- Via the SME IPO, Vinrox will try to raise funds to establish an electronics manufacturing services (EMS) facility and three new SMT Lines
- The company generated revenue of Rs 25 crore in FY20, Rs 55 crore in FY21, and Rs 91 crore in FY22.
Original Design Manufacturer (ODM) and Original Equipment Manufacturer (OEM) company Vinrox is preparing to file an SME Initial public offering (SME IPO) in six to eight months. Ashvin Navadia, CEO and co-founder of Vinrox revealed this information in an exclusive conversation with the Electronics B2B and Electronics For You team.
He said, “Right now, Vinorx is a LLP company. It will take around two to three months to convert it into a Private Limited company, and then we will file for an SME IPO.”
According to Motilal Oswal firm, for an SME IPO to take place, the company must have a minimum post-paid-up capital of Rs 1 crore. For a regular IPO, this is Rs 10 crore at the minimum. Further, the minimum amount of allottees in a regular IPO must be 1,000. For an SME IPO, the number is 500. Also, in an SME IPO, the application size is Rs 1 Lakh, whereas, in a regular IPO, it is between Rs 10,000 and Rs 15,000.
China+1, And New EMS Facility
Via the SME IPO, Vinrox will try to raise funds to establish an electronics manufacturing services (EMS) facility. Navadia explained the company will try to raise approximately Rs 30 crore via the SME IPO.
“A parcel of land, around 1,25,000 square feet, has already been purchased. We will construct around 75,000 square feet there. This is one of the main investments the funds raised from SME IPO will go to,” he said.
Among the company’s plans for this new EMS facility are setting up three new SMT Lines, which will require sourcing machines and equipment from scratch. Vinrox, at its present EMS facility in Gujarat, is operating two SMT lines. The new facility will be located near the company’s existing facility.
Navadia added that Vinrox is valued at around Rs 150 crore, and in the process of filing for SME IPO, it will dilute at least 26% stake. He explained that the world focusing on India because of the China+1 strategy is one of the leading “encouragements” for Vinrox gunning for an IPO.
“The EMS business in China is down by at least 35% to 50%. As proof of the statement, I can tell you that we are exporting PCBs to a company in China,” he said. According to him, the trend of the EMS business going further down will continue its momentum, resulting in favourable outcomes for India.
Major Revenue From Outside India
At present, Vinrox generates approximately 65% of its revenue from outside India, and Navadia shared that America is a significant contributor to the same. He highlighted that as more and more American companies stop availing EMS services from China, India will gain a lot of orders.
“I recently visited China. There is a company there that gives EMS machines on rent and lease. When I spoke to the owner of that company, I came to know several of its clients have not paid rent for these machines for over a year. All he told me was that everyone says the business is bad,” he said.
As per him, much of this business will land in India, because the labour here is much more affordable than in China. He also believes that component costs in India have also started to come at par with China.
He highlighted, “The only problem I see is the availability of components in a local ecosystem. If you look at Shenzhen in China, you can source all the components within a 20 km radius. This is something that India needs to improve. I am sure with the current government policies, this will also happen.”
While the company focuses on solutions for industrial automation, telecom, medical, IoT, and a little electric vehicle vertical, it plans to enter the consumer electronics and EVs vertical on a “larger scale” at a new facility. It has also applied for International Automotive Task Force (IATF) certification. This helps companies manufacture automotive solutions and products for global markets.
Navadia shared that with clients in the US, Europe, China, and India, the company generated revenue of Rs 25 crore in FY20, Rs 55 crore in FY21, and Rs 91 crore in FY22. He projected that Vinrox will close the current fiscal at INR 125 crore, and once the new facility is ready, these figures will more than double to around Rs 280 crore.