanning various product categories. In 2017, it ventured into the glassware and opal ware business under the “Cello” brand. The company has products in three categories—consumer houseware, writing instruments and stationery, and moulded furniture and related products.

Kotak Mahindra Capital Co. Ltd, ICICI Securities Ltd, IIFL Securities Ltd, JM Financial Ltd and Motilal Oswal Investment Advisors Ltd are book running lead managers and Link Intime India Pvt. Ltd is registrar. The equity shares will be listed on BSE and NSE.

For FY23, consolidated revenue from operations increa-sed about 32% to ₹1,796.69 crore against ₹1,359.18 crore a year ago. Net profit increased by 29.86% to ₹285 crore in fiscal 2023 from ₹219.52 crore a year ago. It had highest ROCE among peers in FY21 and FY23 and highest Ebitda margin for FY21, FY22 and FY23.

Its peers are Borosil Ltd, Kokuyo Camlin Ltd, La Opala RG Ltd, Stove Kraft Ltd, TTK Prestige Ltd, Linc Ltd, and Hawkins Cookers Ltd.

Throughout the fiscal years ending in 2021, 2022, and 2023, the company undertook no significant changes to its business operations, apart from the acquisition of shares in Wim Plast Limited and the acquisition of business entities by Cello Industries Private Limited, Cello Household Products Private Limited, and Unomax Stationery Private Limited through a slump sale.

With ownership or leasing of 13 manufacturing facilities in five different Indian locations including eight facilities in Daman in the Union Territory of Daman and Diu; two facilities in Haridwar, Uttarakhand; one facility in Baddi, Himachal Pradesh; one facility in Chennai, Tamil Nadu; and one facility in Kolkata, West Bengal as of March 31, 2023, the company is also in the process of establishing a glassware manufacturing facility in Rajasthan.

Its manufacturing capabilities enable it to independently produce a wide array of products. During the Financial Years 2021, 2022 and 2023, it launched 397, 169 and 380 new products across its three product categories, respectively.

The company’s robust distribution network spans across the nation, supported by a sales team consisting of 683 members as of March 31, 2023. For the Consumer Houseware category, it collaborates with 678 distributors and around 51,900 retailers across India. For Writing Instruments and Stationery, it has 29 super-stockists, approximately 1,450 distributors, and roughly 59,100 retailers. In the Moulded Furniture and Allied Products category, it works with 1,067 distributors and around 6,500 retailers located throughout India.

Founded by late Ghisulal Dhanraj Rathod, formerly the promoter and father of two current promoters, Pradeep Ghisulal Rathod and Pankaj Ghisulal Rathod, had been associated with Cello Plastic Industrial Works and the “Cello” brand since 1962.